View Full Version : Fed Ex cancels 380
filejw
7th Nov 2006, 15:31
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061107:M TFH93520_2006-11-07_16-26-27_WNAS2223&type=comktNews&rpc=44
MEMPHIS, Tenn., Nov 07, 2006 (BUSINESS WIRE) -- FedEx Express, a unit of FedEx Corp. (FDX), announced today an agreement with The Boeing Company (BA) to acquire 15 new Boeing 777 Freighter aircraft with options to purchase an additional 15 aircraft. The decision to purchase the 777F was made after Airbus announced significant delays in delivery of the A380. FedEx Express notified Airbus that it has cancelled its order for 10 A380-800Fs.
FedEx Express continues to be Airbus' largest wide-body airplane customer and will add additional new and used Airbus wide-body aircraft to its fleet in coming years. Six new A300-600 aircraft are scheduled to join the FedEx fleet in 2007.
The Boeing 777 Freighter is the world's largest twin-engine cargo aircraft with a range of more than 6,100 nautical miles and a revenue payload capacity of 171,000 pounds. This represents a 2,200 nautical mile increase in range and an additional 8,500 pounds of revenue payload over the MD-11F, which is FedEx's primary long-haul aircraft. These advantages will result in more non-stop, point-to-point transoceanic routes with shorter flight times, enabling improved service offerings to FedEx customers. FedEx Express is expected to take delivery of four of the 777 aircraft in calendar year 2009, eight in 2010 and the remaining three in 2011.
"The Boeing 777F will allow FedEx Express to fly directly between major markets and hubs in Asia, Europe and the U.S. with more freight and in less time than it takes today, improving fuel efficiency and lowering total operating costs," said David J. Bronczek, president and chief executive officer, FedEx Express.
extreme P
7th Nov 2006, 16:34
Is this the first cancellation of an order? Now that one has done it will others follow?
Wow, That has to sting since they were the main driver in designing the cargo version.
Interesting to see what happens with UPS since they usually just parrot FEDEX. (and wound up hating their A300's and cutting that order off early)
Cheers
Wino
Whalerider
7th Nov 2006, 16:36
Having spent millions of dollars widening taxiways etc to take the A380 - Fedex is one of its largest customers - the Anchorage authorities will NOT be happy !!!! :uhoh: :uhoh: :uhoh:
G-CPTN
7th Nov 2006, 16:46
http://edition.cnn.com/2006/BUSINESS/11/07/airbus.fedex.ap/index.html
http://news.bbc.co.uk/1/hi/business/6126206.stm
20driver
7th Nov 2006, 16:54
Interesting that they went for the 777 and not the 747-8 which would presumably be closer to the A380.
This is very bad for Airbus and I suspect more cancellations to come.
20driver
Mudfoot
7th Nov 2006, 17:02
Well, hell. :{ Just when we thought things were improving.
One step forward, two steps back... :ugh:
Cheers, y'all. Time to go cry in my beer...
fokkerjet
7th Nov 2006, 17:58
Interesting to see what happens with UPS since they usually just parrot FEDEX.
FedEx and UPS both operate the MD11, A300, B727. In addition, FedEx operates the MD10 and A310, while UPS operates the B747, B767, B757 and DC8. Both had ordered the A380 and FedEx just announced that they were purchasing the B757. I wouldn't say either "parrots" the other.
vapilot2004
7th Nov 2006, 18:23
Shocking news. :eek:
Particularly since the A380 promises to be the world's largest civilian freighter in terms of both volume and weight and also consider the penalties Airbus would need to pay Fed Ex with this latest round of delays. :mad:
How could they possibly pass on this? Does Fed Ex know something we do not know about the super jumbo beyond the 'wiring' issues?
tilewood
7th Nov 2006, 18:32
Perhaps it's just yesterday's solution to tomorrow's requirement!
20driver
7th Nov 2006, 19:23
I missed the following quote:
"The Boeing 777F will allow FedEx Express to fly directly between major markets and hubs in Asia, Europe and the U.S. with more freight and in less time than it takes today, improving fuel efficiency and lowering total operating costs," said David J. Bronczek, president and chief executive officer, FedEx Express."
This is exactly what Boeing has being claiming for the passenger market. Packages represent the ultimate hub and spoke and here is the worlds biggest package hauler saying it is cheaper to go point to point.
