FedEx Buys $10 Billion of Boeing 767 Jet Freighters

FedEx Corp, the world’s largest cargo firm, has signed a deal to buy 50 additional Boeing Co 767-300 freighters in the biggest order ever for the plane, allowing the aircraft maker to extend its production line well into the next decade.

The deal, announced in a statement by the U.S. cargo operator, includes options for another 50 767Fs and is worth $9.97 billion at list prices.

Customers typically receive an undisclosed discount off the list prices.

FedEx said the aircraft will be delivered by Boeing for its FedEx Express arm over the fiscal years 2018-2023.

The latest deal brings FedEx’s firm orders for 767Fs to 106 and extends the company’s drive to modernize its fleet.

“Acquiring additional 767F aircraft will enable us to reduce structural costs, improve our fuel efficiency and enhance the reliability of our global network,” David J. Bronczek, president and chief executive officer of FedEx Express, said in the statement.

The air cargo business has remained soft compared to the general aviation business since the 2008 global financial crisis.

Weak demand, overcapacity and competition from the belly space of passenger planes has driven down yields and reduced the need for dedicated freighters.

Boeing, however, has forecast that global air freight traffic will still grow at an annual rate of 4.7 percent, doubling cargo traffic over the next 20 years.

Read: Two-thirds of Boeing’s $6Billion Cost Cutting Will Come from Its Supply Chain

FedEx had a fleet of 641 freighter aircraft as of May 31, according to data on its website. In addition to the 767F orders, it has also committed to 18 Boeing 777 freighters.

On Tuesday, Boeing said that Taiwan’s EVA Air had finalized an order for five 777 freighters worth $1.5 billion.

“We appreciate the confidence that FedEx has shown in the 767,” a Boeing spokesman said in a statement.

The 767Fs will replace a number of older freighters, including Boeing MD10s and MD11s as well as Airbus Group A300-600s and A310s, which FedEx plans to retire in the coming years (The great aviation graveyard).

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