FedEx filed an 8-K report with the Securities and Exchange Commission yesterday in which it said it had:
- entered into an agreement with Boeing to increase its order for 777 Freighters by an additional four units, and
- entered into a letter of intent (LOI) to acquire two 777Fs from another party
Assuming the LOI is firmed, this will bring FedEx’s total orders for 777Fs to 38. The company ordered 15 from Boeing in late 2006, and later added 15 more. The new agreement brings the total Boeing order to 34. In addition, at the beginning of this year, FedEx reached an agreement with Air France to take over two of the 777Fs that carrier had on order with Boeing.
Cargo Facts believes the remaining two, covered by the LOI mentioned in yesterday’s 8-K, will come from Guggenheim Aviation Partners (GAP), but this has so far not been confirmed. GAP originally ordered six 777Fs from Boeing, but later converted one of the orders to a 777-300ER pax unit (for end user Korean Air). Of the other five, Cargo Facts believes two will be taken as freighters, likely with FedEx as the end user. The fate of the remaining three has yet to be decided, and they may also wind up being delivered as pax units.
This brings FedEx’s total 777F order to 38, of which six have already been delivered. However, we point out that a clause in the purchase agreement with Boeing allows FedEx to opt out of the 15-unit second order if the US government reclassifies FedEx Express employees (other than pilots and aircraft maintenance workers) under the National Labor Relations Act, rather than under the Railway Labor Act. As things currently stand, the House version of the FAA Reauthorization Bill includes language that would do just that, while the Senate version does not. The matter will presumably be settled in reconciliation.