FedEx Express set to acquire 19 new Boeing aircraft

FedEx Express, a subsidiary of FedEx, said it has agreed to purchase 19 B767-300 aircraft from the Boeing Company.

Company officials said Boeing has agreed to convert four Boeing 777s –two in fiscal 2016 and two in fiscal 2017—to 767 equivalent purchase value. FedEx Express currently operates 19 long-range 777 freighters and now is committed to purchase an additional 24 777s. And the 19 767s will be delivered from fiscal 2015 to 2019 and replace current MD-10 and A310-200 aircraft. The 767s are substantially more fuel efficient and reliable than the aircraft they will replace, said FedEx.

The 767s will provide similar capacity as the MD10s, with an approximate 30 percent increase in fuel efficiency and a reduction in unit operating costs of more than 20 percent, according to FedEx. And they also increase efficiency by sharing spare parts, tooling and flight simulators with the Boeing 757s which are part of the FedEx air fleet.

“FedEx Express is positioning itself for more profitable growth by modernizing its aircraft fleet and better aligning its U.S. domestic air network to match current and anticipated shipment volumes,” said David J. Bronczek, president and chief executive officer of FedEx Express, in a statement.

This purchase is part of a December 2011 deal FedEx announced with Boeing, when it agreed to purchase 27 new 767s for delivery between fiscal 2014 and 2018 and delay delivery of a number of 777s.

And last month FedEx said in an 8-K filing with the Securities and Exchange Commission it is taking steps to reduce its aircraft fleet.

The company said it has permanently retired the following assets from service:
-18 Airbus A310-200 aircraft and 26 related engines; and
-6 Boeing MD-10 aircraft and 17 related engines.

Company officials said that the majority of these aircraft are currently parked and not in revenue service, adding that it will take a non-cash impairment charge of $134 million, which is $84 million net of tax and recorded in the fiscal fourth quarter of 2012.

What’s more, FedEx said that the decision to permanently retire these aircraft will better align the U.S. domestic air network capacity of FedEx Express to match current and anticipated shipment volumes. And it added that these permanent aircraft retirements follow previous aircraft retirements from the fourth quarter of fiscal 2012, which included five Boeing 727-200 aircraft and the planned fiscal 2013 retirement of 21 B727 aircraft, which is said will be fully depreciated. With these steps, the company will have retired 50 aircraft by the end of fiscal 2013.