I don't have a dog in this fight but this is really a kick in the shorts to Airbus. I wonder if you can short sell A380 slots?
20driver
Mudfoot
7th Nov 2006, 19:47
I wonder if you can short sell A380 slots?
I hear Ebay is quite effective... :rolleyes:
I work for Fred and know several people involved in this program, including two guys who have been over to France and flown the thing.
Believe me, they wanted this to work. I still think we'll buy some, after the bugs are worked out. The Board probably wouldn't let FS sign for some 777's until he got out of the A380 deal....
rotornut
7th Nov 2006, 19:54
Well, it's not a total disaster as Qantas just ordered 8:
http://www.qantas.com.au/regions/dyn/au/publicaffairs/details?ArticleID=2006/oct06/3498
fokkerjet
7th Nov 2006, 20:59
If you read through the September ORDERS-DELIVERIES-OPERATORS WORLDWIDE list on Airbuses website, 25 A380F's are listed: 10 each for FedEx & UPS, plus 5 for IFLC (plus 5 more passenger versions). Going to the individual airline orders section, it shows no A380 orders for FedEx & UPS, and only 5 for IFLC (passenger version I assume). Is there a reason why Airbus would not show individual A380F orders when they do show A300/310 orders to these same airlines? Is the freighter program cancelled? I know FedEx cancelled, but what about the UPS and ILFC orders?
vapilot2004
7th Nov 2006, 22:14
You sound surprised. From my personal point of view (and many of the guys on our team) it's seemed the freighter's looked for ages like a dead plane walking. Emirates was clearly unhappy with it, but saved Airbus' face when it dumped the freighter by chalking up a couple more pax versions.
Airbus touted the comparative efficiency of the -F all along. I guess the numbers were not good enough for EK?
Timing for Fed Ex is everything - their slogan says it all "The World on Time"
Buster Hyman
8th Nov 2006, 01:50
Perhaps the "deal" that QF did was as a result of FedEx cancelling? A couple of empty slots, cheaper than list price and...Bobs yer Uncle!
bobdbuilder
8th Nov 2006, 07:18
Perhaps the "deal" that QF did was as a result of FedEx cancelling? A couple of empty slots, cheaper than list price and...Bobs yer Uncle!
I doubt it. If i were airbus and suddenly i have 10 cancellations i would bring forward the other orders that are already delayed rather than give those free slots to new orders. This would cut down on the fines airbus have to pay on delayed deliveries. Just my opinion.
FedEx' decision is probably down to simply capacity. The freight market is booming and despite the A380F probably being a very good product (once the bugs are ironed out) a two year delay is probably just not something FedEx can tolerate. It needs capacity and the 777 is available in the required time frame.
seacue
8th Nov 2006, 11:19
Pure speculation, but...
While the A380F may well have a lower tonne-km cost than the 777F, I wonder whether its larger size would result in significantly longer loading and unloading times. Those times must be quite important in the overnight package delivery business.
Might worries about these times be an additional factor in FedEx's decision? "Cheaper in the air, but could we still meet our schedules?"
Isn't the overnight business more time-sensitive than price-sensitive, if the price difference is not large?
Taildragger67
8th Nov 2006, 11:30
Perhaps the "deal" that QF did was as a result of FedEx cancelling? A couple of empty slots, cheaper than list price and...Bobs yer Uncle!
As QF's "new" orders were simply exercising of options granted when the original orders were placed, I'd suggest that the price of the "new" orders had been set (or at least the formula for setting the price was set) when the original order was placed some years ago. Doubtless the terms on the four extra A330s were pretty sweet as well; I'm sure Airbus would rather book four extra deliveries (even if for sod-all revenue) than a written cheque on its P&L account.
But this sort of thing, plus the VS 'deferral', will simply allow a bit of squeeze-up for those who've spent too much to pull out and mean that Emirates' 30th-odd airframe will roll out a bit sooner.
Actually on the spending point, maybe FedEx's board were just at the point of having to decide on whether to invest in new loaders, etc. and they blinked... Anyone have any idea if MD10/11-compatible ground equipment could be used (or modified at little cost) to suit 777Fs?
