UPS Orders 60 Airbus Freighters for $6 Billion
United Parcel Service Inc. said Tuesday that it has ordered 60 Airbus Industrie A300-600 freighters for $6 billion, taking options for 50 more.
The order, UPS’ biggest, will expand the company’s fleet of 238 freighters and throw a lifeline to the A300, Airbus’ first airplane line. The order backlog for the A300, which was first delivered in the 1970s, had shrunk to just 23 from a previous UPS deal.
The order also helps Airbus get more of its foot in the door at Atlanta-based UPS, the world’s largest package delivery company, which now operates 231 jets built by Airbus rival Boeing Co. and seven wide-body A300-600s.
UPS said in October that it will accelerate A300 deliveries under a previous order for 30, with 30 options. The carrier cited a growing need for wide-body, short-haul freighters for regional routes outside the United States.
The freight hauler in November said it would buy at least 13 pre-owned MD-11 wide-bodies from Boeing, which would convert passenger jets to cargo configuration in a $2-billion deal.
During its third quarter, UPS’ international export volume climbed 23% from a year earlier, the company said.
The jet order signals United Parcel’s confidence about growth prospects even after a weaker-than-expected holiday season prompted the company last month to warn that fourth-quarter profit would miss analysts’ estimates.
Airbus had previously booked just 68 orders for A300 freighters since launching the program in 1991 with an order from FedEx Corp.
The UPS deal--Airbus’ biggest freighter sale yet--boosts total orders to 128. With 45 delivered so far, the backlog grows to 83.
“The A300 is clearly an airplane that the cargo market has found fits its needs,” said Airbus spokesman David Venz.
Yet Airbus has no plans to accelerate A300-600 production, which stands at just one per month at the company’s assembly plant in Toulouse, France.
Airbus is a partnership of European Aeronautic Defence & Space Co., and Britain’s BAE Systems.
For Boeing, the order was a setback in the burgeoning market for cargo planes. The 767 wide-body is about the same size as the A300, but Boeing said UPS had not been asked for a competing offer for a new freighter.
“That happens on occasion when options are being exercised,” said Boeing cargo spokesman Bob Saling. “UPS will continue to buy Boeing airplanes. They are a good Boeing customer.”
The A300s will be delivered over a nine-year period, with the current 23 on order slated for delivery in 2001 and 2002.
Boeing planes until now have dominated the cargo market, with an array of orders for jumbo 747 freighters and converted smaller passenger jets.
UPS shares closed off 6 cents at $61 on the New York Stock Exchange. Boeing closed off 6 cents at $58.94, also on the Big Board.
