Summary
FedEx Corporation (FDX) announced a significant shift in its long-term fleet strategy through two material definitive agreements filed on November 7, 2006. The company's subsidiary, Federal Express Corporation, has entered into a new agreement with The Boeing Company to purchase fifteen Boeing 777 Freighter (777F) aircraft, with options for fifteen more. This move introduces a new, high-capacity, long-range aircraft into FedEx's fleet, with deliveries commencing in 2009 and extending through 2011. Concurrently, FedEx Express has terminated its purchase agreement for ten Airbus A380-800F aircraft. This termination, driven by repeated delivery delays from Airbus, including a revised schedule that pushed initial deliveries to 2009 and a subsequent further delay, was executed without incurring early termination penalties. The net impact of these fleet decisions is an estimated increase of $500 million in capital expenditures over the next five years, reflecting the commitment to the new Boeing 777F fleet.
Key Highlights
- 1FedEx Express entered into a definitive agreement to purchase fifteen Boeing 777 Freighter (777F) aircraft from The Boeing Company.
- 2The Boeing agreement includes an option for an additional fifteen 777F aircraft.
- 3Deliveries for the Boeing 777F aircraft are scheduled for four in 2009, eight in 2010, and three in 2011.
- 4FedEx Express terminated its purchase agreement for ten Airbus A380-800F aircraft.
- 5The termination of the Airbus A380-800F agreement was due to multiple delivery delays from Airbus.
- 6FedEx does not anticipate incurring early termination penalties for the cancelled Airbus order.
- 7The net change in expected capital expenditures over the next five years is an increase of approximately $500 million due to these fleet decisions.