8-KMaterial Agreements

FEDEX CORP 8-K Report, Material Agreement (May 6, 2010)

Filed May 6, 2010For Securities:FDX

Summary

This 8-K filing from FedEx Corp. (FDX) on May 6, 2010, primarily discloses a significant amendment to its aircraft purchase agreement with The Boeing Company. Federal Express Corporation, a subsidiary, entered into a Supplemental Agreement to acquire four additional Boeing Model 777-Freighter (B777F) aircraft, with deliveries scheduled for fiscal years 2012 and 2013. Additionally, FedEx Express is pursuing the acquisition of two more B777F aircraft from another party, subject to definitive agreements. These new commitments bring FedEx Express's total intended B777F fleet to 38 aircraft, with options for up to 15 more, reflecting a strategic expansion and modernization of its air cargo fleet. The company reaffirms its capital expenditure forecast for fiscal year 2010 at approximately $2.9 billion. Investors should note the long-term nature of these fleet investments and their potential impact on future operational capacity and costs.

Key Highlights

  • 1FedEx Express entered into a supplemental agreement with Boeing to purchase four additional B777F aircraft.
  • 2Deliveries for the newly ordered B777F aircraft are slated for FedEx's fiscal years 2012 and 2013.
  • 3FedEx Express also entered into a letter of intent to acquire two B777F aircraft from a different, unnamed party.
  • 4The total intended B777F fleet for FedEx Express now stands at 38 aircraft (34 from Boeing, 4 from other parties).
  • 5FedEx holds options to purchase up to 15 additional B777F aircraft from Boeing.
  • 6The company reiterated its capital expenditure forecast for fiscal year 2010 at approximately $2.9 billion.
  • 7The filing includes forward-looking statements regarding future events and financial performance.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce a material definitive agreement between FedEx Express (a subsidiary of FedEx Corp.) and The Boeing Company, which amends an existing purchase agreement to include four additional Boeing 777-Freighter (B777F) aircraft.

FedEx Express is acquiring four additional B777F aircraft from Boeing and has a letter of intent to acquire two B777F aircraft from another party. This brings their total committed B777F acquisitions to 38 aircraft.

One of the four additional B777F aircraft from Boeing is expected in FedEx's fiscal year ending May 31, 2012, and the remaining three are expected in fiscal year 2013. The delivery schedule for the two B777F aircraft from the other party is subject to a definitive agreement.

The filing states that FedEx's capital expenditures for fiscal year 2010 are still expected to be approximately $2.9 billion. The new aircraft orders are part of a longer-term fleet plan, with deliveries extending into future fiscal years.