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UPS to buy 'super jumbo' airplanes

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ATLANTA, Ga. - With international shipments growing far faster than domestic, UPS is moving to buy the biggest of all aircraft to carry them.

UPS on Monday announced an order for 10 Airbus A380s, with options for 10 more. The Sandy Springs-based firm also slashed its order for twin-engine Airbus A300s used for domestic deliveries, to 53 from 90.

The A380, a "super jumbo” designed to carry more than 550 people in its passenger configuration, is scheduled to make its first flight this year. A public unveiling of the prototype will be held next week in France, home of Airbus Industrie.

Each A380 carries a list price of $280 million, but aerospace experts say UPS likely squeezed discounts from Airbus. The European consortium's A380 program launch is behind schedule and nearly $2 billion over budget.

Airbus had sold 139 A380s and options before the UPS announcement.

"You can be sure that 10 (orders) plus 10 (options) made Airbus very negotiable,” said Steve Rehrman, an analyst at Morten, Beyer & Agnew, a Virginia aviation consulting firm.

UPS also likely felt pressure to match FedEx. The Memphis archrival was the first U.S. company to order A380s, with an identical-sized purchase in 2001.

FedEx gets its first A380 in 2008, and UPS will take its first delivery in 2009.

The supersized jets will be able to fly nonstop between China and the UPS air hub in Louisville, Ky. - or the FedEx center in Memphis. Both companies typically stop in Anchorage, Alaska, on Pacific crossings.

In last year's third quarter, UPS' international export volume climbed 13.2 percent over a year earlier. Asia export volume increased 29 percent, and China exports more than doubled.

Aviation treaties strictly control the number of flights, so larger aircraft that carry more goods with fewer landings offer competitive advantages.

"We'll be able to get much greater efficiencies out of our existing slots,” said Mark Giuffre, a UPS spokesman.

At UPS' air hub in Louisville, workers are extending a runway so that fully loaded A380s will be able to fly nonstop to Asia or Europe.

Each four-engine plane will be able to carry up to 330,000 pounds of freight, far more than the Boeing 747, currently UPS' biggest jet. The newest and largest 747-400 freighter can lift about 273,000 pounds.

Ed Coleman, a FedEx spokesman, said company officials met with Airbus throughout the A380's design to ensure the plane will work for packages.

Air cargo firms have traditionally filled their fleets with hand-me-downs from passenger airlines. But the post-9/11 airline downturn, and the surge in international shipments brought on by offshore manufacturing, have created greater demand than ever.

International Lease Finance Corp. and the flag carrier for the United Arab Emirates also have ordered A380 freighters.

Both UPS and the union representing its 2,400 pilots said the Airbus deal won't complicate ongoing labor negotiations. The two sides are in mediated contract talks and overdue for reaching a new labor agreement.

The deal also cancels the planned acquisition of 37 A300s. Unlike most passenger airlines, UPS pays pilots the same hourly rates regardless of the size of the aircraft they fly.

Brian Gaudet, a spokesman for the Independent Pilots Association, which represent UPS fliers, said the union is "very pleased” about the giant planes.

"It shows UPS is growing big-time,” he said. "We just want to share in that growth.”

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