FAA to Review FedEx’s Proposal to Install Missile-Defense System

The U.S. Federal Aviation Administration (FAA) said it is reviewing FedEx Corp.’s (NYSE: FDX) proposal to install a laser-based missile defense system on 200 Airbus A321 airplanes. Shares of the logistics behemoth closed at $256.22 on January 14.

Protecting Cargo with Missile Defense Systems

In 2019, FedEx had proposed installing a laser-based missile defense system on cargo jets, which are used for its logistics services. The step aims to protect the cargo carriers from shoulder-fired missiles known as Man-Portable Air Defense Systems (MANPADs).

MANPADs have been threatening airline companies and governments for many decades. They detect the carrier’s engine through heat. Few of these missiles even use the infra-red system to detect the aircraft’s engines. Around 40 civil aircraft have been hit since the 1970s and some cargo carriers were recently targeted.

The FAA said that any approval will come with the condition that the system cannot be used while the aircraft is grounded and even during maintenance, since these rays can be harmful to the eyes and skin. The FAA has kept 45 days open window for public comments before issuing its approval.

Comments

The FAA said, “In recent years, in several incidents abroad, civilian aircraft were fired upon by man-portable air-defense systems (MANPADS).”

The FAA added, “The FedEx missile-defense system directs infrared laser energy toward an incoming missile, in an effort to interrupt the missile’s tracking of the aircraft’s heat.”

Wall Street’s View

The FDX stock commands a Strong Buy consensus rating based on 12 Buys and 2 Holds. The average FedEx price target of $309.71 implies 20.9% upside potential to current levels. Shares have gained 3.8% over the past year.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into FDX’s performance.

In December, FedEx website traffic recorded a 5.87% year-over-year decrease in monthly visits. However, year-to-date website traffic growth increased by 15.74% compared to the same period last year.

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