FedEx sees profit fall, glum forecast
 

I'd imagine it'll be a few lean years for both FedEx and UPS (not to mention pax airlines).


FedEx sees profit fall, glum forecast
03.20.08, 3:34 PM ET
http://www.forbes.com/markets/feeds/afx/2008/03/20/afx4799860.html

http://images.forbes.com/media/assets/spacer_white.gifhttp://images.forbes.com/media/assets/spacer_white.gif
MEMPHIS, Tenn. (AP) - FedEx Corp. reported a 6 percent drop in third-quarter earnings Thursday, saying a slow economy and high fuel prices are expected to continue cutting into profits.
The Memphis-based shipper predicted lower fourth-quarter earnings from a year ago, as well as limited earnings growth for its next fiscal year.
'As we survey the current economic landscape, we expect limited earnings growth in (2009), given the current outlook for macro-economic conditions and fuel prices,' Chief Executive Frederick W. Smith told market analysts in a conference call.
'There is clearly stress in the housing and financial sectors and they create a drag on the overall U.S. economy, as well as the fuel prices,' Smith said, also noting an apparent softening in the labor market. 'In calendar year 2008, we expect U.S. GDP to grow more slowly than in 2007.'
FedEx which is often seen as a bellwether for the U.S. economy, expects the international economy 'will continue to expand overall, albeit at a slower rate,' Smith said. 'And this will be fueled by the emerging markets.'
Company shares fell 2 cents, or 0.02 percent, to $86.21. Shares have traded in a range of $80 to $119.10 over the past 52 weeks.
'I'm not surprised they lowered their near-term outlook,' said Morgan Keegan analyst Art Hatfield. But it is a bit unusual, he said, for FedEx to begin talking about next year's expectations so early.
'Now keep this in mind. They haven't actually said what they expect to earn next year,' Hatfield said. 'All these comments could change radically in the next three or four months.'
The company is well managed, he said, and its troubles come from 'outside forces that are very difficult to control.'
FedEx and its larger rival, United Parcel Service Inc. have both indicated they are counting on business overseas to help counteract stalled demand in the U.S.

UPS said last week that it might not meet first-quarter earnings predictions, due next month, because of the uncertain U.S. economy.
'We expect the weakness in parcel volumes at FedEx and UPS to continue for the next few quarters,' said JPMorgan analyst Thomas R. Wadewitz.
Peter Morici, a professor and economist at the University of Maryland, said the financial reports suggest a more dire future for the broader economy.
'The parcel carriers are a fantastic gauge of the U.S. economic outlook,' he said. 'The fact that they are forecasting future weakness further proves that we are in a recession and its duration is unknown.'
Morici said the high price of oil has compounded the troubles.
'What we have is a structural breakdown in the economy. We are truly navigating a region not yet on the map,' he said.
FedEx said it earned $393 million, or $1.26 a share, in the three months ended Feb. 29, versus $420 million, or $1.35 a share, for the same period last year, when earnings got a benefit of 8 cents a share from a tax-rate adjustment.
Revenue rose 10 percent to $9.44 billion, from $8.59 billion.
Analysts at Thomson Financial expected earnings of $1.22 a share on sales of $9.11 billion.
FedEx said package volumes for domestic express shipments declined 2 percent, while less-than-truckload shipments fell 3 percent.
Revenue at FedEx Ground, the company's main trucking unit, rose 13 percent, however, and sales at FedEx Express, the company's cargo airline, increased 11 percent overall, primarily because of growth in international express shipments.
Smith said FedEx is focused on managing costs and is depending heavily on its ongoing growth overseas.
FedEx predicted earnings in the fourth quarter of $1.60 to $1.80 a share, compared with $1.96 for last year's final period. Analysts were looking for earnings of $1.95 a share in the fourth quarter.
That outlook 'assumes no additional increases to current fuel prices and no further weakening in the economy,' the report said.
FedEx expects 'revenue growth to continue to be restrained across all segments for the remainder of 2008,' said Chief Financial Officer Alan B. Graf Jr.
Analysts forecast earnings of $6.31 a share this fiscal year and $7.11 a share in fiscal 2009.
'Now the wild card going forward remains the price of fuel,' Smith said. 'We are in uncharted territory when oil consistently sells for more than $100 a barrel.'

AP Business Writer Samantha Bomkamp in New York contributed to this report.

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

AHHHHHH the sky is falling!!! Run for the hills!!!!

Good thing we have that LOA that's so good we had no problem filling the FDA seats w/o the expense of having to hire new pilots.

Ok, I'm little slow, say that again?... You're talking purple, right? If so why did you highlight UPS? Confused....

