June 04--FedEx Corp. on Monday announced it had permanently retired 10 aircraft and planned to retire another 76 planes well ahead of schedule as part of a FedEx Express fleet modernization.
The changes are in addition to 78 aircraft retirements announced last June and the departure of FedEx's last Boeing 727-200 later this month.
"We are modernizing our aircraft fleet by retiring older, less-efficient, and less-reliable aircraft and replacing them with modern aircraft to build a fleet with higher reliability and better cost efficiency," FedEx Express chief executive officer David J. Bronczek said,
The announcement by the Memphis freight hauler, which burns more than 1 billion gallons of jet fuel a year, came after financial markets closed for the day. The changesalso cover 308 engines related to the aircraft targeted for retirement: MD10s and Airbus A310s.
Separately, FedEx's board declared a quarterly cash dividend of 15 cents a share on common stock, a penny more than the previous dividend. It's payable on July 1 to stockholders of record on June 17.
The company is scheduled to release results June 19 for the March-May quarter and full year ending May 31. The earnings report may shed light on the outcome of a voluntary buyout program that saw its first wave of employees leave the company last Friday.
Fleet modernization and reduction of the U.S. workforce are key parts of a push to improve profits by $1.7 billion a year in the next three years.
"With the planned acquisition of new aircraft and projected slower economic growth than previously forecast, FedEx Express is lowering maintenance costs by aggressively parking and retiring aircraft," Bronczek said.
The company has been buying Boeing 757s to replace 727s and is bringing in Boeing 767s to replace MD10s. The replacements can carry more cargo at less cost.
FedEx said it had retired two A310-200s, three A310-300s and five MD10-10s, plus 21 related engines, registering a $100 million impairment charge in May.
It will speed up "by several years" the retirement of another 47 MD10-10s, 13 MD10-30s and 16 A310-200s, plus 287 related engines, a company release said. The accelerated retirements will result in a $74 million depreciation expense in the fiscal year that began Saturday.
FedEx Express had 660 aircraft, including 368 jets, on Feb. 28. It reported spending $3.8 billion on 1.2 billion gallons of jet fuel in the four quarters ending Feb. 28.
Copyright 2013 - The Commercial Appeal, Memphis, Tenn.
