FedEx is planning to ground more aircraft with the decline in revenue and operating income during the fourth fiscal of the year citing demand weakness and cost inflation
“The company had retired 18 aircraft, including 12 MD-11Fs, during the quarter ended May 29 and there were plans to take out another 29 aircraft from scheduled flying during the coming fiscal year,” Raj Subramaniam, FedEx Corporation president and chief executive said during a recent results call.
“Flight hours during the fiscal fourth quarter were down 12% compared with last year,” he added.
This move comes in the backdrop of a 13% decline in FedEx Express revenues year-on-year.
Mike Lenz, chief financial officer, FedEx said: “The plan had been to reduce its fleet when the supply-demand constraints experienced in recent years eased. We continue to reduce the transpacific and transatlantic flying to match demand, and we’ll continue to lean into that as well as utilising the flexibility of capacity in the market.”
The company is in the midst of a cost-saving initiative that it hopes will reduce annual costs by $4bn by June 2024. FedEx also reduced its headcount by 29,000 and closed facilities.
In the fourth quarter, revenues at the express division were down 12.8% year on year to $10.4bn while operating income was down 51.5% against a year earlier to $430m.
Overall FedEx revenues for the quarter including its ground and freight segments were down 10.1% to $21.9bn and operating income fell 21.8% to $1.5bn.
