United Parcel Service Inc. and FedEx Corp. have managed to disrupt plans by rival Deutsche Post AG, which owns DHL Worldwide Express, to expand in the U.S. by using a must-pass war-funding bill. Last week, the Senate voted to include an amendment intended to force regulators to be stricter in enforcing U.S.-ownership regulations for air-cargo carriers against the German company.
Read MoreIndustry analysts say DHL Worldwide’s proposed acquisition of Airborne Inc. will receive intense scrutiny from the U.S. Department of Transportation. Greg Burns of J.P. Morgan Chase believes the deal will be approved because of its impact on competition despite fierce opposition from FedEx Corp. and United Parcel Service. Other analysts were more skeptical. Scott Flower of Salomon Smith Barney gave the deal a 60 percent chance of approval, but noted that it will also be subject to political pressures.
Read MoreFedEx Corp. and United Parcel Services are not expected to stand silently by while DHL Worldwide Express consummates its $1.05 billion takeover of Airborne.
FedEx and UPS have already pushed the Department of Transportation to look at the ownership of DHL. The companies claim that the DHL is really just an arm of the German government. “Both UPS and FedEx are going to object to DHL’s acquisition of Airborne’s ground base assets under the cover of regulatory and anticompetitive grounds,” said analyst Peter Jacobs, of Ragen MacKenzie, a division of Wells Fargo Investments,
FedEx Corp. reported the following consolidated results for the third quarter:
Revenue of $5.55 billion, up 10% from $5.02 billion the previous year, operating income of $269 million, up 14% from $237 million a year ago and net income of $147 million, up 23% from last year’s $120 million.
For the third quarter, FedEx Express reported revenue of $4.06 billion, up 8% from last year’s $3.78 billion and operating income of $133 million, down 8% from $145 million a year ago.
Employees are finding out exactly what “stringent cost controls” really means at Memphis-based FedEx Corp. as the economy continues to deteriorate its core overnight air express business. For instance, approximately 150,000 employees, including management, of FedEx Corp., the holding company, and its FedEx Express and FedEx Services units have had their profit sharing benefits suspended indefinitely. Profit sharing will not be paid out for the second half of fiscal 2001 as well as for the entire fiscal 2002 unless the company’s business improves significantly, confirmed Shirlee Clark, FedEx spokesman, Monday.
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