Board approves plan to replace narrow-body aircraft fleet with Boeing 757-200 aircraft

FedEx announced today a USD2.6 billion, multi-year program to acquire and modify nearly 90 Boeing 757-200 aircraft to replace FedEx Express’s narrow-body fleet of Boeing 727-200 aircraft. Subject to identification of suitable 757 aircraft to purchase and the successful negotiation of agreements to purchase such aircraft, FedEx Express expects to bring the new aircraft into service during the eight-year period between calendar year 2008 and 2016.

Compared to the 727 aircraft, the 757 has a 20 percent greater payload capacity, and has an approximately 25 percent lower operating cost per pound. Replacing the older 727 aircraft with the more fuel efficient and quieter 757 aircraft will have the effect of significantly reducing operating costs over time and providing better aircraft utilization efficiencies. In addition, the program will help to reduce greenhouse gas emissions and airport noise. The program is expected to have very positive financial benefits upon completion and although startup costs will be incurred, they will not materially affect earnings. The capital impact of the program on the current fiscal year was included in the company’s recent first quarter earnings release. The total FedEx capital spending forecast for fiscal 2007 remains at USD3.0 billion.