FedEx (FDX) Pushes for Drastic Cut in Near-Term Boeing (BA) 777 Deliveries as Economic Pressures Weigh

August 6, 2012 3:44 PM EDT
FedEx (NYSE: FDX) is still enamored with the Boeing (NYSE: BA) 777 cargo jet, but it's putting that love affair on hold...for now.

According to reports out Monday, the world's largest air-cargo shipper by revenues is pushing back orders of the 777s. Dow Jones says FedEx is cutting 777 deliveries by as much as 65 percent over the next five years, mainly in delaying deliveries to 2018 or later.

From a current fleet of 19 777s, FedEx will run 27 of the airplane by the end of 2017. That's down from 41 under a prior schedule.

Instead, recent macro pressures has forced FedEx to focus more on its 767 fleet, which is used primarily for domestic shipments. Cost is the obvious key factor here; each 777 costs about 60 percent more than a 767 ($295.7 million versus $185.4 million for the 767).

FedEx recently said its CapEx for 2012 remains at about $3.9 billion. Shares of the shipper are up 0.7 percent Monday, while Boeing is trading 0.4 percent higher. Both are off session highs.

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