FedEx today released financial and operating results for its fiscal first quarter (ended 31 August). As expected, total revenue was up a bit (2.6%), while net income was down a bit (1.1%), as strong gains in the company’s Ground and Freight Segments were not sufficient to overcome the difficulties faced by the Express Segment. We will provide a detailed analysis of the quarterly results in the upcoming issue of Cargo Facts, but will share a summary here of some of the details that emerged regarding FedEx’s planned “restructuring” of its US domestic express business. Of course, FedEx is not alone in facing a changing world. Those of you who are interested in learning how the overall freight and express business is coping with the changes that have hit FedEx should plan to join us at the upcoming Cargo Facts Aircraft Symposium in Miami, 15 - 17 October (Click here for details and to register)
Two points to start with:
What will the specific changes be? That remains somewhat closely guarded, with the grand unveiling to be made at an investors’ meeting in the second week of October, but here are a few clues.
Regarding changes in air capacity, the chart at right shows a summary of FedEx’s planned acquisitions and retirements over the next six fiscal years, and how the changes in the composition of the fleet will affect the total available revenue payload. As one might expect, older aircraft will be retired, and newer, more fuel-efficient models will be brought in, but for the first time in its history, FedEx is entering an extended period of net reduction, as both numbers of aircraft and total available capacity shrink over the coming six years.
727-200Fs will be gone from the fleet by 2016, replaced by 757-200Fs. Likewise, a total of fifty-four MD-10-10Fs, MD-10-30Fs, and A310-200/-300Fs will exit, replaced by forty-two 767-300Fs. At the top end of the payload scale, FedEx has postponed some planned 777F deliveries, but will still acquire eight more units as fourteen MD-11Fs are retired. Interestingly, FedEx operates one type of freighter whose numbers have remained constant for many years, and will remain almost constant through the next six years: the A300-600F. FedEx acquired its seventy-first unit in 2007, and does not plan to start retirements until a single unit leaves the fleet in FY2018. Click here for a beautiful sunrise photo of one of the A300-600Fs