Amazon leasing planes to set up own delivery network

Amazon.com Inc will lease 20 Boeing 767 freighter aircraft, lessor Air Transport Services Group Inc said on Wednesday, as the online retailer moves closer to setting up its own air delivery network.

The deal comes at a time when Amazon, which offers fast and increasingly free deliveries for millions of online orders, has been trying to make shipments even faster as well as assume more control over its business and costs.

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The e-commerce giant has been testing deliveries by drones, but has not said when it expects to have them in service. The duration of the leases will be five to seven years, ATSG said.

As part of the agreement, Amazon also has the right to buy up to 19.9 per cent of ATSG's stock over five years at $9.73 US per share. The price is at a 17.3 per cent discount to ATSG's Tuesday closing price of $11.77.

ATSG's shares were soaring in early trading on the news.