Airbus To Announce $6 Billion Deal With Federal Express

June 17, 1991|By New York Times News Service

PARIS -- Airbus Industrie plans to announce this week that Federal Express Corp., the express airfreight carrier, will order up to 75 new cargo planes from Airbus in a $6 billion deal, officials from the European aircraft consortium said.

The deal, which is set to be announced at the Paris Air Show, will be one of Airbus' biggest successes in the U.S. market, which has long been dominated by Boeing and McDonnell Douglas. The order will also be the consortium's largest for cargo aircraft.

In winning the Federal Express order, Airbus has bested an offer DTC from the McDonnell Douglas Corp., which, along with the Boeing Co., has frequently complained that Airbus receives government subsidies that give it an unfair competitive advantage.

The U.S. market has been the biggest challenge for Airbus, which rejects the charges of unfair subsidies.

"This is a real blow for McDonnell Douglas," an industry analyst said at the Paris show.

According to Airbus officials, Federal Express is placing orders for 25 A300 wide-body, twin-engine aircraft and is taking out options on 50 other A300s.

The Airbus A300 won in a competition against McDonnell Douglas MD-11 cargo planes, the Airbus officials said.

The Airbus planes, which are scheduled to be delivered over 15 years beginning in 1993, will replace most of Federal Express' Boeing 727s and McDonnell Douglas DC-10s.

An Airbus official said that on many routes to and from Federal Express' hub in Memphis, Tenn., a single A300 could replace two Boeing 727s now serving the route.

The Airbus official said: "This makes economic sense for Federal Express. They can use one aircraft with two pilots and two engines instead of two 727s with a total of six pilots and six engines."

Airbus officials said final papers for the deal were not signed yet, but they said Federal Express officials were coming to Paris this week for a news conference about the order.

The Federal Express order is the largest announced by far at this year's Paris Air Show, the world's largest air show.

This year the show has a downbeat mood. Civil aircraft orders are down because of airline financial troubles resulting from a plunge in air traffic during the Persian Gulf crisis.

Military aircraft orders are also down because of the end of the Cold War and cuts in military budgets.

On Thursday, Boeing announced orders, totaling $2.74 billion, for 41 aircraft from four buyers: American Airlines, Delta Air Lines Inc., Lufthansa A.G., and GPA Group P.L.C., an Irish airplane leasing company.

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