FedEx cuts back capacity
Logistics giant to take 14 planes out of service next month.
By Dave Hannon -- Purchasing, 4/15/2009 2:43:00 PM
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ogistics giant FedEx said it will permanently ground 14 of its jets by May 31 as part of its previously announced efforts to better match freight capacity with slumping demand.
According to a filing with the Securities and Exchange Commission, FedEx will take 10 Airbus A310s and four Boeing MD10s out of service by May 31, resulting in a $180 million charge. “This decision reflects management’s ongoing efforts to optimize the company’s express network in light of continued excess aircraft capacity due to weak economic conditions and the expected delivery of newer, more fuel-efficient aircraft in fiscal year 2010,” FedEx said in its filing.
While FedEx plans to buy new, more fuel-efficient planes in the fiscal year starting in June, it also said recently it may delay purchasing 30 new Boeing 777 cargo planes if Congress reclassifies the company under a different labor act, which would make it easier for its employees to unionize.
FedEx also laid off 1,000 workers this month as part of the cost-reduction plan. Spokesman Jess Bunn told the Associated Press the cuts affect all of the corporation's operating units, which include its cargo airline and trucking divisions. Bunn said the company had no immediate plans for additional job cuts.
See also, FedEx cuts back as volumes, forecasts continue to concern
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