Atlas inks five-year deal to provide freighters to FedEx

Atlas Air Worldwide Holdings (AAWW) has entered into a five-year agreement with FedEx Express to provide five 747-400 freighter aircraft during peak flying seasons, starting in 2017 and lasting through 2021. While Atlas has previously provided freighters to FedEx on an ad-hoc basis, the agreement is the first to lock in aircraft this far in advance, suggesting that FedEx is confident about its position in the market well into the future.

“We have worked closely and successfully with FedEx for many years, but this is our first agreement that allows both companies to plan for the longer term,” said William J. Flynn, president and CEO of Atlas. An agreement to provide five aircraft for the 2016 peak season flying is already in place, Atlas noted.

While Atlas did not specify the exact dates of the deal, it noted that “peak season flying generally occurs in the month of December and potentially earlier.”

The news of the deal also implies that FedEx is not concerned about losing market share to potential rival Amazon.com, which recently inked its own deal with Atlas. The latter recently signed a deal to provide Amazon with a fleet of twenty 767-300 freighters, with the first aircraft entering service this month.

The entrance of a major retailer and e-commerce giant into the air cargo business has some insiders wary. In the second quarter of 2016, Amazon had a market capitalization of US$337.6 billion.

FedEx, however, maintains that no single customer comprises more than 3 percent of its business, despite Amazon being one of its biggest customers. The five-year deal means that FedEx expects brisk future business, regardless of competition.

Atlas, meanwhile, has pivoted towards the express and e-commerce markets, as growth in the traditional air cargo market has slowed over the last few years.

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