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Updated: Amazon and Hawaiian Airlines

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Amazon will partner with bellwether Hawaiian Airlines to expand its air cargo service and take up to 15% stake in the airline. The retailer will use Hawaii to operate and maintain a new fleet of leased A330 wide-body cargo jets to replace older aircraft. This is a completely new and innovative direction for Hawaii’s largest private employer.

Read this for our local Hawaii too.

Updated at 1030 am 10/21:

A Hawaiian Air investor call took place later Friday, with CEO Peter Ingram highlighting several aspects of this deal:

  • Hawaiian said this deal “allows synergies with our a330 passenger business” and will provide a “different and separate meaningful revenue stream” from Hawaiian’s meat-potato Hawaiian passenger business.
  • Ingram added that “Hawaii is a natural partner” for this 8-year Amazon contract. He said Amazon has the option to deploy additional aircraft with Hawaii and extend the agreement beyond the initial 8-year period.
  • Hawaiian said they have reached an agreement with the existing pilot employment contract necessary to add this new line of business. Ingram said he expects pilots to devote specific time only to freighter work or passenger work and not to go back and forth more frequently.
  • Hawaii will be paid on “block hours” based on hours flown and the number of flights departing, and revenue will not be affected in the same way as passenger business. Also, the cost of jet fuel will be a “transition” from Hawaii to the Amazon.
  • Regarding pilots, Ingram said this is “a new source of opportunity for employees, including hundreds of new pilots and others.” He said it would further increase Hawaiian Air’s appeal to pilots. HA estimates this will result in approximately 160 new pilot jobs for ten new aircraft.
  • In terms of the risks associated with this new venture, Ingram said timely performance is paramount for Amazon. This has been a major issue in Hawaii’s passenger business lately, as we noted earlier this week that Hawaiian experiences 145 delayed flights in one day. Also, Hawaiian has just started working with an Amazon-sized customer rather than airline passengers.

These are similar to the A330 aircraft Hawaiian uses for passenger service.

Hawaiian’s passenger service uses a fleet of 24 private Airbus A330-200 aircraft, whereas these are A330-300 cargo aircraft. These will leverage the airline’s extensive knowledge and experience with the A330 while also taking the airline in a completely new direction.

“These A330-300s will not only be the first of its kind in our fleet, but also the newest, largest aircraft for Amazon Air, enabling us to deliver more customer packages on every flight,” Amazon said this morning. said.

Amazon also said today that it has signed an agreement with Airbus to lease 10 aircraft that Hawaiian will operate. These are the largest planes Amazon has ever used to transport cargo.

“We are excited to serve Amazon customers by providing additional airfreight capacity and logistical support. This recognizes our experience in providing safe and reliable operations, our incredible front-line team, and our shared focus on the customer. This relationship is a key to growing our business,” said Hawaii CEO Peter Ingram. It provides a unique opportunity to diversify our revenue streams while leveraging our catalyst and built-in strengths.”

Hawaiian will be Amazon’s largest airline partner to date.

Amazon similarly already uses leisure airline Sun Country for its Boeing 737 cargo service, which discontinued Hawaii service last year. Amazon also uses Atlas and ATSG to fly cargo for them.

As part of the deal, Amazon will retain the option to buy up to 15% of its shares over the next nine years.

Hawaiian plans to start flying chartered cargo jets within the next year.

Hawaiian will fly 10 or more of the A330-300s for Amazon starting fall 2023. All of the new aircraft will enter Hawaiian service by 2024.

To do this, Hawaiian is setting up another pilot base to be set up somewhere on the mainland and plans to recruit any auxiliary personnel needed to fulfill the new contract.

Why now? BOH takes over Hawaiian’s Amazon partnership.

  • We give Hawaii a lot of credit for its creativity in this latest venture. This is a challenging financial environment and this diversification can only be seen as beneficial. Another indication of this is that airline shares rose sharply on the news this morning.
  • A stronger airline also benefits Hawaii passengers, so initially this seems like good news all around.
  • The initiative draws on Hawaiian’s extensive experience with its own large fleet of A330s over the past decade.
  • Hawaiian will also maintain the new Amazon A330 fleet and use its own well-tuned internal and external maintenance resources.
  • The airline has the systems and knowledge required to recruit and train the pilots and other individuals required to fulfill this contract.
  • Given the pilot shortage that all airlines still face, questions remain.
  • We don’t know if or how this affects Hawaiian’s current piloting and dealings with other unions.
  • It will further advance Amazon’s relationship with the state of Hawaii.
  • This will be a fascinating development to follow.

We’ll meet with Hawaiian later this morning and update this post later.

The photo above is of a Hawaiian Airlines A330-200 passenger plane.

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