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The Implications Of Amazon’s Stake In Hawaiian Airlines

Date: October 23, 2022


Amazon and Hawaiian Airlines entered into an agreement on Friday in which Amazon will acquire up to 15% of Hawaiian stock in exchange for the operation of 10 Airbus A330-300 freighters. The deal comes at a time when Amazon is looking to expand its distribution network while Hawaiian is keen to recover from the drop in demand for consumer travel since the beginning of the pandemic.

Amazon Air gets an upgrade

Amazon has a longstanding history of leasing aircraft for distribution purposes. In fact, the retailer has its own cargo airline called Amazon Air, which it relies heavily on to transport packages from warehouses to customers. The airline has demonstrated interest in owning its own planes in the future, but for now, it relies on lease agreements with other airlines to fulfill its needs. Such airlines include Silver Airways, Atlas Air, Sun Country Airlines, ASL Airlines Ireland, Air Transport International, ABX Air, and Cargojet Airways.

Through these agreements, Amazon has access to 97 planes, including 26 Boeing 737-800s, 12 Boeing 767-200s, and 54 Boeing 767-300ERs, which it leverages in order to transport packages across the country to its customers. Hawaiian Airlines represents the biggest and latest addition to Amazon's entourage with their agreement bringing a modest bump to the retailer's existing fleet.

Hawaiian Airlines resurfaces as a cargo carrier

Like the vast majority of airlines, Hawaiian has struggled to recover financially from the drop in demand for consumer travel since the beginning of the pandemic. Its decision to operate planes for Amazon, therefore, comes as no surprise and is simply the latest in a trend of airlines providing cargo services in order to boost their revenue. Thus far, it seems to be paying off, as Hawaiian stock shares are already up over 10%.

The agreement also gives Amazon the option to lease additional planes in the future, signaling the start of what will hopefully be a long and fruitful relationship for both partners.

It is worth noting that the planes that Hawaiian Airlines will be operating for Amazon are not its own; rather, Amazon will be leasing the planes through a third party named Altavair which will convert them from passenger to freighter aircraft and hand them over to Hawaiian to operate on behalf of Amazon.

Looking ahead

The Hawaiian-Amazon partnership is one that will ultimately allow the retailer to meet its constantly growing demand while giving the airline a chance to break into the cargo freight business and diversify its source of revenue. And given the recent trend towards increased demand for consumer goods and a decreased demand for travel, it is not unreasonable to expect both partners to enter into similar agreements with other businesses. In fact, Amazon may soon find itself leasing planes that are operated by other airlines while Hawaiian starts operating planes for other delivery services like FedEx and UPS.

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