FedEx Cancels Order for A380, Turns to Boeing

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The New York Sun

FedEx Corp. on Tuesday became the first customer to cancel its order for Airbus’s new A380 superjumbo aircraft, changing course to place a $3.5 billion order with rival Boeing Co.

Airbus said last week it would delay production of its A380 aircraft for about two years to correct electrical problems. The European manufacturer has repeatedly announced production delays on key new aircraft, leading several customers to review their purchase plans.

FedEx, of Memphis, Tenn., said Tuesday it had canceled an order for 10 A380 freighters, instead ordering 15 new Boeing 777 Freighter aircraft, with an option to buy 15 more. FedEx plans to take delivery on four aircraft in 2009, eight in 2010, and the remainder in 2011.

“We made the decision to purchase the new Boeing freighters after Airbus notified us that there were going to be significant delays,” a FedEx spokesman, Maury Lane, said. “Global demand for air cargo and express continues to grow, and we needed the aircraft to fill our customers’ needs.”

Airbus, a unit of European Aeronautic Defence & Space Co., said Tuesday it expects to continue with the A380 freighter program, despite the cancellation by FedEx.

EADS shares Tuesday closed down EUR0.65, or 3.1%, at EUR20.66, the biggest declines on the bluechip CAC-40 index in Paris.

Boeing shares rose sharply following news of the FedEx order, and were up 3.8% at $83.50 in recent trading on the New York Stock Exchange.

“In the freight business, FedEx is a marquee customer,” a Boeing spokesman, Bob Saling, said.

Mr. Saling declined to say whether the move by FedEx, the world’s largest air freight carrier, could herald a similar shift by other customers.

“I don’t have a crystal ball,” he said. Officials at Boeing have been cautious in recent months about their ability to capitalize on Airbus’s woes.

Airbus now has orders for just 15 of the freighter A380s. Plane-leasing giant International Lease Finance Corp. — a unit of American International Group Inc.— has ordered five and United Parcel Services Inc. has ten.


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