FedEx Express Global Air Network Cuts
 

Per the earnings call today, FedEx CEO released the following steps to reduce costs in FY23 (July 22-June23)

• Prioritizing Cost Actions to Generate $2.2B-$2.7B of savings of which $1B will be permanent (Company wide)
• FedEx Express (the airline) expect to drive $1.5B-1.7B in savings this fiscal year

The largest single expected contributor (to savings) in FY23 will be the changes to the Express Air Network as Global Flight Hours Are Cut:

• 11% Trans-Pacific daily frequencies
• 9% Trans-Atlantic daily frequencies
• 17% of Asia to Europe daily frequencies
• Additional reductions to be taken post peak
• Parking 8 Narrowbodies temporarily to defer maintenance spending

These cuts are to take effect in October and November '22

Over the last quarter, FedEx Express operating income was down 72% !! Ground was up 3% and Freight was up 67%. Express's declines were blamed on macroeconomic issues worldwide as well as service failures in Europe.

Long Term Savings Plan (through FY25) ... $1.4B savings from FedEx Express Operating Expenses:

• Restructuring the Air Network by reducing routes and more efficiently deploying crews, aircraft and commercial line haul
• Optimization of sorts

Slightly misleading… Mike said they will be parking the equivalent capacity of 8 narrowbodies, and then dodged the question about deferring new deliveries

I would love to know more about these service failures in Europe. It’s been six years of TNT. We bought them to gain equal market share with UPS and DHL over there. I hope we haven’t squandered the opportunity.

So….better to be junior in your seat or senior when hours drop to minimums?

Such a strange way to say “we’re parking the remaining MD-10-30s that only had extra life due to the COVID volume surge.”

Does converting the phrase to a higher number of narrow bodies make it seem like a a deeper cut? Politics is theater I guess.

I think every airfreight operator will announce massive reductions in all metrics. They ramped-up capacity to meet the covid demand, which is now softening, and more pax players are back further adding to capacity.

To blame this on any systemic company failure is misguided.

It does play well as a media bite though

So all the analysts are wrong?

The CEO did name specifically “service failures” in Europe and provided a number of fixes they’re going to implement. The TNT integration so far has been a disaster.

We are parking NB. Not sure how many but a guy in my pad. Is a MX planner. We just flew 3 757 to Victorville to defer paying for heavy checks that are due .
you can verify this on plane spotter and flight aware. Plane other than 10-30 are being stored or parked.

I would love to know which 757s you are seeing that have flown to VCV for storage.