Amazon buys Boeing jets from Delta, WestJet as aircraft prices drop

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Amazon said Tuesday it’s buying 11 used Boeing 767-300 jets from Delta and WestJet, the latest sign of how cargo carriers are growing while passenger airlines rush to shrink their fleets as Covid-19 hurts travel demand.

The expansion comes as Amazon continues to push for faster delivery amid a pandemic-fueled surge in online orders. Stuck-at-home shoppers have turned to the service for both essential and nonessential goods, while the holiday shopping season generated further demand for speedy delivery.


The four WestJet planes are being converted to cargo jets and will join the Amazon Air fleet this year, while the seven Delta planes will be added in 2022 after their conversion, Amazon said.

The company has been steadily building up the fleet of planes dedicated to its Amazon Air cargo operations through leasing agreements but Tuesday’s announcement marks its first-ever outright aircraft purchase, Amazon said.

“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 with meeting our customer promises,” Sarah Rhoads, vice president of Amazon Global Air, said in a statement.

Amazon said the Amazon Air fleet will have more than 85 planes, both leased and owned, by the end of 2022. Amazon launched its air fleet in 2016, prompting speculation that it would reduce its reliance on UPS and FedEx. The company still relies on outside carriers for a portion of its deliveries, but it has rapidly accelerated its in-house logistics operations, particularly during the pandemic. Amazon Air’s 767 fleet is operated by Atlas Air Worldwide Holdings and Air Transport Services Group, but an Amazon spokeswoman declined to comment on which airlines would operate the newly purchased planes.

The expansion builds on Amazon’s ramp up of its air cargo fleet last year. The company’s $1.5 billion air hub in Kentucky is slated to open this year,. It has capacity for 100 Amazon-branded planes and is expected to handle an estimated 200 flights per day.


Amazon, Delta and WestJet declined to disclose the planes’ price but the value of many aircraft has plunged this year as the coronavirus decimated travel demand. Boeing 767-300ERs values in mid-December were about 15% lower compared with the start of 2020, according to Ascend by Cirium, an aviation consulting firm. Rob Morris, a consultant at Ascend, said the Delta aircraft are about 20 years old and, if between major maintenance cycles, would be valued at close to $13 million to nearly $14 million each.

Delta and other airlines have sped up retirements of aircraft to help cut costs as the virus and a web of travel restrictions and quarantine requirements aimed at slowing the disease’s spread, kept many potential customers at home. Delta in June said it planned to retire seven of its Boeing 767-300ER jets by the end of 2020 and in October it announced it plans to retire the remaining 49 of its 767-300ER aircraft by the end of 2025.


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Logistics costs will make or break Amazon, buying logistics assets at probable fire sale prices makes sense.
Wonder if Amazon may eventually buy a UPS or do a wide scale delivery start up for logistics cost control.
 
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UPS probably has high costs because of their unionized work force as compared to buying a company that is not unionized
I concur and Amazon would rather build something themselves than take over an older company. Too much that's the way we've always done it to overcome.
 
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Amazon has been increasing the size of their fleet and this makes total business sense. As some airlines are retiring 767’s as part of their fleet reductions, Amazon is taking advantage. They are getting a big bang for the buck here.
 
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They can park owned planes more cheaply if they're not required by the core business. Leased planes they have to pay for regardless if they're flying or not.
 
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I remember the anti-Walmart sentiment from the 80s and 90s. Don't see much of that for Amazon even though the company is substantially larger and more powerful than Walmart ever was.

Certainly Walmart's physical footprint is much larger than Amazon's ever will be, and that's what drives the anti-Walmart sentiment. Nobody wants a Walmart encroaching too closely to their residence.
 
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Bezos wants to own the world. From an enterprise business standpoint, I find Amazon highly interesting.
For the past 30, maybe 40 years, business strategy was to focus on core strengths and outsource everything else.
Jeff Bezos flipped outsource strategy on its head.

He has done pretty well by setting up an online book store...
 

Dave Hess

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Bezos wants to own the world. From an enterprise business standpoint, I find Amazon highly interesting.
For the past 30, maybe 40 years, business strategy was to focus on core strengths and outsource everything else.
Jeff Bezos flipped outsource strategy on its head.

He has done pretty well by setting up an online book store...

You either innovate or get left behind.... and that pretty much goes for any industry.

Do you remember the Blackberry cellphone craze ?
LOL

Very interesting to watch YouTube videos of Bezos from the late 90’s and his views about what he wanted in Amazon to become in the future. He really didn’t worry about Circuit City, Sears, Kmart, Walmart, etc.... beating him on a lower price.
 
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Bezos wants to own the world. From an enterprise business standpoint, I find Amazon highly interesting.
For the past 30, maybe 40 years, business strategy was to focus on core strengths and outsource everything else.
Jeff Bezos flipped outsource strategy on its head.

He has done pretty well by setting up an online book store...
He knows what customers want and he focus on incremental change that sets him apart from his competitors. His goal was never to cut cost but to grow customer base gradually. He is also very ruthless in layoff bottom performer instead of people costing too much.
 
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Amazon needs to invest in driver Training.
That's the real beauty of the setup. They don't actually work for Amazon, they're just a contract delivery service. So when accidents happen, you don't sue Amazon, you sue a small time delivery company that only contracts with Amazon and then they just go out of business when they don't have enough insurance.
 
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767... even a -300 meh... I'm a Boeing guy, but don't get it. Maybe makes sense for medium haul domestic cargo only flying and they probably buying them 20 cents on the dollar.

I'm a little surprised DL did not dump all their 76s in one felt swoop. All the engineering and training costs that come with having even a single a/c type would go away.

I know their expensive as heck, but would bet they must have looked at 78s
 
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767... even a -300 meh... I'm a Boeing guy, but don't get it. Maybe makes sense for medium haul domestic cargo only flying and they probably buying them 20 cents on the dollar.

I'm a little surprised DL did not dump all their 76s in one felt swoop. All the engineering and training costs that come with having even a single a/c type would go away.

I know their expensive as heck, but would bet they must have looked at 78s
The freighters sit probably half of the time instead of being run long hours to have the efficiency pay off . Or at least until Amazon buys /leases new.
 
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