FedEx Cuts 14 Aircraft Overcapacity

By Darren Shannon

FedEx is culling 14 aircraft from its Express fleet as part of the freight company’s ongoing attempts to limit the adverse effects of excess capacity in world airfreight.

The cuts include 10 A310-200s and four MD-10-10s, as well as an unspecified amount of excess engines. All these cuts will be made in FedEx’s fiscal fourth quarter, ending May 31.

The company’s 670-strong aircraft fleet includes 66 A310-200s and -300s and 61 MD-10-10s.

In a U.S. Securities and Exchange Commission filing, FedEx noted, “This decision reflects management’s ongoing efforts to optimize the company’s express network in light of continued excess aircraft capacity due to weak economic conditions and the expected delivery of newer, more fuel-efficient aircraft in fiscal year 2010.

As a result of this decision, a noncash charge of approximately $180 million for impairment of the value of the aircraft and engines will be recorded in the fourth quarter of fiscal 2009.”

These new aircraft include additional Boeing 757s and the introduction of the U.S. manufacturer’s 777 freighter.

“A limited amount of the company’s total aircraft capacity remains temporarily grounded because of network overcapacity. Any future decisions to further alter our networks by eliminating additional aircraft may lead to additional asset impairment charges,” FedEx added in its SEC filing.

Photo: FedEx