Amazon.com Inc has already established a benchmark in E-commerce world, and recently made another turn to indicate how to achieve operational excellence. On Wednesday Amazon.com Inc announced that it had signed a deal with Air Transport Services Group (ATSG) to lease 20 Boeing 767 freighter aircraft to transport its deliveries in the United States.
The lease deal with ATSG spans five to seven years and the agreement to operate the aircraft is for five years. As part of the agreement, Amazon also has the right to buy up to 19.9 percent of ATSG’s stock over five years at $9.73 per share. The price is at a 17.3 percent discount to ATSG’s Tuesday closing price of $11.77. ATSG’s shares jumped 21 percent to $14.25 in premarket trading.
The deal would help Amazon to strengthen its normal delivery and particularly prime service (free two day delivery and also same day in metros), which is being estimated 40 to 60 million members world-wide. Another theoretical possibility is that Amazon is trying to enter into the huge domain of air transportation.
Simple implication is that operational excellence can be enhanced if the control of all the related work packages is under one umbrella. Also, the cost optimization is also a function of the controls on operations. With this single deal, Amazon is trying to engender multiple benefits like cost control, operational efficiency, new business opportunities etc.