FedEx Plans to Retire 29 Aircraft as Demand Declines

FedEx, the global logistics and parcel carrier, is set to remove 29 aircraft from its fleet this year through permanent retirement and temporary storage. This move aligns with FedEx’s strategy to reduce costs and increase flexibility amid the slowdown in global trade. Despite the retirements, FedEx’s mainline fleet will actually grow by 10 aircraft this year with the delivery of newer freighters ordered in previous years. The company’s focus on streamlining operations and optimizing resources aims to improve efficiency and adapt to changing market conditions.

In its recent earnings briefing, FedEx’s CEO Raj Subramaniam announced the retirement of nine additional MD-11 freighters and the temporary storage of 20 aircraft in the fiscal year 2024. The Express unit retired a total of 18 aircraft in the previous fiscal year, including MD-11s, Boeing 757-200s, and Airbus A300-600s. These retirements resulted in a write-off of $70 million in the fourth-quarter financial results.

While the Express division experienced a 13% decline in revenues during the fourth quarter, the company’s efforts to reduce expenses and optimize yields helped improve profits. FedEx witnessed a 7% decrease in Express package volumes, showing signs of recovery compared to the previous quarter. The company has been strategically adjusting its flight schedules, accelerating aircraft retirements, and relying more on partner airlines to enhance cash flow and prioritize owned aircraft for parcel shipments.

To support its fleet modernization efforts, FedEx plans to add 55 aircraft over the next two years. This includes the addition of Boeing 767-300 freighters, Boeing 777s, Cessna 408 SkyCourier aircraft, and ATR72-600s. However, beyond fiscal year 2025, FedEx currently has no firm commitments for further aircraft purchases. Capital expenditures for aircraft are expected to decrease in the coming years.

Overall, FedEx aims to optimize its network, consolidate operations, and adapt to evolving market conditions while maintaining a strong fleet that meets the demands of the logistics industry. These strategic adjustments will enable FedEx to continue providing efficient and reliable delivery services worldwide.