Columba From Germany, joined Dec 2004, 6835 posts, RR: 5 Posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7242 times:
Quote: Fedex CEO says it may buy Airbus A380s in future as its market grows
Fedex CEO Frederick Smith said the company will consider buying Airbus
A380 freight version planes in the future as the market for its delivery services continues to grow, but he was not more specific.
In an interview with Les Echos, he said FedEx's recent cancellation of its order for ten Airbus A380s will help the EADS unit speed deliveries of the plane to other customers facing delays.
KC135TopBoom From United States of America, joined Jan 2005, 11742 posts, RR: 51 Reply 1, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7223 times:
Now that just doesn't make any sense. Give up your business plan to help another company out? Then why order the B-777-200F?
Dougbr2006 From Brazil, joined Oct 2006, 383 posts, RR: 1 Reply 2, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7198 times:
Now that just doesn't make any sense. Give up your business plan to help another company out? Then why order the B-777-200F?
It does make sense for Fedex, the B777's will be delivered much sooner than the A380F could be.
Perhaps what we have here is a little bit of corporate dealing.
You scratch my back etc.
It is probably better for Airbus to lose this customer and gain production slots than have to pay compensation to Fedex as well as all the others. Perhaps Airbus will not lose so much especially if Fedex come back to buy at a later date.
Jlbmedia From United States of America, joined Jun 2002, 606 posts, RR: 0 Reply 3, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7200 times:
It is good politics. Give something positive to Airbus and its customers, while adapting a new direction for their Company. It was all done with class if you ask me. John.
Bringiton From United States of America, joined Sep 2006, 866 posts, RR: 0 Reply 4, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7200 times:
They could have just deferred and asked for a bigger compensation . I think it may be a case of not ruling out anything at the moment as demand increases.
Flying-Tiger From Germany, joined Aug 1999, 4115 posts, RR: 39 Reply 5, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7175 times:
Do you know the full package? Do we really know what FX and Airbus decided? No... FX clearly said they cancelled their order because of timing reasons, that they no longer had time to wait for the bird. They clearly stated that this decision was not based on technical or economical reasons, but on the timing. They clearly indicated that at one point they would re-consider their order.
So why cancel the order in first place?
1. Think about removing a postponed financial obligation from your balance sheet - your stock market will love it.
2. Think about the PR when you re-order the A380 - good for you, good for Airbus - everybody is happy. And you might get a couple of $$$ in addition for being a valuable customer, once again showing trust into the product.
3. You take out 10 firm orders for a yet-to-be developed product, which occupies extremly valuable space with the OEM. Airbus isn´t too unhappy about it as it helps to reduce the overall delay of the A380 deliveries. Count on a couple of extra $$$ taken off your next firm order.
AutoThrust From Switzerland, joined Jun 2006, 1489 posts, RR: 8 Reply 6, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7129 times:
Quoting Dougbr2006 (Reply 2): Now that just doesn't make any sense. Give up your business plan to help another company out? Then why order the B-777-200F?
It does make perfectly sense. Because Airbus issues with the A380 FX, was forced to buy the 772F (and only) as interim solution. That doesnt mean they aren't interested at the A380F wich will give them a lot more capacity then any other plane.
Quoting Flying-Tiger (Reply 5): No... FX clearly said they cancelled their order because of timing reasons, that they no longer had time to wait for the bird.
Zvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 65 Reply 7, posted (6 years 6 months 1 week 5 days 4 hours ago) and read 7057 times:
One problem with a duopoly is that if a customer states any aversion to one's supplier or its products, then the other supplier will not offer competitive prices. FedEx (like any airline) must say that they might buy Airbus or Boeing in order to get good prices.
WINGS From Portugal, joined May 2005, 2831 posts, RR: 69 Reply 8, posted (6 years 6 months 1 week 5 days 3 hours ago) and read 6961 times:
Quoting Zvezda (Reply 7): One problem with a duopoly is that if a customer states any aversion to one's supplier or its products, then the other supplier will not offer competitive prices. FedEx (like any airline) must say that they might buy Airbus or Boeing in order to get good prices.
Or they may actually see a need for the A380F in it's fleet in the future.
Astuteman From United Kingdom, joined Jan 2005, 9257 posts, RR: 96 Reply 11, posted (6 years 6 months 1 week 5 days 3 hours ago) and read 6879 times:
Quoting Dougbr2006 (Reply 2): Now that just doesn't make any sense. Give up your business plan to help another company out? Then why order the B-777-200F?
