Amazon expands its air delivery fleet after buying 11 new planes

This marks the first time the e-commerce giant has purchased rather than leased its planes.

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Amazon stock represented by Amazone air plane with prime air printed on it

Image source: Amazon.com

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Amazon.com Inc (NASDAQ: AMZN) air cargo ambitions are taking a new flight path after the e-commerce giant announced it was buying, not leasing, 11 used Boeing aircraft from Delta Air Lines and WestJet Airlines.

The purchase marks the first time Amazon has not leased any airplanes for its Prime fleet. It expects to have 85 planes in service by the end of next year.

On a wing and a prayer

Amazon leases most of its cargo aircraft through Air Transport Services Group, which provides the fleet with 767s, and Atlas Air Worldwide Holdings, which supplies 737s and 767s. Amazon has taken an ownership stake in both companies.

It also leased 15 737s through General Electric's GE Capital Aviation Services, but in September went off in another new direction that hinted at the purchases to come when it directly registered one of its aircraft under its own name. That plane was also from WestJet.

Under the new acquisition, Amazon will be getting Boeing 767-300 aircraft. Sarah Rhoads, vice president of Amazon Global Air said in a statement:

Our goal is to continue delivering for customers across the U.S. in the way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal. Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises.

Amazon has emerged as a major threat to FedEx and UPS. A recent study suggested the e-commerce leader could grow into a major aircraft carrier with as many as 200 planes in the next seven or eight years, at which time it would be close in size to UPS.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Rich Duprey has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and FedEx. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Delta Air Lines and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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