FedEx Will Buy 10 Airbus A380s
FedEx Corp.’s FedEx Express unit said Tuesday that it will buy 10 of the A380 aircraft planned by Europe’s Airbus Industrie in a deal valued at $2.3 billion at list prices. FedEx Express is the first U.S. carrier to order the super-jumbo long-range aircraft.
FedEx, the world’s No. 2 package shipper, provides another key launch customer for the A380, which will be the largest commercial aircraft yet built.
As a launch customer, FedEx received a discount from list prices, but FedEx and Airbus executives did not disclose the value of the carefully negotiated contract. Discounts on launch orders for the A380 are believed to be as much as 30%.
FedEx said it will take delivery of 10 A380-800F aircraft beginning in 2008, although it hoped to begin receiving them sooner. The planes will exceed the capacity of FedEx’s current workhorse MD-11 long-range freighters.
“The A380 will be capable of flying directly between Asia, Europe and our hubs in the U.S. with nearly twice the payload of the MD-11,” said Frederick Smith, FedEx’s chief executive.
“Rather than operating daily multiple MD-11 aircraft from these markets, we will be able to operate with a single aircraft, the A380, with unit costs expected to be substantially lower than with the MD-11.”
The FedEx order bolsters Airbus’ case that the large aircraft is needed as the market for international passenger and cargo traffic grows.
The order is the latest blow to a competing aircraft planned by Boeing Co., a larger version of the 747. Seattle-based Boeing had hoped that cargo carriers, many of which have been solid 747 customers in recent years, would prefer the bigger version of its jumbo jet to Airbus’ A380.
FedEx plans to take delivery of three A380s each year from 2008 to 2010 and one in 2011. The Memphis, Tenn.-based company also holds options from Airbus for an undisclosed number of additional A380s.
FedEx said it will see a significant rate of return on its investment in the new aircraft, which will reduce costs and increase revenue.
In addition, the aircraft could be loaded and unloaded in the same amount of time as the MD-11 (23 minutes), executives said, an attractive feature for efficiency-minded FedEx.
A number of international airlines have committed to as many as 50 A380s, and several more carriers are considering possible orders, including U.S. cargo shipper Atlas Air Inc.
On the New York Stock Exchange, FedEx shares gained 86 cents to close at $42.36, and Boeing shares rose 38 cents to close at $61.
