Amazon deal helps Wilmington company’s stock, fortunes take flight


Companies under Air Transport Services Group umbrella

ABX Air, the legacy company

Air Transport International, an air carrier.

Airborne Maintenance and Engineering Services, a maintenance-and-repair operation.

LGSTX, logistics and ground support.

GFS, a flight dispatch service

Airborne Global Solutions, a marketing entity.

Amazon and Wilmington's Air Transport Services Group are at the start of what may be a long relationship, observers say.

Last month, the Wilmington air cargo company announced that online giant Amazon is positioned to become not only the company’s most important customer but a part-owner, and the company’s shares (NASDAQ: ATSG) have seen a more than 40 percent bump.

Amazon is leasing six ATSG Boeing 767s to assist in the delivery side of its business. The agreement lets Amazon lease up to 20 of the planes.

“From our standpoint, knock on wood, the E-commerce sector growth is playing into our sweet spot,” said Joe Hete, ATSG chief executive and president.

John Haber, founder and CEO of supply chain consultant Spend Management Experts, feels this could be the beginning of a profitable relationship between Amazon, ATSG — and Wilmington itself.

“I think that it (Wilmington Air Park, ATSG’s base) very well could be a centralized domestic air hub for Amazon,” Haber said. “I mean, that’s where DHL was.”

Amazon could look for other areas to complement Wilmington, including Dallas and Atlanta, he said. But Wilmington is a good location, has an available workforce and the site has served as an air hub before with plenty of traffic, Haber said.

Hete hopes that Amazon’s willingness to take an ownership stake in the company demonstrates that Amazon Fulfillment Services Inc., an affiliate of Amazon, is willing to make ATSG — and Wilmington Air Park — a more permanent part of its future.

“Hopefully this is only a starting point to where they want to go,” Hete said.

Meanwhile, ATSG’s leaders are still focused on what hasn’t changed: Moving cargo and fixing airplanes for customers like DHL, Delta, the Department of Defense and others.

It’s not exactly business as usual for Hete. But it’s close to it.

Amazon is a household name and a potential co-owner. The online powerhouse has agreements to buy up to 19.9 percent of ATSG stock over the next five years, stocks locked in at an agreed-upon price of $9.73 per share. (On Thursday afternoon, shares of ATSG closed at $14.29, so Amazon has already made what Haber called a “profit on paper.”)

The airplanes — Hete calls the Boeing 767 the “key” to his company’s survival — will be operated by ATSG’s airlines, ABX Air and Air Transport International.

Today, Amazon is flying six of the company’s 767s, with plans to add an airplane a month for the next 14 months.

Amazon did not respond to a message seeking comment.

The Amazon agreement does not put a new large cargo-sorting operation in Wilmington, the kind DHL employed when it used Wilmington Air Park as a hub. But Hete calls the agreement “transformational” nonetheless.

The cargo is brought to the Wilmington Air Park, built into pallets and loaded onto airplanes. Most pallets go from one airplane to another. Then the planes go to airports in California, Arizona, Pennsylvania and elsewhere.

Some of the cargo offloaded in Wilmington goes to a local Amazon sorting facility.

“Our responsibility is airport to airport,” Hete said.

But ATSG is more than flying and leasing planes. It also fixes planes.

After DHL left Wilmington in 2008 — which ultimately meant a loss of about 8,000 area jobs — Hete was forced to terminate the employment of aircraft maintenance workers, only to rehire them under a new company, Airborne Maintenance and Engineering Services.

Maybe more than any other aspect of the company, it’s Airborne that sets ATSG apart from other air cargo operations.

On a recent morning, a plane for the presidential campaign of Sen. Ted Cruz was getting work at a Airborne hangar. Jim Savastano, vice president, technical operations for Airborne, said his crews have been working on the plane since it was owned by an earlier owner.

Airborne has grown from 600 to 800 employees, Savastano said. The new hangar is one reason. Another is the company’s wide-ranging capabilities.

“The airplanes that we fly are old,” he said. “They don’t build a lot of them anymore. So we have to reverse-engineer a lot of our parts. That’s what sets us apart.”

Walk across Airborne’s 100,000 square feet of space, and you’ll see an avionics shop, a CNC shop, a sewing shop, an engine shop, a sheet metal shop, a seat shop — and more.

“The maintenance operation never really left here,” Hete said. “And in fact, in 2014, we added the 200,000-square-foot hangar operation.”

That hangar allowed the company to draw Delta in for a key five-year maintenance contract.

In total, ATSG and its companies have 2,900 employees across the country and in Europe. Of those, 1,241 work in Wilmington.

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