One wonders if FEDEX were somewhat constrained by their ability to finance, and HAD to cancel the A380 in order to proceed with acquiring the lift they needed in the next few years.
Perhaps creditors were not keen to agree additional financing whilst there was a contractual commitment to the A380 still......
But FEDEX needed the lift........
Adriaticus From Mexico, joined May 2004, 1112 posts, RR: 21 Reply 13, posted (6 years 6 months 1 week 5 days 1 hour ago) and read 6635 times:
Quoting Dougbr2006 (Reply 2): It does make sense for Fedex, the B777's will be delivered much sooner than the A380F could be.
Quoting AutoThrust (Reply 6): It does make perfectly sense. Because Airbus issues with the A380 FX, was forced to buy the 772F (and only) as interim solution. That doesnt mean they aren't interested at the A380F wich will give them a lot more capacity then any other plane.
Correct. It is all a matter of timing. Package volumes keep growing and simply put, there are not enough airplanes to fly them on, especially on the Asia routes...
Quoting WINGS (Reply 10): Rather hard to stick with the B748F when they haven't committed to it yet.
And FX will hardly commit ot it... Its rounded, irregular shapes, especially the progressive reduction of the fuselage diameter to the aft, and the second floor, are impossible to fill with standard containers in an efficient manner, thus creating many empty, inefficient spaces that only turn into tare weights. Passengers, those you can cram everywhere a seat fits in, but it is not the same for containers... Remember FX does not carry bulk loads...
Quoting Astuteman (Reply 11): One wonders if FEDEX were somewhat constrained by their ability to finance, and HAD to cancel the A380 in order to proceed with acquiring the lift they needed in the next few years.
Not!... You may want to check the finances of FX on the public yearly reports and you'll see the numbers and profits perfectly allow for FX's purchasing plans. FedEx's stock currently lingers at around US$115-117.
Quoting HAWK21M (Reply 12): Would the A380 be a better Freighter than the B748
Undoubtedly. FX's engineers looked deeply into everything before deciding for this a/c. Loading and unloading of large standard containers can be done simultaneously in the two main decks as well as to/from the bellies; turnaround times are comparable to those of an MD10 or 11; fuel efficiency on effective cargo Lb/Mi is better than on any other aircraft, even the advanced B748F.
Quoting Zvezda (Reply 7): FedEx (like any airline) must say that they might buy Airbus or Boeing in order to get good prices.
In despite of this cancellation, FX is still Airbus' best wide-body customer worldwide. And Boeing, obviously, loves FX at themoment. That means something?
USAF336TFS From United States of America, joined Apr 2005, 1421 posts, RR: 53 Reply 14, posted (6 years 6 months 1 week 5 days 1 hour ago) and read 6516 times:
Quoting Zvezda (Reply 7): One problem with a duopoly is that if a customer states any aversion to one's supplier or its products, then the other supplier will not offer competitive prices. FedEx (like any airline) must say that they might buy Airbus or Boeing in order to get good prices.
The FedEx CEO would be irresponsible to say anything different. The same could be said of their evaluation of the 747-8F. The significance of the switch from the A380F to the 777F can not be underestimated. It's simplistic to say that the only reason FedEx canceled the A380 and ordered the 777F because of the delivery dates. That was a FACTOR, but certainly not the only consideration. Their who business plan had to be adjusted for the change.
The 777F will become the flagship of their fleet, but as was said, there is no reason that it will not be supplemented in the future by the A380 or any other aircraft.
336th Tactical Fighter Squadron, 4th Fighter Wing, Seymour Johnson AFB
Slz396 From , joined Dec 1969, posts, RR: Reply 15, posted (6 years 6 months 1 week 4 days 23 hours ago) and read 6292 times:
Quoting Astuteman (Reply 11): One wonders if FEDEX were somewhat constrained by their ability to finance, and HAD to cancel the A380 in order to proceed with acquiring the lift they needed in the next few years.
Perhaps creditors were not keen to agree additional financing whilst there was a contractual commitment to the A380 still......
But FEDEX needed the lift........
Good thought, me thinks.
Not every airline can afford nor is willing to spend billions from its own money on interim lift like SQ or EK are doing.
It is not because a company makes profits or has money in the bank, they want to spend it on additional interim lift. FedEx likes to keep investment costs as low as possible to give higher dividends to its shareholders and in this perspective it makes sense for them to cancel the delayed A380 order to free up the money reserved for it and use it on the interim 777Fs, rather than having to 'invest' several additional billions on these...
