FedEx Agrees to Buy 14 Jets from United Air

FedEx Corp. ( FDX ) disclosed plans Thursday to buy up to 30 Boeing Co. (BA) 757 passenger jets from United Airlines and convert them to carry cargo as part of the freight carrier's fleet renewal strategy.

The company agreed to buy an initial batch of 14 jets that will start arriving later this year and continue through 2015, as well as options to acquire another 16, according to a regulatory filing.

FedEx has slowed purchases of new jets and may even park some jets because of industry wide air freight overcapacity and a shift by shippers to cheaper delivery options, but it is continuing to shed older, less fuel efficient planes.

The company started acquiring 757s in 2007, which can carry 20% more freight and burn a third less fuel than the fleet of around 30 three-engine Boeing 727s they are replacing. Analysts said converting the 757 from passenger use can cost around $5 million per jet.

FedEx was already due to receive four 757s from unidentified sellers this year to add to an existing fleet of around 60.

The aircraft being acquired from the United Continental Holdings Inc. will be used on domestic routes. Its fleet of 233 757-200s at Dec. 31--47 of them owned and the remainder leased--had an average age of just over 19 years.

United said last year that it would phase out its older 757s after ordering 150 new Boeing 737-900ERs, 100 of them the re-engined Max version being launched later in the decade.

The airline is keeping 757-300 jets--it owns nine and leases 12 with an average age of 10 years--which are used predominantly on transatlantic routes. Boeing stopped making the 757 in 2004, and a full 737-900ER lacks the range to reach Europe from the U.S.

-Doug Cameron contributed to this article.

Write to Bob Sechler at Bob.Sechler@wsj.com

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