FedEx turns in higher-than-expected quarterly profit; buys aircraft

MEMPHIS, Tenn. ― FedEx Corp. reported a higher-than-expected quarterly profit and said it is buying 27 new Boeing aircraft to update its fleet for fuel efficiency and cost savings.

The company also said it is deferring delivery of some Boeing freighter aircraft, adjusting for slowing volume out of Asia.

FedEx shares jumped more than 3 percent after the world’s No. 2 package delivery company reported fiscal second-quarter net profit of $497 million, or $1.57 per share, up from $283 million, or 89 cents per share, a year ago. Analysts had been expecting a profit of $1.52 a share.

FedEx also affirmed its fiscal 2012 guidance for $6.25 to $6.75 per share, after trimming it in September on tepid global economic growth and high fuel costs.

“Our improved performance was largely a result of effective yield management programs and strong demand for FedEx Home Delivery and FedEx SmartPost services,” FedEx Chief Executive Officer Frederick Smith said in a statement. “With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services.”

Revenue rose 10 percent to $10.59 billion. Analysts, on average, expected revenue would rise to $10.61 billion, according to Thomson Reuters I/B/E/S.

The massive volume of goods moved by FedEx make its shipping trends a bellwether of consumer demand and the economic climate.

The value of packages that it handles in its trucks and planes each is equivalent to about 4 percent of U.S. gross domestic product and 1.5 percent of global GDP.

FedEx Express has signed an agreement with Boeing Co. to buy 27 new 767-300F aircraft, replacing some that are more than 40 years old.

The company said the 767s will provide similar capacity as the MD10s being retired, with about 30 percent more fuel efficiency and a minimum 20 percent reduction in unit operating costs.

Three of the planes will arrive in fiscal 2014, then six per year between 2015 to 2018.

Boeing logs big order from Southwest for fuel-efficient planes

(Reuters) – Boeing Co. bagged its first firm order for the new 737 MAX fuel-efficient, narrowbody plane, as part of a $19 billion deal with Southwest Airlines that the jet maker calls its largest order ever.

The order for 208 narrowbody planes includes 150 MAX aircraft and puts Southwest, a loyal Boeing customer, first in line to take delivery of the upcoming revamp of the best-selling 737, which will feature a new energy-efficient engine.

The order reflects robust demand for fuel-efficient planes as the airline industry struggles to rebound from a painful downturn and cope with volatile oil prices. The Southwest deal is also one of the last major aircraft orders up for grabs from U.S. carriers looking to replace aging models.

“It’s been a very good year for orders, really driven by the re-engined platforms for Airbus and Boeing,” said Peter Arment, an aerospace and defense analyst with Sterne, Agee & Leach. “We do expect that to continue in 2012.”

He said Boeing would likely garner more orders for its 737 MAX from existing customers, and noted the company was currently competing with chief rival Airbus for an order from United Continental Holdings, the world’s largest carrier.

Delta Air Lines ordered 737-900ER 100 Next-Generation extended-range 737 planes in August, following a giant order in July from now-bankrupt American Airlines for 460 single-aisle jets worth up to $40 billion, an order Boeing split with Airbus.

The MAX orders, combined with a strong existing backlog for other 737 models, will allow Boeing to raise production rates to record levels on one of its most profitable plane programs, Arment said.

“Longer term, it’s going to help generate some additional earnings power for the company,” Arment added.

Boeing reported commitments for 948 MAX airplanes and said the figure could climb to 1,500 by the end of next year. It said the Southwest deal was its largest firm order ever in dollar value and the number of airplanes.

Private Indonesian carrier Lion Air last month placed an order for 230 planes, including 201 of the MAX that Boeing said at that time was its largest order, but those orders were not firm.

“It truly is Christmas come early for the Boeing Co,” Jim Albaugh, Boeing’s chief executive for commercial planes, told a press briefing held in Dallas to announce the Southwest order.