FedEx Corp. to order 50 ATR turboprop planes

FedEx Corp. is renewing part of its fleet of smaller cargo planes in a deal valued at $1.3 billion at list price, amid an improved outlook for the global airfreight market.

FedEx will buy up to 50 turboprop planes from European aircraft maker ATR – a joint venture between Airbus SE, the world's No. 2 plane maker behind Boeing Co., and Italy's Leonardo SpA – the Toulouse, France-based plane maker said Wednesday. The deal comprises a firm order for 30 planes and options for 20 more, and represents a boost for ATR in the US, the world's largest single aviation market.

The delivery giant typically uses such turboprop planes – which are slower and burn less fuel than their jet counterparts – to transport packages between smaller cities and larger airports where its big Boeing and Airbus jets operate.

The prospects for the airfreight market have improved in recent months after a prolonged slump. WorldACD, which tracks the sector, said air-cargo growth in September, the last month for which figures are available, grew above 5% year-over-year for the 13th consecutive month.

FedEx said in its latest quarterly earnings that sales at its air-shipping Express division benefited from higher rates to ship US domestic packages and strong international package growth.

Though turboprop freight planes are typically modified passenger models, FedEx in this case opted for a new design. The plane is based on the European plane maker's 78-seat ATR 72-600 model, which features a new cockpit and more powerful engines than earlier versions.

FedEx Express Chief Executive David L. Cunningham said in a statement that the company "worked with ATR to develop this new aircraft, which include special features to help us grow our business, especially in the airfreight market where shipments are larger and heavier."

FedEx is expected to get the first planes in 2020. The aircraft typically can carry around 8.3 tons of cargo, though delivery companies are usually more focused on volume than weight.

"Our bet is that the freighter market is going to become much more active than it has been," ATR Chief Executive Christian Scherer said in an interview. Though much of the global demand will likely remain for converted planes, he said FedEx's endorsement could generate greater appetite for new planes as well as spur a general increase in demand for freight planes. (WSJ)