FedEx Corp.'s (FDX) shipping business could buy up to 100 planes from Textron Aviation, Inc., a unit of Textron Inc. (TXT), as part of the carrier's plan to expand its air freight business.
FedEx Express, which ships freight and packages in the U.S. and abroad, has agreed to purchase 50 Cessna SkyCourier aircraft from Textron with the option to buy up to 50 more, the company said Tuesday. The planes have a base price of $5.5 million a piece, making the initial order of 50 planes worth at least $275 million.
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The new aircraft will help FedEx Express expand its feeder fleet, a group of 300 cargo planes that serve smaller markets in 45 countries. FedEx has used Textron's platforms in its feeder fleet for more than 30 years, Textron said.
FedEx Express Chief Executive David Cunningham said the new aircraft will improve fuel efficiency, reliability and operating costs.
"We worked closely with Textron Aviation to develop the Cessna SkyCourier 408, which includes several key features that will help us grow our business in small and medium-sized markets, especially in the air freight segment," Mr. Cunningham said.
Among those features are more powerful engines and larger cargo doors to support containers and pallets.
FedEx's investment comes as the airfreight market has picked up in recent months after a prolonged downturn. Air-cargo growth in September, the last month for which figures are available, grew above 5% year-over-year for the 13th consecutive month, according to tracking firm WorldACD.
FedEx earlier this month said would also add up to 50 ATR planes to its feeder fleet. ATR is a joint venture between Airbus SE and Italy's Leonardo SpA.
The first Cessna plane will be delivered in 2020 and Textron will continue delivering one aircraft per month for about four years, FedEx said.
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(END) Dow Jones Newswires
November 28, 2017 07:10 ET (12:10 GMT)