Posted on May - 08 - 2010
FedEx agrees to buy six more 777s
FedEx upped the ante Thursday in its bet on Boeing 777s, announcing agreements to buy six more of the air freighters that connect Memphis nonstop to Asia and Europe.
The move was viewed as a show of confidence in the global economy and recently inaugurated service from Hong Kong and Shanghai to the world hub in Memphis.
The Commercial Appeal file photo
FedEx employees and their families welcome the first Boeing 777 freighter plane to the world hub.
The express delivery company said it would buy four more 777s from Boeing, bringing the total to 34, and two more from other sources, bringing that total to four. Fifteen Boeing purchases are contingent on Congress not changing FedEx Express’ coverage by the Railway Labor Act.
FedEx Corp. said in a filing with the Securities and Exchange Commission that the agreements didn’t change plans for $2.9 billion in capital expenditures in 2010.
FedEx has taken delivery of six 777s and has put four in service since it launched the Asia-Memphis flight in January.
Company officials have been extremely bullish on the service. It eliminates a refueling stop in Anchorage, giving them a competitive advantage by offering later drop-off times for transocean shipments.
The purchases likely reflect the 777′s benefits as well as an impending bump in business expected with new air cargo security regulations, said transportation analyst Satish Jindel with SJ Consulting.
“I think it’s a combination of the wonderful 777 model for freight, in terms of its versatility and fuel and payload factor, and secondly, it also is an indication of the increase in volume and business they expect from the changes in air freight security,” Jindel said.
A requirement for more extensive screening of air freight starting in August will boost companies like FedEx over those that ship freight in bellies of passenger aircraft, Jindel said.
“It provides potential for integrators like FedEx and UPS to take some business away from those companies.”
FedEx didn’t say where the two 777s are coming from besides Boeing. It previously bought two from Air France.
Beyond the agreed-upon 38 777s, the company holds options with Boeing for 15 more.
–Wayne Risher: 529-2874
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