Fedex to retire 15 widebodies
06-03-2015, 05:35 PM
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Fedex to retire 15 widebodies
The express carrier said it would take a $276 million charge to retire some airplanes. Cowen’s Helane Becker and team consider the impact:
FedEx announced they will permanently retire 15 aircraft and 21 related engines. The retired aircraft are part of their fleet modernization and capacity management program.
FedEx will remove 7 MD11s (12 engines), 3 A300s (3 engines), 4 A310s (3 engines) and 1 MD10 (3 engines).
The company will recognize a $246MM charge as a result of the retirements. FedEx also announced they adjusted the retirement schedule of 23 additional airframes and 57 engines and will recognize a $30MM cash charge as a result of the adjustment. This announcement helps to bring the discussion back to the company’s $1.7 Bn Express profit improvement plan, which has fallen out of focus since announcing the acquisition of TNT. Management continues to remain on track to return Express to a 10% margin by the end of 2017. One of the major components of their profit improvement plan is fleet modernization. The company has stated in the past every MD10 replaced by a B767 adds ~$10MM to the bottom line (maybe a little less than that now with lower jet fuel prices).
FedEx announced they will permanently retire 15 aircraft and 21 related engines. The retired aircraft are part of their fleet modernization and capacity management program.
FedEx will remove 7 MD11s (12 engines), 3 A300s (3 engines), 4 A310s (3 engines) and 1 MD10 (3 engines).
The company will recognize a $246MM charge as a result of the retirements. FedEx also announced they adjusted the retirement schedule of 23 additional airframes and 57 engines and will recognize a $30MM cash charge as a result of the adjustment. This announcement helps to bring the discussion back to the company’s $1.7 Bn Express profit improvement plan, which has fallen out of focus since announcing the acquisition of TNT. Management continues to remain on track to return Express to a 10% margin by the end of 2017. One of the major components of their profit improvement plan is fleet modernization. The company has stated in the past every MD10 replaced by a B767 adds ~$10MM to the bottom line (maybe a little less than that now with lower jet fuel prices).
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