Boeing Wins Big Freighter Jet Order as FedEx Bets On Continued Air Cargo Recovery
Reaping the benefit of a worldwide recovery in air cargo, even amid fears of a global trade war, Boeing on June 20 announced a big order from air package-delivery specialist FedEx Express.
FedEx Corp. ordered a dozen 777 freighters, for delivery between fiscal 2021 and 2025. While that’s too late to help fill out empty delivery airplane slots on the assembly line in Everett, Wash., between now and the introduction of the 777X model in 2020, it will help bolster production in the early, slow-production years of the 777X.
FedEx ranks No 2 on the Transport Topics Top 100 list of the largest North American for-hire carriers.
Also, FedEx ordered a dozen 767 freighters for delivery between fiscal 2020 and 2022, vindicating Boeing’s decision to increase production of that jet by 20% from 2.5% to three jets per month beginning in 2020.
Patrick T. Fallon/Bloomberg News
The combined 767 and 777 order for 24 widebody aircraft is valued at $6.6 billion using Boeing’s list prices. However, market pricing data from aircraft valuation firm Avitas indicates that the real value, after standard discounts, is no more than $2.8 billion.
The April move to hike the 767 production rate was triggered by a strong recovery in the air cargo market over the past two years.
Boeing is well-placed to take advantage because it enjoys a monopoly in midsize and large cargo aircraft with its 767, 777 and 747 freighter jets. Rival jet maker Airbus focuses on passenger planes almost exclusively and offers no competition for any of those cargo planes.
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The boost from FedEx follows one from rival package-carrier UPS Inc., which in February ordered 18 jumbo jet 747-8 freighters plus four 767 freighters.
UPS ranks No. 1 on the for-hire TT100.
Amazon.com, which has acquired 40 used 767 freighter jets for its Amazon Air service, is considered a potential customer for new 767s.
The FedEx order brings Boeing to more than 50 widebody freighters sold so far this year, compared with 11 sold in all of last year.
Recent fears of a potential trade war among the United States and major trading counterparts — including China, the European Union and Canada — have raised concern that the air cargo recovery could falter. Indeed, the most recent monthly data released by the International Air Transport Association indicates a slowdown.
Last year, airfreight demand worldwide grew 9%. In February, the growth rate was 7%. In March, it slowed to 2%, IATA said.
Still, the FedEx order is a vigorous bet by the U.S. freight carrier that global trade will not be restrained long term.
FedEx Express CEO David Cunningham called the order “another positive step in our fleet modernization program as we add more efficient, lower-emission aircraft to our global fleet.”
Boeing Commercial Airplanes CEO Kevin McAllister said the order is “a big vote of confidence in Boeing’s market-leading freighter family and the long-term outlook for airfreight.”
