By Jon Ostrower And Laura Stevens
FedEx Corp. said Tuesday it plans to acquire as many as 100 new
Boeing Co. 767 freighters, the largest order for the aging widebody
jetliner that first entered service as a passenger plane in
1982.
The agreement with Boeing is worth nearly $20 billion at list
price and includes a firm order for 50 new 767 freighter aircraft
and options for 50 more of the jets, which carry a list price of
$199.3 million, though buyers typically enjoy steep discounts on
large deals.
FedEx, the large international express-package air carrier, has
been hit by a multiyear slowdown in the global air-freight
industry. The global market for air freight has only recently begun
to rebound after years of recession following the global financial
crisis. In recent years, shippers also switched to slower and
less-expensive methods and FedEx's express business has struggled
to maintain the same level of profitability.
The company has been restructuring its Express division,
overhauling the aircraft fleet and buying new planes to improve
fuel efficiency and adjust to demand. In addition, about 3,600
employees have accepted buyout offers and left the company.
In June, FedEx said it was accelerating retirements of planes
both to reflect demand and to modernize its fleet, recording
charges of $276 million. It retired 15 planes and 21 related
engines, and said it would adjust the retirement schedule for
additional aircraft.
FedEx significantly modifies each 767 jet for use as a cargo
carrier, adding a new cockpit with large, modern displays. FedEx
said it has firm orders for 106 of the freighters for delivery
between 2018 and 2023. FedEx said that the order would have no
impact on its 2016 capital spending, and would be immaterial to its
fiscal 2017 spending.
While FedEx said in the announcement it had ordered 50 new
planes, one is already on Boeing's books and three were previously
committed. Those four jets were contingent on language in the
contract allowing the company to cancel the order if Congress
passed changes in labor law that would have made it easier for the
company's workers to unionize. The order will add 49 new jetliners
to Boeing's backlog.
Separately, Boeing earlier Tuesday said it won an order for five
777 freighters from Taiwan's Eva Air.
Boeing has delivered more than 1,000 767s, and the FedEx order
breathes new life into the aging jetliner. The jet's future was
largely earmarked as an aerial refueling tanker for the U.S. Air
Force, the development of which Boeing is now struggling to
complete.
Boeing on July 17 took a pre-tax $835 million charge against its
second quarter earnings after it discovered an issue with the fuel
system on its KC-46A aircraft, a heavily modified version of the
767. Boeing builds both the tankers and freighters on the same
assembly line at its Everett, Wash., plant.
Write to Jon Ostrower at jon.ostrower@wsj.com and Laura Stevens
at laura.stevens@wsj.com
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