FedEx Corp steps up overhaul of US air fleet

FedEx Corp is stepping up the restructuring of its air fleet by taking an additional 24 aircraft out of its domestic US network, to respond to changing customer demand for express shipments. The company said late yesterday that it is retiring 18 of its Airbus A3110-200 aircraft and 26 related engines, as well as six Boeing MD10-10 planes with 17 related engines.

Most of the aircraft are already parked and out of operational use, FedEx noted.

The retirements come in addition to ongoing plans that will see a further five Boeing 727-200 planes retired later this year and 21 727s in the 2013 fiscal year.

The Memphis-based integrator said it recorded a net $84m impairment charge related to the additional retirement of aircraft.

David J Bronczek said: “Along with the decisions to retire these 50 aircraft, we are also developing detailed operating and cost structure plans to further improve our efficiency.”

FedEx Express, which has 688 aircraft in its fleet overall, including 397 jets, is in the process of adding newer aircraft to its fleet that will be more reliable and fuel-efficient than those being replaced.

As well as responding to a general changing trend in customer shipments, the company is looking to reduce the $3.2bn it spends on 1.2bn gallons of jet fuel every year.

The company signed a deal with Boeing back in December to purchase 27 new 767s to replace its MD10s, suggesting the new aircraft would mean a 20% cut in operating costs and 30% increase in fuel efficiency.

In adding new Boeing 767-300 and 757-200 aircraft, the company is planning to pull 31 additional Boeing MD10-10s, 18 additional Airbus A310s, four B727s and one Boeing MD10-30 out of service over the next three years, costing around $196m in accelerated depreciation.