FDX 727 Replacement

[Spur]

Off the company website:

"FedEx targets 727 replacements

FedEx Express is looking at acquiring and converting to freighters Boeing 737-300 or 757-200 passenger aircraft as it begins to ponder possible replacements for its large Boeing 727 fleet.


Cargo conversion providers say FedEx has asked them for proposals and could make a selection within the next couple of months.


FedEx operates about 120 727s, all within North America. The carrier is initially expected to acquire about 20 replacements, with follow-on orders likely.


Industry sources say FedEx has begun to search for blocks of 737-300 and 757-200 passenger sister ships that may be for sale. FedEx plans to purchase rather than lease the aircraft and has discussed possible deals with Boeing, GE Capital Aviation Services and passenger airlines. The manufacturer has also been talking to Boeing about a bulk deal for new 757-200 freighters, but the manufacturer says there is a gulf between what the carrier wants to pay and what Boeing wants to charge.


FedEx declines to comment on potential aircraft acquisitions.


The 727 remains the workhorse in the US domestic express package market, although it has already been phased out in Europe because of stricter noise regulations. FedEx is believed to be favouring the 757 over the 737, but 737 providers believe declining demand for overnight services within North America could swing the competition in their favour. A split 737/757 order is possible.


If FedEx opts not to add any 737s, its new fleet of ATRs could also potentially replace 727s in weak domestic markets. FedEx is already acquiring 19 ATR 42s from American Eagle and eight from Continental Airlines to replace its fleet of 35 Fokker F27s. FedEx is seeking more ATR 42s and could supplement these with larger ATR 72s.

Brendan Sobie
Flight International

07/15/2003"

Good news or Bad News?? Maybe replacing a 3 seater with a 2 seater in the near future is why hiring has slowed down.

 

[ERJ - Jay]

I read in Aircraft Commerce about two months ago (http://www.aircraft-commerce.com under freight - the whole article I can't post because it was a second hand magazine so I don't have online access) that the problem is apples and oranges.

Their argument was that the 737-300 could carry more cubic foot tons than the 727-100. However, it could not carry as much as the 727-200. Big surprise right.

The 737-400 could carry a little bit more than the 727-200, however their residual aircraft values made the pax to cargo conversions too expensive.

But, a 757-200 could carry almost exactly the same ft/tons as TWO 727-200s.

The author's premise was that although the cost of the 757 conversions and monthly payments would be higher than the 737s, FedEx would do better financially because of reduced crew, fuel burn, landing fees, and insurance costs due to lower airframe counts. Plus there are lots of early 757 sitting in the desert (many ex-USAir 'block' examples) available for purchase at a discount.

The article's only real quandary was whether Boeing would able to work a deal so that FedEx would buy a block of the last production airframes of the 757 to keep the line going until the deferred deliveries of CAL and others could be delivered, and thereby continue to keep the production line going and profitable. (see the article posted below from flight international)

From the outside it all makes sense. Instead of those two 727s in GRR, you'll see one 757. If you have too much from EWR to STN, you can run a 757 supplement (since they're ETOPS).

The problem for pilots is that if they really take this option, it's not the loss of one position (3 - 2) it's FOUR!! (6 - 2)!!!!
While I'd love to get a call from FedEx, if they do this deal and do a 2 for one swap with the 727-200s and 757-200s, it could potential stall hiring for YEARS. In addition, advancement would all but stop, as I'm sure they would correlate aircraft deliveries with pilot retirements. So those who are fortunate enough to get on with FedEx before this all happens (if it happens) will find themselves essentially seat locked on reserve on an aircraft that's being retired (=shrinking # or lines).

It's a very scary proposition. Great for Fedex to position itself well for the future and reduce staffing costs. Bad for pilots looking for advancement to another seat or an increase in seniority and quality of life.

(Flight International April 01, 2003:
US manufacturer launches recovery mission as it pushes to end twinjet's order drought and boost backlog

Boeing has launched an aggressive sales push in both China and at FedEx Express for its 757-200 twinjet, in an effort to bolster the aircraft's rapidly dwindling orderbook. There are now 26 aircraft on the company's backlog, three fewer than the total number of 757-200s and -300s delivered last year.

