Amazon (NASDAQ:AMZN) is set to transfer its fleet of Boeing 737-800 cargo jets, currently operated by Atlas Air, to Sun Country Airlines. This shift will occur in phases starting next year, as announced by Amazon.
Expanded Partnership with Sun Country Airlines
Sun Country Airlines, based in Minneapolis and traded under NASDAQ: SNCY, will take on up to eight additional Boeing 737-800 converted freighters for Amazon. This is part of an extended contract that will now run until 2030. Sun Country has been operating 12 Amazon-supplied Boeing narrowbody cargo jets since 2020 and will start flying the first of the new aircraft in the first quarter of 2025. All eight planes are expected to be operational within Amazon’s domestic parcel network by the third quarter of 2025, bringing Sun Country’s total freighter fleet to 20 aircraft.
Contract Termination with Atlas Air
Amazon’s decision to reallocate these eight 737-800 freighters comes after terminating its transport partnership with Atlas Air. In addition to the 737-800s, Amazon is also moving 16 Boeing 767-300 freighters from Atlas Air to ABX Air. The 737-800s are leased from AerCap and will now be directly controlled by Amazon.
Strategic Importance
“Amazon is an extremely important customer to Sun Country, and our strong execution on current cargo services has positioned us well for growth. We look forward to continuing to provide services to Amazon into the 2030s,” said Sun Country CEO Jude Bricker.
Financial Impact
In 2023, Sun Country’s cargo revenue increased by 10.4% year-over-year to $100 million. This growth came despite a general downturn in the air cargo industry. The airline benefited from Amazon gaining market share in the declining domestic parcel market, surpassing FedEx and UPS in total deliveries last year. Sun Country’s stock price surged by 10% to $11.32 per share following the announcement.
Future Prospects
Sun Country and Amazon have the option to extend their amended contract through 2037. This partnership highlights Amazon’s reliance on partner carriers to operate its network, as it does not have its own airline operating authority. Amazon’s active fleet has remained steady at around 80 aircraft for the past 20 months, peaking at 88 during the pandemic.
Continued Leasing from Atlas Air
Atlas Air Worldwide’s leasing division, Titan Aviation, will continue to lease 16 Boeing 767-300s to Amazon, now being operated by ABX Air.
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