Cargojet signs strategic agreement granting Amazon voting shares 

Cargojet announced today that it signed a strategic agreement with Amazon.com NV Investment Holdings, an affiliate of Amazon.com.ca Inc., as a key carrier for Amazon’s middle-mile transportation in Canada. The new agreement also grants the e-commerce giant the opportunity to buy a stake in the carrier. 

The news follows Cargojet’s recent handling of record volumes in support of Amazon’s Prime Week last month. 

Under the new agreement, Cargojet will issue warrants in two tranches to Amazon to purchase variable voting shares that will vest based on commercial results related to business between the two companies.  

The first tranche of warrants will allow Amazon to acquire up to 9.9% of Cargojet’s variable voting shares at an exercise price of C$91.78 (US$68.94) per share, comprising the 30-day volume weighted average trading price (VWAP) immediately prior to the date of the agreement.  The first tranche of warrants will vest over a period of six and a half years, with vesting tied to the delivery by Amazon of up to C$400 million in business volumes during the same term.  

The second tranche will allow Amazon warrants to acquire up to an additional 5% of Cargojet’s variable voting shares with vesting tied to the delivery by Amazon of up to an additional C$200 million in business volumes after the first tranche of warrants is fully vested. The vesting period for the second tranche of warrants will continue for an additional year, making the aggregate term of all the warrants equal to seven and a half years from the date of the agreement. The exercise price of the second tranche of warrants will be set two years after the date of the agreement using the 30-day VWAP immediately prior to the second anniversary of the agreement (or, if earlier, the date on which the first tranche of warrants is vested in full). 

The agreement will proceed in conjunction with Amazon’s and Cargojet’s existing commercial agreement for overnight air cargo services and charters to move packages from Amazon facilities to other Amazon or last–mile carrier locations before final delivery to customers.

“Cargojet has been a key player in our Canadian middle mile operations for several years,” said Amazon’s Vice President global transportation, Adam Baker. “We’re thrilled to build a longer-term relationship that will allow us to provide even faster service to Amazon customers in Canada,” he continued. 

Cargojet said that it expects the agreement will generate additional revenue growth and be meaningfully accretive to the company’s earnings in the long-term. The carrier plans to add more non-stop flights in its overnight network to the 15 cities it already serves, as well as new ones, over time but did not share any further details.