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Jun 3, 2020

Amazon dives into weak aircraft market, leases 12 more planes

The Amazon.com Inc. logo sits on boxes moving along a conveyor into a truck dock ahead of shipping from an Amazon.com Inc. fulfilment center during the online retailer's Prime Day sales promotion day in Koblenz, Germany, on Monday, July 15, 2019. Amazon is tapping high-profile actors, athletes and social-media sensations like never before to maintain buzz around its Prime Day summer sale, now in its fifth year and battling increasing competition from rivals. Photographer: Krisztian Bocsi/Bloomberg

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Amazon.com Inc. is expanding its air cargo operations with plans to grow its fleet to more than 80 planes as the online retailer takes advantage of a depressed market for aircraft during the pandemic.

The company announced Wednesday that it had leased 12 converted Boeing 767-300 passenger planes from Air Transport Services Group Inc. One was added to Amazon’s existing fleet of 70 aircraft last month, and the rest will be delivered in 2021, the Seattle-based company said in a statement.

The deal comes as the global aviation industry grapples with severe travel restrictions to limit the spread of COVID-19. Air Transport shares rose as much as 16 per cent on the news.

Amazon, meanwhile, is trying to keep up with a booming e-commerce business that has benefited from a surge in online shopping from people sheltering at home. The company unveiled the air cargo service, now called Amazon Air, in 2016 as it looked to rely less on carriers such as United Parcel Service Inc. and FedEx Corp.

A report released last month by the DePaul University’s Chaddick Institute of Metropolitan Development estimated that Amazon Air may grow to 200 planes in the next seven or eight years, creating a cargo service that could rival UPS. “Amazon Air’s robust expansion makes it one of the biggest stories in the air cargo industry in years,” the study’s authors wrote.