NOTE 14: COMMITMENTS
Annual purchase commitments under various contracts as of May 31, 2013 were as follows (in millions):
| Aircraft and | |||||||||||
| Aircraft-Related | Other(1) | Total | |||||||||
| 2014 | $ | 968 | $ | 44 | $ | 1,012 | |||||
| 2015 | 1,054 | 29 | 1,083 | ||||||||
| 2016 | 1,140 | 28 | 1,168 | ||||||||
| 2017 | 959 | 22 | 981 | ||||||||
| 2018 | 1,382 | 19 | 1,401 | ||||||||
| Thereafter | 4,492 | 86 | 4,578 | ||||||||
| $ | 9,995 | $ | 228 | $ | 10,223 | ||||||
| (1) | Primarily advertising and promotions contracts. | ||||||||||
The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of May 31, 2013, our obligation to purchase four Boeing 767-300 Freighter (“B767F”) aircraft and nine 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. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft. 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 which are supported by the purchase of B777F, B767F and Boeing 757 (“B757”) 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 2013, we entered into an agreement to purchase 14 additional B757 aircraft, the delivery of which began in 2013 and will continue through 2014. The agreement provides the option to purchase up to 16 additional B757 aircraft, subject to the satisfaction of certain conditions. In addition, we entered into agreements to purchase an additional 23 B767F aircraft, the delivery of which will occur between 2014 and 2019. The delivery of two firm B777F aircraft orders were also deferred from 2015 to 2016.
We had $414 million in deposits and progress payments as of May 31, 2013 on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our consolidated balance sheets. In addition to our commitment to purchase B777Fs and B767Fs, our aircraft purchase commitments include the B757 aircraft in passenger configuration, which will require additional costs to modify for cargo transport. 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, 2013, with the year of expected delivery:
| B757 | B767F | B777F | Total | ||||||
| 2014 | 13 | 4 | 2 | 19 | |||||
| 2015 | - | 12 | - | 12 | |||||
| 2016 | - | 10 | 2 | 12 | |||||
| 2017 | - | 10 | - | 10 | |||||
| 2018 | - | 10 | 2 | 12 | |||||
| Thereafter | - | 4 | 14 | 18 | |||||
| Total | 13 | 50 | 20 | 83 | |||||
Effective as of June 14, 2013, we entered into a supplemental agreement to purchase 13 of the 16 B757 option aircraft noted above. Delivery of the aircraft will occur during 2014 and 2015. This aircraft transaction is not included in the table above, as it occurred subsequent to May 31, 2013.