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Commitments
12 Months Ended
May 31, 2016
Commitments [Abstract]  
Commitments

NOTE 17: COMMITMENTS

 

Annual purchase commitments under various contracts as of May 31, 2016 were as follows (in millions):

   Aircraft and       
  Aircraft Related Other(1)  Total   
            
2017$ 1,212 $ 1,235 $ 2,447  
2018  1,770   401   2,171  
2019  1,563   264   1,827  
2020  1,620   193   1,813  
2021  1,476   120   1,596  
Thereafter  4,240   108   4,348  
Total$ 11,881 $ 2,321 $ 14,202  
            
(1) Primarily equipment, advertising contracts and, in 2017, approximately $615 million of estimated required quarterly contributions to our U.S. Pension Plans.
            

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of May 31, 2016, our obligation to purchase four Boeing 767-300 Freighter (“B767F”) aircraft and seven Boeing 777 Freighter (“B777F”) aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

 

We have several aircraft modernization programs underway that are supported by the purchase of B777F and B767F aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.

 

During July 2015, FedEx Express entered into a supplemental agreement to purchase 50 additional B767F aircraft from Boeing. The 50 additional B767F aircraft are expected to be delivered from fiscal 2018 through fiscal 2023 and will enable FedEx Express to continue to improve the efficiency and reliability of its aircraft fleet.

 

On June 10, 2016, FedEx Express exercised options to acquire six additional B767F aircraft for delivery in 2019 and 2020.

 

We had $413 million in deposits and progress payments as of May 31, 2016 on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our consolidated balance sheets. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of May 31, 2016, with the year of expected delivery:

  B767F B777F Total 
        
2017 12  -  12 
2018 16  2  18 
2019 13  2  15 
2020 12  3  15 
2021 10  3  13 
Thereafter 16  6  22 
Total 79  16  95