(By Balaseshan) FedEx Corp. (NYSE:FDX) said its subsidiary has agreed to buy 19 additional B767-300 aircraft from Boeing Co. (NYSE:BA) to continue to improve the efficiency and technology of the FedEx air fleet.
FedEx Express agreed to buy 19 additional B767-300 aircraft, which will be delivered from fiscal 2015 to 2019 and replace current MD-10 and A310-200 aircraft. The impact to capital spending in fiscal 2013 and fiscal 2014 is immaterial, and estimated fiscal 2013 capital spending remains at $3.9 billion.
[Related -FedEx Corporation (FDX): George Soros And John Paulson Own This Stock. Should You?]
As part of the agreement, Boeing has agreed to convert four Boeing 777s -- two in fiscal 2016 and two in fiscal 2017 -- to 767 equivalent purchase value.
FedEx Express currently operates 19 long-range 777 freighters and now is committed to purchase an additional 24 777s. The 767s are substantially more fuel efficient and reliable than the aircraft they will replace.
The 767s will provide similar capacity as the MD10s, with an approximate 30% increase in fuel efficiency and a reduction in unit operating costs of more than 20%. They also increase efficiency by sharing spare parts, tooling and flight simulators with the Boeing 757s which are part of the FedEx air fleet.
FedEx Express' Chief Executive David Bronczek said the company is positioning itself for more profitable growth by modernizing its aircraft fleet and better aligning its U.S. domestic air network to match current and anticipated shipment volumes.
[Related -Plug Power Inc. (NASDAQ:PLUG): Can FedEx Deliver $10 for PLUG?]
The recent action is in addition to a FedEx Express agreement with Boeing announced in December 2011 to purchase 27 new 767s for delivery between fiscal 2014 and 2018 and delay delivery of a number of 777s.
In June, FedEx announced the permanent retirement from service of 18 A310 aircraft and 26 related engines, as well as six MD10 aircraft and 17 related engines, bringing the total to 50 aircraft to be retired by the end of fiscal 2013.
FDX closed Friday's regular session up 3.18% at $91.61, while BA ended up 3.80% at $74.30.