OldAeroGuy From United States of America, joined Dec 2004, 3215 posts, RR: 66 Reply 16, posted (6 years 6 months 1 week 4 days 23 hours ago) and read 6261 times:
He'll probably be very happy to take some A380 passenger to freighter conversions at a future date.
Airplane design is easy, the difficulty is getting them to fly - Barnes Wallis
Dank From United States of America, joined Jul 2006, 829 posts, RR: 16 Reply 17, posted (6 years 6 months 1 week 4 days 23 hours ago) and read 6246 times:
Quoting KC135TopBoom (Reply 1): Now that just doesn't make any sense. Give up your business plan to help another company out? Then why order the B-777-200F?
It doesn't say that they changed their order to help Airbus out. He could easily mean that an effect of the cancellation is that it helps Airbus out.
But more importantly, I stand by the the analysis that the reason that Fed Ex changed their orders was not that their business plan, but the fact that they needed lift sooner than Airbus could deliver with the 380. If Airbus was on time, there would have been no cancellation. The press they used at the time was to put the best spin on the cancellation (and like any company they are going to tailor their business plan to what is feasible).
I won't be shocked if Fed Ex does reorder 380s at some point later.
Leelaw From , joined Dec 1969, posts, RR: Reply 18, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 6193 times:
Quoting Dank (Reply 17): I won't be shocked if Fed Ex does reorder 380s at some point later.
Perhaps, or FX may bide their time and see if there isn't an adequate, even ample supply of redundant A380s to mine for conversions in the mid-term, a la the MD-11. A lot will depend on how the impending A380 dogfight on the constituent segments of the "Kangaroo Route" turns out.
Zvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 65 Reply 19, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 6131 times:
Quoting Leelaw (Reply 18): FX may bide their time and see if there isn't an adequate, even ample supply of redundant A380s to mine for conversions in the mid-term, a la the MD-11.
I was thinking the same thing, but figured I'd be flamed to a crisp if I posted it. If the B787 and A350 have the CASM I expect them to have, then a lot of WhaleJets will soon be converted to freighters or parked in the desert.
Slz396 From , joined Dec 1969, posts, RR: Reply 20, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 6114 times:
Quoting Zvezda (Reply 19): If the B787 and A350 have the CASM I expect them to have, then a lot of WhaleJets will soon be converted to freighters or parked in the desert.
How many traffic rights does EK or SQ have on a weekly basis to for instance Australia?
Even if the A350/787 beats the A388 in CASM, replacing it with A350s/787s is not an option to them, unless they decide to seriously cut their capacity (we're talking about slashing by more than half!!! Sorry but that's just not going to happen.)
Zvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 65 Reply 21, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 6048 times:
Quoting Slz396 (Reply 20): Even if the A350/787 beats the A388 is CASM replacing it with A350s/787s is not an option to them, unless they decide to seriously cut their capacity (we're talking about slashing by more than half!!!
Cutting capacity while maintaining frequency and cutting CASM is a great way to increase profits and reduce risk. RASM goes up as capacity goes down, so long as frequency is maintained. Lower CASM together with higher RASM results in much higher profit per seat, most likely increasing total profit.
CosmicCruiser From United States of America, joined Feb 2005, 2222 posts, RR: 16 Reply 22, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 6048 times:
Quoting OldAeroGuy (Reply 16): He'll probably be very happy to take some A380 passenger to freighter conversions at a future date.
According to some folks I've spoken to there is a diff between skin thickness on the pax jet vs. the freighter(higher max gross) ver and when asked about that possibility Airbus didn't have an answer.
I think it's a little presumptous to sit here and thimk anyomne one's really got the definitive answer. I've been here over 20 yrs. and I sure don't know except from what I've seen in the past if the time schedule got dorked up Fedex will move on without blinking an eye. After that nobody knows.
TeamAmerica From United States of America, joined Sep 2006, 1761 posts, RR: 23 Reply 23, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 5998 times:
I'm willing to bet that FedEx reassessed their plans given the A380 delays, and revised accordingly. Nothing more. No grand conspiracy with (or against) Airbus, no extraordinary financial concerns...nothing like that. Just business.
FedEx will periodically reassess in the future. Such reassessment will consider the A380F (if it exists) or A380ACF. I tend to agree with Zvezda that such conversions may be seen sooner rather than later. A lightweight conversion might well be an even better package carrier than the A380F would have been.
