US parcel carrier will not complete MD-10 conversions and delays new aircraft deliveries

FedEx Express is to curtail its Boeing MD-10 conversion programme and defer delivery of Airbus A300 and Boeing MD-11 freighters because of the weak US economy and falling demand for domestic express services. The package carrier has also cancelled its orders and options for the Ayres Loadmaster feeder freighter, effectively killing the programme.

FedEx will not complete the last 29 of a planned 118 DC-10 to MD-10 conversions. The aircraft, now stored for passenger-to-freighter conversion and installation of the MD-10/MD-11 common cockpit, will be broken up for spares forcing FedEx to write off $93 million.

The carrier says it will honour its contract with Boeing to take 89 MD-10s by 2006, "unless we can negotiate that number down". FedEx has received the first six MD-10s, and a further nine will be handed over by year-end, says Boeing Airplane Services. The aircraft are being converted byAeronavali in Italy, SR Technics in Palmdale, California, and ST Mobile Aerospace in Alabama.

The airline says it is "right-sizing its domestic express network" after seeing average daily volume decline 6% year-on-year in the fourth quarter ended 31 May. Other actions include retirement of 30 Boeing 727-100 freighters by 2006 and deferral of A300 and MD-11 freighter deliveries scheduled for next year into 2003 and 2004. FedEx was to take delivery of two A300-600s, four A310-200/ 300s and four MD-11s next year.

The company has written off $9 million in deposits and other costs on the Loadmaster programme. "It would be great to have the aircraft, but it is not going to be built, so we have terminated our commitment," FedEx says. This is likely to force Ayres into liquidation (Flight International, 26 June - 2 July). The airline says it will continue to use Fokker F27s, until a "right-sized" feeder freighter becomes available.

FedEx is the latest carrier to announce capacity reductions in the face of a slowing US economy. American Airlines is to retire 22 aircraft, including TWA's fleet of 19 McDonnell Douglas DC-9s, by the first quarter 2002 instead of over the next three years. This will reduce capacity by 1%.

United Airlines has phased out its DC-10s and accelerated the retirement of its 727s, but still expects capacity to increase 2% by year-end as it takes delivery of new A319s,A320s and 777s. Delta Air Lines plans to cut capacity by 1.5% by year-end, removing 10 aircraft, including seven 727s, from its fleet.

United Parcel Service says it continues to evaluate its network. It says it has made no decision on reducing capacity, but "three or four"727-100 freighters have been placed in short-term storage.

Source: Flight International