Ladies, Pleeaasseee! We made an operating PROFIT of 400 million with a gross revenue of 9.5 billion (up 10%)!!!!! In addition our international business grew in double digits, all in the most challenging economic enviornment since pre-Reagan. We are agile, inovative and vibrant. This our time in the sun.....take a deep breath, step back and enjoy it. Every other commercial airline pilot envies you right now.....enjoy it. You are the highest paid, best vacation, most schedule flexibility pilots around....enjoy it. After all you could be trying to work at US Air........:rolleyes:

Y E S Y o u a r e a l i t t l e S L O W.
:p
He was quoting from your post, which had UPS high-lighted. The point was about the international growth (Hence the quoted passage) and our inferior LOA.
:o

Got ya, I knew it, I was just testing y'all... ;)

"Every other commercial airline pilot envies you right now.....enjoy it. You are the highest paid, best vacation, most schedule flexibility pilots around....enjoy it. After all you could be trying to work at US Air"

Very true - except "other commercial airlines" don't have to deal with the over 60 pilots coming back to the front seat - you see their >60 pilots are where they should be - retired... :)

That's your comeback? Weak, very weak. At least make fun of our LOA.

So you're saying that of all the commercial airlines, none have had guys reach their 60th birthday after December 12th of last year, and who have elected to stay in the cockpit? That's very interesting. Frankly, I grow weary of guys like you who continue to complain about this age 60 thing. Reminds me of some of the purple guys complaining, 10 years after the fact, about the purple/silver merger. Get over it. It happened. Move on.

I would like to move on but the retro provision my union fought for cancelled my training class:).

Let's be realistic here JJ. Of course the other airlines have guys who reached 60 and have stayed on. What they don't have though is an additional bunch of people who were 60+ on Dec. 12 coming back to the front seats canceling bid awards(FX) and bumping people back to the panel (UPS so far) and slowing progression during a downturn. Iow this is gonna be longer than the 3-5 year blip all of the optimists like to talk about, and it seems wildly unrealistic to think that people are just going forget about it and get over it like it was just a bad night Tunica. That said, I expect to hear similar 'commentary quite often ahead of our next contract negotiations from the senior portion of the list since it seems that retirement issues will again be at the forefront of things-what did someone say something about the optimizer and FDA's? I couldn't hear you!!

In the big picture the geezers would serve themselves well by not gloating and the younguns would serve themselves well by not baiting them.

But what fun would that be <g>?

You're right Sideshow. I wasn't trying to bait Jetjok, I was just pointing out that I think it's a little naive to think that 4 mos. into a huge change to everyone's careers that was great for some and not so great for a lot more, that people are just going to forget about it and move on. Especially in a downturn and working for an airline that claims it's overstaffed.

So oil increases 50% or so in price and our profits go down by 6%? SOunds like good news to me. And no I didn't do the math, just a wag.

not planning on doing any hiring...planning to have huge excess bid and the bottom guys will have a choice to either keep their job at FDX (HKG or CDG) or not to keep their job....they are not junior manning with this method..watch and see!

What? ....

So why did they try to draft me this afternoon?

this idea is being seriously considered by management....

Management?

Sounds like a load of BS...did they mention furlough too :rolleyes:

Sect 24.C.6.b
If an excessed pilot cannot be awarded a crew position due to insufficient
preferences on his standing bid, the Company shall assign him to a
permanent crew position with a base in the United States with the highest
pay rate to which he is entitled by his seniority.

Well thats not quite right and by the way we will all be over 60 one day and will be making the decision to stay or leave and the folks behind us will be saying the same as what some are saying today about the old fellas who are staying on.Savvy?


Please return your seat to the upright position.

While you will have a choice to retire at 60, 61, 65 or even later if you go to the FE seat (I'm guessing since I don't know your age) - I'm certain that option won’t be available to me and other junior guys when it's our turn to retire. Of course, we'll be able to retire "early" at 60 but not without a pension penalty.

The only true winners here are the guys over 60 AND pilots who are already secure in the left seat - in other words those who aren't risking getting bumped from the left seat. For them, the new rule means an additional 5 years of making well over quarter million dollars a year - no wonder most of them are OK with the new rule. :rolleyes:

This thread is not really about age 60 debate but since you’re comparing apples to oranges I had to reply…

Oh yeah...I agree.

The only group of humans that hold grudges over pretty much anything more than pilots (regarding loss of seniority/seat status) are women ;). So imagine if you will a woman pilot who loses her captain seat because of a geezer! Duck and cover for 20 years. :D

Seriously...look at the grudges still festering to this day (in no particular order/magnitude):

Reno Air/AA/TWA
USAir/Piedmont/PSA/AWA
Allegheny/Mohawk
Capitol/UAL
NWA/Republic
Flying Tigers/FDX
DAL/Western
SWA/Morris (maybe not so bad)

And there has to be many others I have forgotten. Imagine the mythical national master seniority list and the grudges that would create!

wow.... joined yesterday (3/25), most posts are flame worthy (next contract offers, FDA's) - but you speak as though you're in the "know" with both management and union.. Only person like that is DW as he'll be our next VP of flight ops :rolleyes:.

If they furlough, our system couldn't support the 48/68 hours schedules. They would just STV rather than furlough... But I'm sure you'll answer this with a "just wait and see..."

Oh not to mention that by the time/cost it would take to get everyone retrained.