Quoting Flying-Tiger (Reply 5): You take out 10 firm orders for a yet-to-be developed product, which occupies extremly valuable space with the OEM. Airbus isn´t too unhappy about it as it helps to reduce the overall delay of the A380 deliveries. Count on a couple of extra $$$ taken off your next firm order.
Airbus isn't too unhappy? That can only be so if Airbus desires to drop the A380F altogether without facing additional compensation to customers. Can you picture anyone at Airbus smiling when they heard of the FedEx cancellation? I can't. This is an irrational attempt to find a silver lining in the clouds. Airbus needs about 450 frames sold in continuous production just to break even on this project. Any step backward is a significant blow.
PlaneHunter From Germany, joined Mar 2006, 6211 posts, RR: 79 Reply 24, posted (6 years 6 months 1 week 4 days 22 hours ago) and read 5966 times:
Quoting Zvezda (Reply 22):
Cutting capacity while maintaining frequency and cutting CASM is a great way to increase profits and reduce risk. RASM goes up as capacity goes down, so long as frequency is maintained. Lower CASM together with higher RASM results in much higher profit per seat, most likely increasing total profit.
So much for the theory - the question is when some major A380 customers actually put that into practice...
26 Jacobin777: .....FX doesn't have the best credit rating, so it would not have been a wise decision to order the 777F and keep the deposit money for the A380...as
27 Slz396: Real life CEO or not, your perspective lacks long term vision... The weak points in your nice theory are: 1- the increase in RASM from cutting capaci
28 Zvezda: You would certainly get a drop in revenue if there is no increase in frequency, but the drop in costs would be larger, much larger. That doesn't foll
29 Slz396: Assume you do as you suggest and thus almost halve your revenue and manage to cut your costs even further: what does that do to the profit you think?
30 A350: What happend exactly to theit order? Did they make tabula rasa? I wonder if it wouldn't have been better to convert the firm orders to options, that w
31 Zvezda: Sorry, the drop in revenue would be much, much less than 50%. Your numbers have nothing to do with the case I suggested.
32 ComeAndGo: I bet airbus got fedex to drop the order. Fedex had considerable investments linked to the loading and unloading of the upper-deck of the A380. Airbu
33 TeamAmerica: Did FedEx actually buy equipment in 2006 for an aircraft they did not expect to receive until 2008 (prior to the delays)? I doubt it. Which are in no
34 Zvezda: While I don't agree with ComeAndGo and the rest of your critique is sound, your logic doesn't hold here. Just because a little of something is good,
35 Jacobin777: There won't be any soup left to drink...
36 Steeler83: It's probably a little bit late for me to say this, but I will pitch it anyway. FedEX needs the necessary aircraft NOW, and probably cannot afford th
37 Lightsaber: Exactly. It amazes me how many people don't understand a numbers run company. Not to mention Fedex has their new Shanghi hub opening up IIRC in 2008!
38 Jjbiv: From where does your assumption that FedEx had a use for both the Airbus and Boeing ships (in the ordered quantities) come? FedEx needs a certain cap
39 Jonathan-l: I am not familiar with FDX financial position but at least this contrasts with other threads where Chapter 11 pax airlines and other pax airlines tha
40 Curmudgeon: Neither. Bilaterals are awarded based on number of seats per week. Its up to the airline to parse that out the best way based on their fleet. It's in
41 Leelaw: Thanx for so eloquently developing my hypothesis further despite the rather vocal consternation of perhaps the most pretentious "Airbusier" on A.net.
42 WINGS: Leelaw, if one is to follow Zvezda's logic in regards to the A380 program then their won't be any ample supply of redundant A380´s. Don't forget tha
43 FXramper: Nothing more than a good faith gesture to Airbus from Fred. We are happy with AB6F and the most current order: 777F.
44 Leelaw: No, it wasn't Fred Smith, it was David Sutton (managing director of aircraft development acquisitions and sales in FedEx’s A380 programme office),
46 Curmudgeon: I was not correct on this piece of info. SOME Australian bilateral agreements specify the number of weekly seats (Typically 2800). Many others specif
47 Zvezda: As we've discussed before, that is a misleading characterization of my opinion. I clearly suggested that Airbus stop taking WhaleJet orders and then
48 Slz396: The numbers were purely fictional to help you see the light. Sadly even that didn't do the trick... I'd really love to see how you could stop revenue
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