FedEx Corp. Accelerates Aircraft Retirements

MEMPHIS, Tenn.—(BUSINESS WIRE)—

FedEx Corp. (FDX) announced today it had permanently retired or will accelerate the retirement of 86 aircraft and 308 related engines as it continues to modernize its aircraft fleet and improve the global network of FedEx Express.

The permanent retirement of aircraft and related engines announced today includes:

Two A310-200 aircraft and four related engines;
Three A310-300 aircraft and two related engines; and
Five MD10-10 aircraft and 15 related engines.
The impact of retiring these aircraft, engines and parts resulted in an impairment charge of $100 million recorded in May 2013.

In addition, FedEx will accelerate by several years the retirement of:

47 MD10-10 aircraft and 172 related engines;
13 MD10-30 aircraft and 55 related engines; and
16 A310-200 aircraft and 60 related engines.
As of July 1, 2013, FedEx Express will complete the final retirement of the B727-200 fleet.

“We are modernizing our aircraft fleet by retiring older, less-efficient, and less-reliable aircraft and replacing them with modern aircraft to build a fleet with higher reliability and better cost efficiency,” said David J. Bronczek, president and chief executive officer of FedEx Express. “With the planned acquisition of new aircraft and projected slower economic growth than previously forecast, FedEx Express is lowering maintenance costs by aggressively parking and retiring aircraft.”

The impact of accelerating the retirement of aircraft will result in additional year-over-year depreciation expense of $74 million in FY14.

FedEx Express Aircraft Fleet Facts

As of Feb. 28, 2013, FedEx Express’s fleet totaled 660 aircraft, including 368 jet aircraft.
During the four quarters ended Feb. 28, 2013, FedEx Express spent $3.8 billion on 1.2 billion gallons of jet fuel.
The B757 is significantly more fuel efficient per pound of payload and has 20% additional payload capacity than the B727 it replaces.
The B767 will provide similar capacity as the MD10s, with improved reliability, an approximate 30% increase in fuel efficiency and a minimum of a 20% reduction in unit operating costs.
The B767 shares spare parts, tooling and flight simulators with the B757.
Dividend Declaration

The Board of Directors today declared a quarterly cash dividend of $0.15 per share on FedEx Corporation common stock, an increase of $0.01 per share over the previous dividend payment. The dividend is payable on July 1, 2013 to stockholders of record at the close of business on June 17, 2013. FedEx remains committed to paying higher dividends to shareowners in years to come.