Atlas Air Posts Disappointing Earnings Thanks To Amazon

You can count Atlas Air Worldwide Holdings, an aircraft and aviation operating services outsourcer, as another unsatisfied Amazon customer.

Kinda.

The company blamed its disappointing quarterly earnings on a new venture with Amazon, according to MarketWatch.

Atlas Air Worldwide announced in May that it had inked a seven-year deal to provide air cargo services for Amazon and help the eCommerce giant expand its delivery network. As part of the agreement, Atlas Air Worldwide would make 20 Boeing 767 freighters available to Amazon, including crew, maintenance and insurance costs.

Under the agreement, Atlas Air Worldwide also granted Amazon warrants to acquire 20 percent of the company over a five-year period at $37.50 a share, as well as warrants to purchase another 10 percent of Atlas Air Worldwide stock at the same price over a period of seven years.

The problem, however, according to Atlas Air Worldwide’s earnings release, is that the Amazon agreement is resulting in a liability to the company until those options are either exercised by Amazon or expire.

Atlas Air Worldwide said it expects to begin flying cargo for Amazon sometime this quarter.

“We have secured all of the conversion slots and the vast majority of the feedstock aircraft required to support 20 B767-300s for Amazon by the end of 2018,” Atlas Air Worldwide Chief Executive William Flynn said in a statement announcing the company’s quarterly earnings.

Atlas Air Worldwide’s stock fell by 6.56 percent on Thursday (Aug. 4), or $2.51 per share, to close at $35.74 a share.