Federal Express to Purchase Up to 75 Jets From Airbus
Federal Express Corp. said Friday that it had agreed to purchase up to 75 cargo aircraft from European airplane manufacturer Airbus Industrie in a deal worth at least an estimated $5 billion.
The order was one of the largest for the European consortium and will serve as a major inroad into the American market, which the Paris-based firm has been aggressively courting, industry analysts say.
In writing the order, Airbus--the world’s second-largest aircraft manufacturer--also scored a victory over rivals McDonnell Douglas Corp. and Boeing Co., the leading maker of aircraft. Most of the Federal Express’ fleet is Boeing and McDonnell Douglas aircraft.
Memphis-based Federal Express, the nation’s largest overnight package delivery service, said the agreement with Airbus consisted of 25 firm orders for the A300-600F models as well as options and conditions for 50 additional aircraft. Both companies declined to reveal the value of the order.
Paul Turk, an airline analyst with Avmark Inc., an Arlington, Va., consulting company, calculated that each plane would ordinarily be worth $75 million. However, Federal Express might have obtained a discount based on the large size of the order and its role as the first major customer of the cargo model, he said.
Reports of the deal surfaced last month during the Paris Air Show. But the companies refused to confirm the reports then and said negotiations had not reached fruition.
In announcing the agreement, Federal Express Chairman and Chief Executive Frederick W. Smith said, “We are acquiring the A300-600F because it promises very high reliability and is designed to fit economically into our high-cycle U.S. domestic operations.”
The Airbus aircraft would have larger payloads than some current Federal Express planes, said Armand Schneider, a company spokesman. For instance, one Airbus plane would have a payload of 100,000 pounds, more than twice that of the company’s Boeing 727s.
Federal Express, which will receive the first Airbus freighter in 1994, will take delivery of six aircraft a year.
The planes will be the first Airbus aircraft to be built as freighters on the production line. Airbus A330 freighters now in use are reconverted passenger planes.
Airbus--which is owned jointly by France, Germany, Great Britain and Spain--has won contracts from several customers in the United States, including American Airlines and Northwest Airlines, which has orders for 100 jets. But it also has sold planes to some financially troubled carriers, including Pan American World Airways, Eastern Airlines and Trans World Airlines.
Its American competitors, Boeing Co. and McDonnell Douglas, have charged that government subsidies have given Airbus an unfair competitive advantage. Such subsidies allowed Airbus to offer concessions and attractive financing to American customers simply to snare orders, the U.S. manufacturers contend.
