Wednesday, November 8, 2017

FedEx Seals Turboprop Deal Amid Strength in Airfreight Market: Delivery giant to buy up to 50 turboprop planes from European aircraft maker ATR



FedEx Corp.’s new order for regional cargo planes is a testament to the impact online commerce is having on distribution channels.

FedEx will buy up to 50 turboprop planes from ATR in a deal valued at $1.3 billion at list price, the WSJ’s Robert Wall reports, giving the European aircraft maker a foundation for what it hopes will be a growing market for smaller freighters.

Such aircraft don’t usually command much investment in express networks, but FedEx suggests the cargo version of the ATR 72-600 plane will fill an important role in a changing delivery market. 

The new design allows FedEx to carry larger and heavier shipments than usual in the regional service, a boost for freight business and for the bigger goods that online sales are pushing into distribution networks. 

The new turboprops will help FedEx sell customers on moving goods by air, an option that’s faster but more expensive than using a truck but cheaper than adding more distribution centers.



The Wall Street Journal
By Robert Wall
Nov. 8, 2017 6:07 a.m. ET

FedEx Corp. is renewing part of its fleet of smaller cargo planes in a deal valued at $1.3 billion at list price, amid an improved outlook for the global airfreight market.

FedEx will buy up to 50 turboprop planes from European aircraft maker ATR—a joint venture between Airbus SE ,  the world’s No. 2 plane maker behind Boeing Co. , and Italy’s Leonardo SpA—the Toulouse, France-based plane maker said Wednesday. The deal comprises a firm order for 30 planes and options for 20 more, and represents a boost for ATR in the U.S., the world’s largest single aviation market.

The delivery giant typically uses such turboprop planes—which are slower and burn less fuel than their jet counterparts—to transport packages between smaller cities and larger airports where its big Boeing and Airbus jets operate.

The prospects for the airfreight market have improved in recent months after a prolonged slump. WorldACD, which tracks the sector, said air-cargo growth in September, the last month for which figures are available, grew above 5% year-over-year for the 13th consecutive month.

FedEx said in its latest quarterly earnings that sales at its air-shipping Express division benefited from higher rates to ship U.S. domestic packages and strong international package growth.

Though turboprop freight planes are typically modified passenger models, FedEx in this case opted for a new design. The plane is based on the European plane maker’s 78-seat ATR 72-600 model, which features a new cockpit and more powerful engines than earlier versions.

FedEx Express Chief Executive David L. Cunningham said in a statement that the company “worked with ATR to develop this new aircraft, which include special features to help us grow our business, especially in the airfreight market where shipments are larger and heavier.”

FedEx is expected to get the first planes in 2020. The aircraft typically can carry around 8.3 tons of cargo, though delivery companies are usually more focused on volume than weight.

“Our bet is that the freighter market is going to become much more active than it has been,” ATR Chief Executive Christian Scherer said in an interview. Though much of the global demand will likely remain for converted planes, he said FedEx’s endorsement could generate greater appetite for new planes as well as spur a general increase in demand for freight planes.

ATR and Canada’s Bombardier Inc. are the world’s leading producers of turboprop planes. Brazilian plane maker Embraer SA in September said it had opened talks with potential airline customers to gauge whether to re-enter the market for such planes, after exiting it years ago to focus on jet-powered regional planes and private jets.

The FedEx deal also is an important vote of confidence for ATR in the U.S., which it has coveted for years. Passenger carrying turboprops fell out of favor in the U.S. because passengers generally preferred jets they viewed as more comfortable and modern.

But ATR is starting to see demand rebound in the U.S. In addition to the FedEx deal, the plane maker has said it had won a preliminary 20-passenger-aircraft deal with Fort Lauderdale, Fla.-based Silver Airways Corp.

“We have been absent in the U.S. for many, many years and this marks our return,” Mr. Scherer said.

Original article can be found here ➤ https://www.wsj.com

1 comment:

Anonymous said...

The Bombardier planes are the old de Havilland Canada Dash 8 series of planes - long ago a part of Boeing. Used to fly in them from Charlotte to Asheville, sometimes in a storm you could feel them blowing sideways. Great planes, now almost all jets fly into KAVL.

Makes sense for FedEx - the time for short hops is not that much different jet vs. plane and the fuel savings will also come into play over time.