New Video Spotlights Deteriorating Situation at Amazon Air-Contracted Airlines, Threats to Future of Prime



5-29-2018

FOR IMMEDIATE RELEASE: May 29, 2018 CONTACT: Desmond Lee, (646) 517-1826, desmond.lee@berlinrosen.com

“No More Prime As We Know It” New Video Spotlights Deteriorating Situation at Amazon Air-Contracted Airlines, Threats to Future of Prime

(NATIONWIDE) -- As investors and company observers gather for Amazon’s annual shareholder meeting, pilots contracted to fly for the e-commerce giant’s air delivery service unveiled a new video Tuesday warning customers about the intensifying problems at their airlines that could spell trouble for the future of Amazon Air and Prime. This comes as the New York Times recently published a stunning look at how carriers of all shapes and sizes are responding to a hyper-competitive pilot labor market amplified by looming retirements and surging pilot demand.

The pilots fly for Amazon Air through the company’s contracts with Atlas Air, Inc., a subsidiary of Atlas Air Worldwide Holdings (NASDAQ: AAWW), and ABX Air Inc., a subsidiary of Air Transport Services Group (NASDAQ: ATSG). Together, AAWW and ATSG are contracted to operate 40 planes for Amazon Prime Air by 2018. However, full implementation of this partnership has been slow to manifest.

Stylized with ‘whiteboard’ animation, the new video highlights the critical role played by these contracted cargo airlines in supporting the logistics network on which Prime customers depend for fast, reliable service. The video then details the growing pilot attrition, retention and recruitment issues plaguing both Atlas Air and ABX Air, fueled by years of low wages and grueling working conditions that have undermined their ability to thrive in a demanding pilot labor market. It concludes by warning consumers that these problems could lead to “the end of Prime as we know it,” from delays and fewer available products to higher shipping fees for Prime customers.

“Amazon customers have come to expect quick, reliable service but they should have the full story about the serious challenges facing Amazon Air and the future of Prime,” said Captain Michael Griffith, a long-time pilot at Amazon Air contractor Atlas Air and Executive Council member at APA Teamsters Local 1224. “Many of us are Prime members ourselves and want our partnership to succeed, but years of working for half of what pilots at our competitors make with constant staffing and operational issues have put us on a path that’s simply unsustainable. Customers are counting on us, and Amazon and its contractors AAWW and ATSG need to understand that pilots are critical to making the vision of Prime a reality.”

The new video will also be the centerpiece for a nationwide advertising campaign starting Tuesday on Google and Facebook, targeting consumers across the country with links to CanAmazonDeliver.com, an informational website that outlines issues at the Amazon Air- contracted carriers.

On Wednesday, the pilots will also be protesting outside of Amazon’s annual shareholder meeting, where they will be accompanied by a mobile billboard warning customers and investors about the significant problems facing Amazon Air.

BACKGROUND:

Amazon has signaled an increased investment in creating and growing its logistics and air delivery operation. The e-retailer broke out revenues for its logistics operations for the first time in the first quarter of 2017, and in 2017, the company announced that it will construct a $1.5 billion hub at Cincinnati/Northern Kentucky Airport (CVG) and will partner with German shipping giant Deutsche Post DHL to leverage the shipper’s existing resources at CVG. The company has also secured warrants to purchase substantial equity in AAWW and ATSG, driving speculation among some analysts that the tech giant may consider acquiring its cargo contractors in the future.

Despite these ambitions, Amazon’s network of cargo contractors for its air delivery service continue to face growing operational and staffing risks that could undermine their ability to deliver for the e-commerce giant.

At Amazon Air-contracted Atlas Air, staffing, attrition and recruitment issues have been exacerbated because of chronic mismanagement and long-standing substandard pilot contracts. Management is undercutting industrywide standards in everything from pay and wages to working conditions, eroding pilot morale and undermining the company’s ability to attract and retain pilots. The company is losing approximately 200 pilots a year, a trend expected to intensify as pilot retirements accelerate into 2023. At a time when pilots are in high demand, a recent survey of Atlas pilots showed that 72 percent of survey participants have applied or are planning to apply for a job at another airline in 2018.

At ATSG’s ABX Air, where contract violations and chronic under-staffing led pilots to go on strike at the start of the holiday season in 2016, more than 30 percent of new ABX pilots hired in the last two years have already left for other airlines, with 50 percent of the company’s current pilot roster expected to retire in the coming years.

Some of Amazon’s contracted carriers, including AAWW subsidiaries Atlas Air and Southern Air, Inc., face highly-strained operations, undermining the quality of life and working conditions for pilots. Atlas pilots fly as many as 20 straight days a month around the globe and have even been pressured to fly without necessities being stocked on their planes, such as toilet paper or food for the flight crews.

Last year, a survey of nearly 1,400 pilots at AAWW’s Atlas Air and Southern Air and ATSG’s ABX Air revealed that nearly 80 percent of those who participated have witnessed flight delays or cancellations at their airlines due to short staffing. When asked if they were confident that their companies were telling key customers like Amazon the truth about their challenges, 83 percent of ABX pilots and 80 percent of Atlas pilots who participated in the survey strongly disagreed.

The Airline Professionals Association, Teamsters Local 1224 represents pilots and flight crewmembers from 10 airlines operating across the country.

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