Amazon Air has quietlyacquired seven Boeing 767 passenger jets directly from Delta Air Lines, which retired the aircraft in June after air travel cratered during the pandemic.
Seattle-based Amazon.com Inc. will convert the 767s into cargo airplanes, and then add them to its fast-growing fleet of freighter aircraft as it prepares to open a $1.5 billion air cargo hub at Cincinnati/Northern Kentucky International Airport.
Amazon and Delta both declined to comment on the deal, or say where the jets will undergo conversions, but an aerospace industry source confirmed the transaction. It was first reported by CargoFacts, a trade publication.
Prices for used 767-300s can vary widely, ranging from $9 million to $65 million, depending on ownership and how well they have been maintained. Delta owns a huge maintenance arm, and its jets are well-maintained.
The two big companies could release more details about their transaction next week, the aerospace source added.
Atlanta-based Delta retired the seven 767s in June and took a $180 million impairment charge on those aircraft, according to its most recent quarterly financial report filed with the U.S. Securities Commission.
As a result, any deal to sell them to Amazon would give the airline a nice year-end financial boost.
In recent years, air cargo companies have competed aggressively and paid handsomely to get their hands on retired passenger 767 jets to convert them to carry cargo.
Now, however, the market is suddenly flooded with passenger 767s — what the cargo industry calls "conversion feedstock " — that were retired by major airlines like Delta during the pandemic. Air Canada, for example, also announced its low-budget affiliate, Rouge, would retire its entire fleet of 25 767s in June.
Delta itself also said will retire the rest of its 25-aircraft 767-300 fleet by 2025, taking a further $900 million charge on the old gas guzzlers when it made that decision in September.
Together with 12 artists from Seattle and around the world, Delta and Coca-Cola created an art gallery in the sky – transforming the drab gray tray tables on one of the airline’s 767 jets into one-of-a-kind, unique works of art reflecting themes and scenes from their cities.
Amazon has earned a reputation as a shrewd investor and buyer of aircraft to carry out its cargo operations.
Until this year, Amazon has entered deals with other air transport cargo carriers such as Air Transport Services Group (ATSG) and Atlas Air, under which it invests in those companies and agrees to lease jets from them. The more jets Amazon leased, the more the companies' revenues and profits grew, and Amazon's investments in those two companies have become more valuable.
In June, for example, Amazon expanded its fleet of winged merchandise movers by 17% to help improve deliveries during the Covid-19 pandemic, including leasing 12 Boeing 767-300 converted cargo aircraft from Wilmington, Ohio-based ATSG.
With this latest deal with Delta, the company has now directly bought 767 jets itself twice in 2020, raising questions about its own longer-term aspirations as an aircraft owner and operator.
Joseph Schwieterman and Jacob Walls at DePaul University’s Chaddick Institute for Metropolitan Development in Chicago, who have studied and tracked Amazon Air's growth, call the operation the transportation industry’s “juggernaut of 2020,” saying they'll operate more than 100 aircraft in 2021 and as many as 200 by 2029.
Under the leadership of Sarah Rhoads, Amazon is rapidly growing its air cargo operations, including at Sea-Tac International Airport and at Bremerton National Airport, where it has built a new air cargo and distribution facility.
