Tag: Courier/Express/Parcels

Fleet upgrade. FDX announced a $2.6B plan to replace its narrow-body Boeing 727 fleet over time with wide-body 757’s. This project will run from C08 to C16, and FDX reiterated its unchanged guidance for $3.0B capex in F07. Because the project is spread out over 8 years, it should not materially impact capex in years beyond F07, and management is still guiding to capex of 6-8% of revenue going forward. This plane upgrade has been expected for some time.

Supermajority voting eliminated. Previously, an affirmative vote by a supermajority of 80% of FDX shares was required to approve certain business combinations, including transactions with large FDX shareholders. Yesterday, shareholders voted to eliminate this requirement, so now such transactions will be approved by simple majority. FDX’s Board proposed this idea last April, so this does not come as a surprise to us. We see the change as a positive because it makes it marginally easier for the company to engage in M&A.

New Board member. Yesterday FDX’s shareholders elected Steven R. Loranger to a one year term on the Board of Directors. Mr. Loranger is currently the CEO of ITT Corporation, an engineering company. Shareholders also reelected all 13 Board members who served last year.

Plurality voting retained. Shareholders rejected a proposal that would have required FDX’s Directors to be elected by a majority of shares, rather than the plurality system now used. We see it as modestly negative that FDX retained plurality voting, which we believe decreases the Board’s accountability.

Lawsuit news immaterial. Several news reports came out last night pertaining to two FDX lawsuits. We found nothing surprising about the litigation update and nothing that would change our estimates.