As per market sources,
) is set to purchase up to 30
The Boeing Company
) 757 passenger airplanes from
United Continental Holdings Inc.
). None of the companies disclosed the financial terms of the
The express delivery services provider aims to make these
narrow-body jets part of its freighters fleet and utilize them
for cargo delivery. Initially, the company will take possession
of 14 jets, starting from the latter half of 2013 and continue
through 2015. The conversion process of aircraft from passenger
use to freight delivery takes around three months at a cost of
nearly $5 million per plane.
With passenger airlines dropping Boeing 757s from their fleet,
FedEx started buying them from 2007. This step was taken to put a
check on the operating expenses due to rising fuel costs. These
twin-engine based airliners are not only fuel efficient but also
capable of transporting 20% extra freight than the three-engine
Boeing 727s that are getting replaced.
FedEx has set a target of $1.7 billion in incremental profit by
the end of 2016. Management expects to achieve this goal through
cost improvements. The company is also concentrating on a fleet
modernization strategy that will support it in extending services
at a cheaper rate, attracting more clients.
In Jun 2012, the company announced plans to purchase 19 more
Boeing 767 aircraft that are expected to be delivered between
2015 and 2019. These new aircraft will benefit the cost structure
by replacing the old fleet of MD-10 and A31-200.
On the other hand, United started shedding its bunch of older
757s - that have been out of production since 2044 - after
placing an order for 150 new Boeing 737-900ERs. As of Dec 31,
2012, the airline owned 56 Boeing 757s.
FedEx - which operates along with another prominent
United Parcel Service Inc.
) - currently retains a Zacks Rank #3 (Hold).
BOEING CO (BA): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
UNITED CONT HLD (UAL): Free Stock Analysis
UTD PARCEL SRVC (UPS): Free Stock Analysis
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