Frankly I have trouble seeing how such large aircraft suits the parcel market. The big, bulk market, possibly, but parcels??
chipsbrand
8th Nov 2006, 11:44
The much more interesting thing about Fedex is about what they are going to do to replace their DC10's and MD11's. According to jp airline fleets most recent annual listing Fedex have 91 DC10's or deriviatives. They are now the only really substantial DC10 operator in the world. The oldest of these aircraft are well over 30 years old. The youngest more than 20 years old. Sure the ownership costs are very low but fuel burn and manitenance costs must be very high. They must have to start replacing them very soon now.
They have 58 MD11's as well. The average age of these aircraft seems to be around 13 years. Add these to the MD10/DC10 fleet and it looks as if around 150 aircraft will have to be replaced over the next 15 years. That will require them to acquire 1 aircraft per month before expansion is taken into account.
Logically buying more A300's (but there are not many of them around and 767's might be partial solutions but it does look now as is Fedex will have little option but to buy a whole lot more 777's and probably 747-8's as well. Therefore I think we can expect to see Fedex ordering perhaps as many as 150 new Boeing aircraft over the next few years.
It looks like a good news story for Boeing to me. I might even buy some shares in them.
Taildragger67
8th Nov 2006, 11:48
Logically buying more A300's (but there are not many of them around and 767's might be partial solutions but it does look now as is Fedex will have little option but to buy a whole lot more 777's and probably 747-8's as well. Therefore I think we can expect to see Fedex ordering perhaps as many as 150 new Boeing aircraft over the next few years. It looks like a good news story for Boeing to me. I might even buy some shares in them.
787-F... ???
billy34-kit
8th Nov 2006, 12:58
IT's getting serious now!!
FRANKFURT, Germany (Reuters) -- Airbus parent EADS posted a third-quarter operating loss on Wednesday after it took 1 billion euros ($1.28 billion) of charges as it grapples with costly production problems at its A380 superjumbo program.
The loss before interest and taxes and before goodwill impairment and exceptional items was 239 million euros, compared with a year-earlier profit of 559 million.
Dozza2k
8th Nov 2006, 13:03
is it true FedEx cancelled their 380F's and ordered a boeing freighter?
direct ortac
8th Nov 2006, 13:09
http://www.bizjournals.com/memphis/stories/2006/11/06/daily16.html
So yes its true
Will Hung
8th Nov 2006, 13:21
So after 2 years, they're still 320 million up, with a potential world-beater, ( with a few teething problems maybe). Have faith. !
Del Prado
8th Nov 2006, 13:23
is it true FedEx cancelled their 380F's and ordered a boeing freighter?
yup, thread here (http://www.pprune.org/forums/showthread.php?t=251397)
Farrell
8th Nov 2006, 13:35
Someone sent me this the other day....
"Work In Progress"
http://i18.photobucket.com/albums/b140/quartermilefinal/A380www.jpg
I do get the feeling that this will drive UPS closer towards cancelling their order. From what I gather, UPS only ordered the A380 as a switch for the A300/A310Fs they already had on order. From what I hear around the traps, UPS still had a whole bunch more to come from an order and Airbus wanted to close down the line, so they proposed that UPS cancel its remaining A300 order and be a launch customer for the A380F instead. Given UPS has recently ordered a couple of 744ERFs, you'd have to say that things aren't looking to good for the A380F. If UPS pulled out, I'm sure ILFC would get cold feet and either cancel their order too or agree to ice the A380F for some time later on.
Buster Hyman
8th Nov 2006, 21:10
TD. Having a look at the QF announcement on the ASX, they have, indeed, firmed up their options to the tune of 8 additional aircraft + 4 A332's however, in reading the statement, they have "Negotiated an attractive package to firm up an additional 8 A380's". I still think that they have done a deal with Airbus to make this announcement...nothing like good publicity for Airbus when it needs it! On the other hand, perhaps the "negotiated" bit was for the A332's. (maybe they were free!)
The statement also goes on about "...protection against any further delays...and slide rights in the event of changed circumstances." I don't quite see how ordering more will protect against further delays, unless this statement is about delay compensation.
Looks like Brown is in it alone.
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-12-04T123155Z_01_L04349957_RTRIDST_0_AIRBUS-A380-FREIGHTER.XML