FedEx pushes out 777 deliveries

 FedEx has postponed delivery of more than a dozen Boeing 777 freighter aircraft, according to its more detailed quarterly earnings report filed with the Securities and Exchange Commission last week.

   The move is among several cost-cutting measures the world抯 largest express courier is undertaking in the face of a steep decline in business during the global economic slowdown. FedEx's domestic air package volume is at its lowest level in 10 years. The Memphis, Tenn.-based company said it reached agreement with Boeing this month to push back orders for up to 17 months. Under the new schedule, FedEx will receive four of the new planes in fiscal year 2010, 10 planes in 2011 and one plane in 2012. FedEx placed its original order for 15 777 freighters in November 2006 after canceling an order for 10 Airbus A380 superjumbo jet freighters in the wake of a two-year production delay at the European aircraft maker. The original order called for delivery of four 777 aircraft in fiscal year 2009, eight in 2010 and the remaining three in 2011. Only one of the new planes will be deferred 17 months, according to spokesman Jim McCluskey.

   FedEx said the revised payment schedule will result in the deferral of about $275 million of payments to Boeing. One 777 freight costs roughly $240 million at list prices, meaning FedEx is pushing off the cost of about one plane.

   FedEx also announced on Dec. 22 that it will not advertise on television during the Super Bowl in February for the first time in 12 years.

   As previously reported, FedEx said in its earnings report that it was cutting salaries of top executives and salaried employees, freezing bonuses and 401K matching payments, and laying off some workers at its FedEx Freight and FedEx Office business units.

   Wire services first reported the details of the 777 deferrals earlier this week.

Source: American Shipper