Atlas Air said Wednesday it is operating two Boeing 747-400 freighters for FedEx Express (NYSE: FDX) full time under a new long-term contract. The deal is in addition to the all-cargo carrier’s existing multiyear peak-season contract that provides FedEx with a minimum of five aircraft during the fourth quarter.
FedEx (NYSE: FDX) is adding supplemental airlift to keep up with growing international e-commerce volumes in its express network. During its fiscal first quarter ended Aug. 31, FedEx’s international package revenue increased 25.6% to $1.3 billion year-over-year, although airfreight revenue fell from $75 million to $47 million because of extraordinary charter activity FedEx provided at the start of the COVID pandemic in 2020 to delivery personal protective equipment and other medical supplies.
The Atlas (NASDAQ: AAWW) lease, which includes crew and maintenance, went into effect Sept. 1. The aircraft will be used on routes between Asia, Europe and FedEx’s hub in Memphis, Tennessee, Robert Kirchner, the union chief for Atlas Air pilots, told FreightWaves last week.
He said the service has already experienced delays because of crew shortages at Atlas Air resulting from disaffected pilots leaving the company. Neither company has responded to queries about the new arrangement or specified it’s exact duration.
Atlas Air pilots have vented their displeasure with the company for not accommodating demands on compensation, scheduling and working conditions during collective bargaining, culminating in a binding contract set through arbitration that union members have criticized. Under the new deal, pilot pay scales would increase an average 30%, but workers say the increase is off a low base and that the contract fails in other regards.
“We are pleased to grow our long-term relationship with FedEx. This agreement reflects the continued strong demand for airfreight capacity, particularly in the express and e-commerce markets,” said John Dietrich, Atlas Air Worldwide Holdings president and CEO, in a statement.
The news comes on the heels of DHL Express signing a contract extension with Atlas for access to 20 all-cargo aircraft.
Earlier this year, FedEx placed an order with Boeing for 20 additional 767 freighters.