(Bloomberg) — Amazon.com Inc. is ready to take a stake in Hawaiian Airlines’ parent company as part of an agreement to expand the e-commerce giant’s cargo transportation operations with a fleet of Airbus SE freighters.
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According to a statement Friday, Hawaiian Holdings Inc. has issued warrants that allow Amazon to purchase up to 15% of the airline’s outstanding shares. The warrants are exercisable over the next nine years.
The deal could signal a resurgence of Amazon’s plans, announced in 2021, to use Boeing Co. and Airbus long-haul freighters to transport goods using its own aircraft, reviving rivalry with United Parcel Service Inc. and FedEx Corp. Boosting a new revenue stream for Hawaiian amid a slow recovery in Asia-Pacific travel, with some countries only recently lifting coronavirus-related travel restrictions.
“The Amazon deal will not only enhance Hawaiian’s revenue diversification, but also help reduce the earnings volatility characteristic of Hawaiian’s passenger business,” Deutsche Bank analyst Michael Linenberg wrote in a research note on Friday.
Shares of Hawaiian rose as much as 15% to $16.15, its highest intraday price in almost two years. The stock was up 12% as of 12:30 p.m. in New York. Amazon shares climbed 1.5% to $117.01.
The plan was announced as Amazon’s cargo carrier is growing at its slowest pace since the pandemic began – a sign the e-commerce giant is adjusting to slowing demand. Amazon Air was founded in 2016 to speed up shipping products from the company’s warehouses to buyers.
Eager to expand the reach of its delivery network and reduce its reliance on third-party suppliers, Amazon has assembled a fleet of leased and purchased planes acquired from other companies, usually at a discount on new models that roll off the assembly line. The service, which relies on pilots from a handful of partner airlines, has grown rapidly in recent years, tackling new airport hubs while leasing and purchasing more aircraft.
Hawaiian will initially operate 10 Airbus A330-300 Freighters from 2023 and the fleet could be expanded based on Amazon’s needs. The airline will establish a pilot base in the US mainland, expand existing maintenance bases and increase hiring of pilots, mechanics and other workers to support operations. Hawaiian now carries cargo on passenger aircraft within Hawaii and between the state and North America, Asia and Oceania.
“Catalyst for Growth”
“This relationship provides a catalyst for the growth of our business and a unique opportunity to diversify our revenue streams while capitalizing on our established strengths,” Hawaiian Chief Executive Officer Peter Ingram said in the statement.
Amazon will lease the plane for Hawaiian to operate out of Altavair, according to a statement from Airbus. The planes will be converted from passenger planes to cargo planes.
The aircraft will be “the newest and largest aircraft for Amazon Air, allowing us to deliver more customer packages with each flight,” Philippe Karam, director at Amazon Global Air Fleet & Sourcing, said in the statement.
–Assisted by Janet Freund and Matt Day.
(Updated stock trading. A previous version of this story corrected the headline.)
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