Done deal: FedEx orders 50 767 freighters

FedEx yesterday confirmed it had placed a firm order with Boeing for fifty 767-300Fs, plus an option for fifty more.

As we reported last week when news broke that a big order might be in the cards, we believe that FedEx had already proposed the purchase of fifty more 767-300s last year, but could not reach agreement with Boeing on price. To some extent, therefore, the announcement of the firm order comes as no surprise – FedEx executives have repeatedly praised 767-300Fs contribution to profitability, Boeing is in business to sell aircraft, so there was a certain inevitability about an eventual order.

But still, it’s not everyday that we can report an order for fifty freighters.

The order specifies that the fifty firm-ordered units will be delivered beginning in FedEx’s 2018 fiscal year, with delivery of all fifty by FY2023. FedEx also has nineteen 767-300Fs and eighteen 777Fs still to be delivered from previous orders with Boeing, as well as eighteen 757-200s awaiting conversion to freighter configuration by ST Aero. However, while this total of 123 freighters will be added to the FedEx fleet between now and the end of FY2023, the additions will be balanced by retirements of older freighters. As shown in the chart at right, we estimate that the FedEx fleet will have almost the same number of freighters in 2023 as it does now. And, for what it’s worth, a quick back-of-the-envelope calculation shows that the total payload will be almost identical, as well.

That the size and capacity of the fleet will be almost unchanged over the next seven years is interesting, in that it appears to imply that FedEx does not see significant growth in express demand. Obviously, if demand does pick up, FedEx can postpone retirements, exercise some of the fifty 767 options, or order more freighters of other types.  But, in its currently announced long-range fleet forecast, FedEx appears to be preparing for a relatively stagnant express market.