Listen: FedEx’s order book and the 767F

FedEx Express, already the largest operator of the 767, firmed up options late last month to purchase twenty additional 767-300Fs from Boeing. While the 767 production freighter remains popular with FedEx and other express carriers, the platform shares a production line with the KC-46 Pegasus tanker, and production capacity for both types currently stands at three units per month. While output could be further increased, the order fulfillment window is also narrowing as an upcoming International Civil Aviation Organization CO2 emissions standard for aircraft is set to end production of older-model aircraft by 2028, unless their designs are “sufficiently modified,” according to ICAO . In this episode of "Cargo Facts Connect," Senior Editor Charles Kauffman and Associate Editor Jeff Lee take another look at the integrator’s 767 order and options, and discuss the medium widebody freighter’s prospects more generally. [Note: This episode was recorded before the Transair accident earlier today.] A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Charles Kauffman Hello and welcome to this episode of cargo facts connect the podcast and video series of cargo facts, the newsletter record for the air cargo and freighter aircraft industries for over 40 years. I'm Charles Kauffman, Senior Editor of cargo facts. Jeff Lee And I'm Jeff Lee, Associate Editor of cargo facts. Charles Kauffman Special thanks to our sponsors and advertisers. It's Friday July 2, and in this episode, we'll be revisiting a story we ran on June 22. About FedEx Express firming up options with Boeing to purchase 20 more 767 300 freighters for delivery between June 2023 and June 2025. Considering FedEx is already the world's largest operator, 767 freighters with with more than 100 units in the fleet. I can't say that I was too surprised by the order itself. What about you, Jeff? Jeff Lee Well, I will say that it was one of very few wide body orders we've had in the last year and a half. So and you know, in that aspect, it's it was a notable order, even if it wasn't surprising. FedEx took the 100 nouble 767 from Boeing recently, so maybe not hugely surprising. But we It is interesting to think about the reasons behind this order. I mean, FedEx, we know that is replacing its Md 1030s freighters, the getting rid of five between now and June 2022, and the remaining eight in the year after that. And they've also finished phasing out the Mt. 1010s recently. But when we look at the stat book, we see no other planned retirements of for example, a three hundreds for the next five years at least. So and of course, we know how much things can change. And if things do change, I think we might see what we saw last year, at the beginning of last year when they parked some of their seven, five sevens, some of the three hundreds and the 10s at MD elevens, and so on. But even then it's still quite a bit of growth, I think. Charles Kauffman Yeah, definitely. And of course there are no no no signs of an express slowdown at the moment. But I agree with you that particularly with the with the a three hundreds which are you know for the most part paid for though there's there's some flexibility to to park and utilize those those older aircraft to flex capacity, if you will. So looking at their existing orders outstanding orders before this 20 unit order. Yeah, that that'll take the fleet to the seventh Seventh Fleet to just over 150 units, if I'm not mistaken. But that's that's not even all. In recent quarters, FedEx has rarely discussed its purchase options with jet manufacturers and has instead focused on on reporting what it counters for commitments. But in the June update from FedEx, we saw that as of June 24, the company actually held options with Boeing to purchase up to 50 more 767 freighters and I just want to three triple sevens so outside outside of their, their their firmed different orders. So that's potentially even more more growth. And of course, we don't have the inside, as you mentioned, into, you know, retirement plans, because for many of the other types in the fleet there, there just isn't much guidance available at this time. Jeff Lee Right. Although I guess we can say that it's likely that triple sevens will be replacing MD elevens. But back to the 767 apart from FedEx, there really aren't many other operators in Boeing's backlog. Charles Kauffman No that is that's definitely true. I believe the last time I Boeing provided an update. Last month or so ups was was one of the other two customers and then that ups has 276 sevens remaining on order. And then there's also a five unit order attributed to an identified customer, which we've reported in cargo facts as as an order linked to China based central boneco Airlines and its parent hunt and civil aviation. In an investment company, which, of course is he's the stakeholder in carbon Lux, based in junk Joe. So they're, they're the company is certainly involved in various, all cargo and aviation related projects around the world. Jeff Lee Right? And what do we think of the prospects for more 767 freighter orders? Charles Kauffman Yeah, that's a good question. There's demand for the airframe and then there is supply. So, the 767 does share a production line with the KC 46 Pegasus tanker and the current rate of production for both variances, three units per month. So, you know that that is receiving nificant number of aircraft based on 767 platform between now and moving forward. However, we do have to keep in mind that there are new emission standards coming down from IKEA, which go into effect in 2028. However, Sean Newsome Boeing's director of environmental sustainability strategy and global enterprise sustainability, told us last month at cargo FX and me that the new Ico standard, really aren't an immediate concern because they don't apply to any in service airplane or freighter conversion. So these new standards really only affects new build production freighters from 2028 moving forward. So anything in service prior to that timeframe is not going to be affected by the standard. But without further capacity increases, new orders would would likely be limited. We're FedEx to exercises options for for those 50 additional units. Now, it's worth noting that a re engine 767 freighter could further extend production. And so that is that is a possibility, something that has been talked about in the past. But then again, the first passenger configured 767 was delivered in 1982. And even its successor on the passenger side and 77 has already been in service for a decade. So it's seems like there would there would be other replacement options on the horizon. Jeff Lee Right, I guess with that 2028 deadline and mind, maybe we'll even see more orders coming in, you know, from operators trying to get their last last call as of tomorrow morning before that deadline so they can get these aircraft in service. But you know, of course, at the same time, we also have companies snapping up passenger 767, Booth 203 100, sexually left and right, for free to conversion. And these aircraft don't, aren't affected by the by that new regulation either. So we've seen, of course, the usual suspects, such as cargo, aircraft management, SF airlines, yto, airlines, Amazon and a few others, you know, lapping up frames coming out of service. Recently, we saw we're seeing many of the Air Canada Seven, six sevens being taken up by these players. And we'll continue to see that particularly as more seven six sevens exit passenger service. I think Charles Kauffman that's that is definitely true, the 767 conversions are not limited by the the Ico or they're not affected by the Ico standards. The the the total output will be restricted by by feedstock, of course, because we're not seeing any any new 767 300 pasture aircraft rolling off Boeing's assembly line. So yeah, you've been and then of course, we do have a 330 p two f conversion starting to enter the picture. Not on the same scale at this point. But I think it's fair to say that the 767 platform continues to be a pillar of the global Express fleet and really is set to remain so until Boeing ends production and transitions to a newer type or with the with the conversion until feedstock is exhausted. Jeff Lee Right and that will be at least a few few more years down the line. So that bodes well for for 767 Thank you for tuning in to this episode of Cargo facts Connect. For more multimedia content like this check out cargo facts.com and search cargo facts connect on iTunes and Spotify. And Happy Fourth of July to you Charles and to everyone. Join us again next time. Charles Kauffman Thank you Jeff Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor . Cargo Facts Symposium, taking place LIVE October 25-27 at the Wynn Las Vegas, is the essential event for stakeholders in the air cargo industry. Learn more and register at www.cargofactssymposium.com .

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