fdxbusdriver

They're thinking whatever FS tells them to think.

TonyC

They're thinking of a new name for the A380 construction projects.










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dojetdriver

Yeah, that cat was one smooth pimp.

OldAg84

What's the total A380 order book look like? What might it take in lost orders for the program to be cancelled? Viva le Boeing!

KnightFlyer

Not sure if they will still need to close and widen 18C and 18L.

The decision zaps the urgency on $10 million of upgrades under way at Memphis International Airport and scuttles tens of millions of dollars of additional improvements planned through 2008 to accommodate the A380.
The money has not been wasted, said Larry Cox, president and chief executive of the airport authority.

"We're still gong to have a large amount of international flights, so we're still going to need additional capacity," he said. "The Airbus 380 might come here after all. You never know what the future will bring."

FedEx is the first to cancel orders after Airbus last month announced its third delay in a series of mishaps that started the cracks in its foundation back in 2005.

When the planes FedEx originally expected in 2008 were delayed "until 2010, at best," the company decided it had to make a move, said spokesman Maury Lane. "With our growing global demand, we thought it was a prudent and necessary choice to acquire the B777 freighter because of its availability and delivery timing."

With a payload of 171,000 pounds, the 777 can haul about half the load of the A380, which means FedEx will need more flights to cover its rapidly growing international business.

The point is critical for FedEx because not only is the business it gets from Asia and India its fastest growing segment, it also produces the highest yields. In the first quarter of this year, the company reported a yield average of $21.83 per U.S. overnight box compared to $62.58 for International Priority.

While FedEx did not express doubt, the decision was not inexpensive. William Greene at Morgan Stanley expects it will cost FedEx an additional $500 million to buy 15 777s as opposed to 10 A380s.

The company also is in the middle of building a $150 million complex at the airport to house a 13-story maintenance hangar, parts warehouse and ground support areas it designed for the A380.

While the project will continue, it won't need nearly the height for the 777s.

The FedEx order is the biggest ever for the 777 freighter, which is still in the development stage. The cost ranges from $232.5 million to $240 million.

"At this point, we have five customers for the airplane and have sold a total of 38 with the FedEx order," said Bob Saling, Boeing spokesman.

Boeing launched the 777 in the early 1990s and delivered the first passenger plane to United Airlines in 1995. Since then, 44 customers around the world have ordered 866 planes.

Before the cancellations, Airbus had 159 orders for the A380, including last week's order for eight additional planes from Quantas Airways.

Emirates, the biggest A380 customer, is sending a team of auditors to Airbus factories to determine whether there will be a fourth production delay on its 45 planes. Virgin Atlantic Airways Ltd. postponed its A380 order last month.

"The A380 is breathtaking," said aviation analyst Michael Boyd. "But it's like the space shuttle. Not many people are going to buy it."

Still, he can't imagine it will be scrapped. "The entire national pride of France is on this plane. To cancel would be cataclysmic."

While FedEx has had a long history with Airbus -- the head of its North American division, T. Allan McArtor, was once a senior executive -- analysts say it had no choice but to cancel.

"With FedEx's need for more international freighter capacity within three years, the delays by Airbus were simply too great," Greene wrote in a research note.

FedEx had hoped for some time that if other carriers canceled, its order might be moved up. It didn't happen.

The company's stock closed up $1.09 Tuesday at $115.03.

"The question is, what kind of incentive did Boeing give to FedEx to switch the order?" said David Field, Americas editor of Airline Business magazine.

The 777 gives FedEx routing options it wouldn't have with the A380, which could have landed perhaps at as few as 40 airports around the world.

For years, Memphis was intending to be one of them. In the race to build, it had made more progress than any other cargo airport in the nation, said Dick Marchi, senior policy adviser at Airports Council International-North America, though he expects the change will have little effect here.

"FedEx is in the business of moving packages, and because they are very successful, they will continue to grow," he said.

The improvements in the works now will serve other large planes, including the Tennessee Air Guard's C-5 "and other large airplanes coming down the pike in the future."

KnightFlyer

http://boeingmedia.com/imageDetail.c...49&clr=release

FXDX

Sweet looking ride. Go Boeing!

Flaps50MaxBrake

I'm not saying anything that hasn't already been said but I wonder if this wasn't the plan all along. Buying 777 ,that is. FS has always been a great horsetrader. I sure hope we got a decent deal out of Boeing.

RedeyeAV8r

Fred is certainly a shrewd businessman. I suspect he got a very good deal on the A-380's we had on order.......as we were the launch customer for the freighter version.

Just my opinion (cuz I'm not a fly on the Boardroom wall) We pumped a lot of money into the 380 program. FedEx can use a BIG airplane to bring all those I-pods in from China.

The A380 delivery became an uncertainty.....the Boeing 777 is a known.

Fred needed to plan and he acted on the plan.

FXDX

The limiting factor to international growth is the number of slots we can get into China. The A380 maximized the return on each of those slots by bringing more freight on each of those trips. Otherwise I don't think it would have been worth all the dollars we were pouring into constuction projects to support the thing. With the 777 only able to carry about half the weight Mr. Smith will have to double his efforts in Washington and beyond to get more slots into China. We're getting more slots and we need lift to fill them, now we will have to get more for those extra 5 aircraft to fill so we can continue to meet the demand in China. I still think that the 380 would have been better to maximze the lift per slot and that is why we went in that direction. I don't think it was a shrewd move to get 777s on the cheap.