Boeing has tabled at least two proposals in China totalling 12 aircraft. This includes a "highly attractive" pricing offer made to the Chinese government for seven aircraft for allocation to state controlled carriers and a proposal for five more aircraft for independently run Shanghai Airlines.

Five Chinese airlines operate just over 50 757-200s, namely China Southern Airlines, China Southwest Airlines, China Xinjiang Airlines, Shanghai Airlines and Xiamen Airlines. Xinjiang is now part of the China Southern group while Southwest is part of the Air China group. The sources say that while some 757 operators have expressed interest, others are wary of being forced to take aircraft as part of a government-supported deal.

Boeing's other major unsolicited push is with FedEx, with an offer of a large batch of standard-configuration 757-200 Package Freighters built to FedEx specification. The US freight carrier concluded a similar deal in the 1980s for the last 15 727s from the Renton production line.

David Sutton, general manager, aircraft acquisitions and sales for FedEx, confirms that new and used 757-200s have been studied as replacements for the 727-200F fleet, as well as for additional growth, but no decisions have been made. New aircraft could feature a series of Boeing-developed flightdeck improvements, including an enhanced visual system combining infrared and possibly millimetre wave radar, and a head-up-display.

Boeing delivered 29 757s in 2002, but with the firm backlog having fallen to 26 aircraft, new orders must be secured or the company faces the possibility of having to shut the line in Renton by late 2004. "We're continuing to look at opportunities and our sales organisation is working with potential customers in China, Russia and Europe," says Boeing.

The only near-term prospect is Rashid Engineering, which is looking at single corporate transport. The Saudi Arabian-based hadj tent supplier operates two Gulfstreams - a GIV and a GV.

REPORTING BY NICHOLAS IONIDES IN SINGAPORE, GUY NORRIS IN LOS ANGELES & PAUL LEWIS IN WASHINGTON DC)

 

[klhoard]

And the good news just keeps coming!!!

 

[SleepyF18]

As far as worrying about 757s replacing our current 727s on a 1 for 2 basis, it doesn't wash out that way. Those two 727s sitting on the GRR ramp are from two different hubs, just like the four at EWR are, and the 4 at DFW, and on and on and on.

It would be like saying that AA is going to ditch their 600 smallest planes with 100 Triple7s because they are able to carry so much more freight and passengers. The only problem with that is that now, AA has to fly that 777 going originally from DFW to LAX with additional stops in ABQ, TUS, and LAS on the way to LAX to make up for those 5 narrow bodies it replaced. Ain't gonna happen.

Just like you won't see them replace the planes on a 1-2 basis here at FedEx. Way too many moving parts in the system form to condense it down that much. You may see less a/c overall, but if you're going to throw in international coverage as well, now your reserve manning just increased and there go your hiring requirements back up.

The smartest thing to do is to just wait and see what happens. If we're all still here at age 60, then good. If not, then we will know then that we made a mistake somewhere.

Sleepy

 

[JerkyHerky]

My Understanding is that the 757 has only 2 more container positions than the 727, thus the capacity increase is not that significant. I wouldn't think there are many places in the FedEx system that gets 2 727s because only 1 is not enough. In a case like that I bet FedEx would send an Airbus instead.

 

[Swass]

There's also news from Boeing saying that it may stop producing 757's, who knows if it'll happen and what the consequences would be. Just a little tidbit from an ICTer with a few contacts.

 

[ERJ - Jay]

My Understanding is that the 757 has only 2 more container positions than the 727, thus the capacity increase is not that significant. I wouldn't think there are many places in the FedEx system that gets 2 727s because only 1 is not enough. In a case like that I bet FedEx would send an Airbus instead.

The information I was quoting was from Aircraft Commerce Magazine, and if they have their information wrong then I stand corrected. My understanding of the ariticle was total cubic feet tonnage comparison, including the 757's belly cargo. Whether that's a viable comparison or not should be taken up with the editor of the magazine for misrepresenting information.