E-commerce giant Amazon will invest in a third freighter operator as it takes a stake in Canada’s Cargojet.
The two have been working together over recent years with Cargojet providing overnight air cargo services and charter flights.
Under the new strategic agreement, Cargojet will issue warrants to Amazon to purchase variable voting shares that will vest based on the achievement of commercial milestones related to the two companies’ business together.
The first tranche of warrants allows Amazon to acquire up to 9.9% of Cargojet’s variable voting shares at an exercise price of $91.78 per share.
The first tranche of warrants will vest over a period of six and a half years, with vesting tied to the delivery by Amazon of up to C$400m in business volumes during the same term.
Amazon will also receive additional warrants to acquire up to an additional 5% of Cargojet’s variable voting shares with vesting tied to the delivery by Amazon of up to an additional C$200m.
Amazon has also invested in freighter operators ATSG and Atlas in the US.
Amazon utilises Cargojet’s overnight air network and charter aircraft services to move packages from Amazon facilities to other Amazon or last mile carrier locations before final delivery to customers.
“The commercial relationship the Cargojet team continues to build with Amazon has now allowed us to further strengthen and align our long-term strategic commercial interests. Our continuous commitment to provide value added services enables us to earn all of our customers’ trust as the leading overnight air-network operator,” said Carojet chief executive Ajay Virmani.
“Cargojet has been a key player in our Canadian middle mile operations for several years,” added Adam Baker, vice president global transportation, Amazon. “We’re thrilled to build a longer-term relationship that will allow us to provide even faster service to Amazon customers in Canada.”
Cargojet said it plans to strengthen its domestic network on the back of growth in e-commerce and a drive towards faster deliveries as well as 7 days-a-week deliveries.
Cargojet plans, over time, wants to add more non-stop flights allowing later departures and earlier arrivals to the 15 major cities that Cargojet already serves and to add new cities on its overnight network.
These service and frequency enhancements will be available to all Cargojet customers and will expand Cargojet’s reach to approximately 95% of the Canadian population.
“This optimized network will further improve fleet utilization, create additional opportunities, and continue to help Cargojet enhance its customer-neutral, cost effective network for all its customers,” the aircraft operator said.
