Shares of the world's largest aircraft manufacturer rose on Wednesday, June 20, after FedEx Express, a division of the package delivery company, inked a $6.6 billion deal on Tuesday with the Chicago-based aerospace company for 24 medium and large freighters.
Shares of Boeing rose 0.2% to $341.76 at 11 a.m. New York time; the stock had reached $345 earlier in the trading session. Meanwhile, FedEx shares fell 1.9% to $253.34 as the order will increase the company's capital expenditures in 2020 and 2021 due to incremental aircraft deliveries.
FedEx ordered 12 767 freighters and 12 777 freighters, valued at $6.6 billion, as it takes steps to modernize its fleet by replacing aging freighters, such as the three-engine McDonnell Douglas MD-11.
"We've added very few incremental planes along the years here," FedEx Chief Operating Office David Bronczek said during a conference call on Tuesday. "On the other hand, if we continue to see strong growth like we're seeing now, we could use them to add capacity."
The air cargo industry has been growing recently as carriers are adding capacity to keep up with demand. Boeing said it has sold more than 50 widebody freighters this year, including this latest order, and plans to increase production of 767 planes from 2.5 to 3 per month starting in 2020.
"A year after demand grew by nearly 10%, global air freight is on track to increase by another 4% to 5% in 2018," Boeing said in a statement.
The Memphis, Tenn.-based FedEx is the largest operator of the 767 and 777 freighters and a major operator of the Boeing 757 freighter. Its rival, United Parcel Service Inc. (UPS) - Get Reportordered 18 aircraft from Boeing this year, including 14 747s and four 767s.