Story ID: GPfedex767order07222015
FedEx Places Largest Ever Boeing 767 Order
By: Gregory Polek
Caption: Deal breathes fresh life into aging widebody 
Word Count: 373
Boeing has collected the largest single commitment for 767s in the 37 years since the program’s industrial launch with Tuesday’s purchase agreement with FedEx Express covering fifty 767-300F freighters worth as much as $10 billion at list prices. FedEx Express has also taken options to buy another 50 of the airplanes. Schedules call for deliveries of the airplanes on firm order to run from FedEx’s 2018 fiscal year through FY2023.

With the new deal, the cargo carrier now holds firm orders for 106 B767s. In June the company announced plans to accelerate the retirement of seven MD-11s, three Airbus A300s, four A310-300s and a single MD-10, as well as adjust the retirement of another 23 airframes.

At the time it noted that the 767 provides similar cargo carrying capacity to that of the MD-10, as well as improved reliability, roughly a 30  percent increase in fuel efficiency and at least a 20 percent reduction in unit operating costs.

FedEx said the 767 purchase will not affect capital spending for 2016, which stands at $4.6 billion, and that 2017 capital spending related to the new order would prove “immaterial.”

“Acquiring additional 767F aircraft is a continuation of our very successful air fleet modernization program and will enable us to reduce structural costs, improve our fuel efficiency and enhance the reliability of our global network,” said FedEx Express president and CEO David J. Bronczek.

For Boeing, the order guarantees a healthy flow of work for the 767 assembly line as the company prepares for production of the 767-based aerial refueling tanker for the U.S. Air Force, the KC-46A. Now building 1.5 airframes a month on the 767 line, Boeing plans to increase the rate to two per month next year to meet tanker delivery requirements. However, whether or not the FedEx order prompts another rate hike remains undecided. “We’ll treat future rate considerations like we do on all our production lines,” said Boeing CEO Dennis Muilenburg during the company’s second quarter earnings call. “We have a lot of confidence in that mature 767 production line and any changes that we might consider beyond two a month, again we’ll go through that normal, very financially disciplined assessment.”