FedEx Corp is in talks with Boeing and Airbus to buy next-generation freighters as e-commerce soars, but the delivery giant has postponed a buying decision amid ongoing labor talks with pilots, industry sources said.
The world's largest cargo airline is the latest flashpoint for competition after Boeing last week launched a freighter version of its 777X to compete with a new Airbus A350 freighter.
Air cargo demand has been stoked by online shopping, supply chain disruptions and a drop in passenger flights - which often also carry cargo in their holds.
"Cargo is the only part of the jetliner market that has fully recovered, and is still growing," AeroDynamic Advisory analyst Richard Aboulafia said. "Given a very depressed twin aisle market, cargo widebody orders are the only ray of hope."
At one point FedEx had emerged as a possible launch customer for the 777X, joining Qatar Airways at a White House signing ceremony, but a decision is not now expected before the summer.
FedEx is locked in talks over pay and retirement with pilots who argue they helped deliver record profits and maintain the economy during the pandemic - discussions that could be strained by an immediate big-ticket investment, two of the people said.
"Aircraft acquisitions are strategic business decisions and we have deferred any new commitments as we evaluate and prioritize potential capital investments," a FedEx spokesperson said.
The Air Line Pilots Association, which represents FedEx crew, said it wants an agreement that recognizes their role. "Significant bargaining clearly remains," a spokesperson said.
PRODUCTION PLANS
Memphis, Tennessee-based FedEx is a mainly Boeing customer, with 83% of its trunk fleet using models such as the 777, 767 and 757, and legacy McDonnell Douglas tri-jets, though it also operates 67 Airbus A300-600s.
Barring surprises, Boeing is seen as front-runner to win a 777X deal from FedEx though any delay leaves Airbus an opening to fight for the business.
Airbus was at the center of an unusual twist last month when the Federal Aviation Administration released a proposal to put laser missile defenses on the smaller Airbus A321, a plane that FedEx does not operate, only to withdraw its review days later.
Research into defenses for freighters operating in parts of the world facing threats from portable anti-aircraft systems is not new. But the surprise disclosure, described by one source as inadvertent, linked FedEx to Airbus for the first time in years.
Airbus and Boeing declined to comment.
For planemakers, the stakes involved in winning freighter orders are especially high as they try to shore up production of sister models hit by a long-haul travel slump.
To win Qatar Airways' launch order for 34 777X freighters, Boeing agreed to switch a third of its existing order for 60 777X passenger planes to freighters.
Although that limits the number of net new 777X-family orders to just 14, analysts said it gives Boeing greater certainty that the underlying jets will be produced and could set the tone for other freighter negotiations.
Airbus has also had to sacrifice passenger jet orders to win deals for its new A350F freighter, according to monthly data.
Boeing's soon-to-be-discontinued 747-8, as well as the 777F and 767F, cannot be produced after 2027 due to emissions rules.
The freight boom is not without risks.
Those include a rapid recovery in passenger flights that would bring the belly space of under-used passenger jets back into service, as well as unresolved U.S.-China trade tensions.
"Is this demand sustainable, especially when the global supply chain returns to normal?" Vertical Research Partners analyst Rob Stallard said.
"And what happens to all those old passenger widebodies that are parked up? It is a lot cheaper to convert an old passenger widebody than to buy a new plane."
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