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FedEx Shrinks Schedule Following Lowered Demand

Cost-Cutting Brings 8% Reduction in Fleet Usage

FedEx Express has rolled back on some of its operations to the tune of almost 10%, looking to cut costs amid decreasing demand for freight shipping.

The decision was spoken of by CEO Raj Subramaniam during an earnings call, telling investors that the company was parking aircraft and optimizing procedures to slash costs where possible. In the near future, the airline could see increased flights once again as newer, more fuel-efficient aircraft are delivered to replace their older, thirstier jets.

"We are taking additional steps to address our fixed expense structure. This quarter, we reduced flight hours by 8% and salary and benefit expenses by 4%. We also parked an additional 9 aircraft, down gauged on certain routes, and implemented various productivity improvements. As a result of these actions, we mitigated 45% of total revenue declines on an adjusted basis.”

Reportedly, the biggest money sinks for FedEx lie in international operations and aviation costs, dragging down the revenue of FedEx Express year after year. Adjusted operating income has continued to drop year over year, as the global economy continues to shift away from the peripandemic bonanza of logistics. With rolling clouds on the horizon, management has begun tightening the belt in preparation.

"Revenue at FedEx Express was down 8% year over year primarily due to lower volumes globally and yield softness in Asia and Europe," said Brie Carere, FedEx's Executive Vice President of Chief Marketing and Communications Officer. "In Europe, we're seeing improved operational execution with service at the best levels they have been since fiscal year '21. There's more work to do, but the momentum is building as our team has improved service levels while maintaining a healthy sales pipeline."

FMI: www.fedex.com

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