jgflyer

FedEx could lure private equity interest: Barron's
Sunday July 8, 4:00 pm ET

NEW YORK (Reuters) - Package delivery company FedEx Corp. (NYSE:FDX - News) could become a target for private equity buyers because of its modest valuation and turnaround potential, Barron's reported in its July 9 issue.
With an enterprise value of $35 billion, FedEx is valued at about six times expected fiscal 2008 earnings before interest, taxes, depreciation and amortization, or Ebitda.

"One need not get anywhere near the recent double-digit Ebitda valuations of (leveraged buyouts) in other industries to get to a share price more than 20 percent above current levels," Barron's said in the report.

The attraction for buyout firms would be the potential to cut capital expenditures to help finance a deal as well as the opportunity to turn around ailing retail unit FedEx Kinko's.

Even without a buyout, which Barron's said may not be imminent or even likely, FedEx shares should perform fine on their own, the investor weekly said.

FedEx shares, which are essentially flat this year, closed on Friday at $110.84.



Just one more thing to watch out for.

Huck

I watched my dad go through this in the late eighties at NWA.

NWA used to write checks for 747's new out of Seattle. They owned most of the asian hotels they stayed at. They had tons of cash in the bank.

Some geniuses led by Al Checci (who was like 30 at the time) bought it out for 3 billion in leveraged money. Then they sold everything the company owned and leased it back again. That got them down to 2 billion in debt.

Then they went to the employees and said, take a 25% pay cut or we're going out of business. We've got lawyers on a plane to New York to file bankruptcy today.

Hard to look at the last 15 years at NWA and argue that was good for the company or the economy in general. And Checci left after a few years, tens of millions richer.

I've been arguing for awhile here at FDX: there's 50 MBA's in MEM alone who get up every morning and point their guns at us, looking for the next big cost savings. Foreign flying is in their sights. Pensions next.

Albief15

Let's 'em have it. If I have to live overseas in squalor to hold this job I'll sell insurance or cars instead. I won't be bluffed into working for **** wages in Hong Kong because of some MBA bogeyman.

FedEx isn't your future. Fedex is your job right now. I hope this company succeeds and prospers. They are asking you to take a pay cut now and accept being sent away against your will whenever they need you for 3 months. Are you so scared of losing this job 10 years from now you are willing to take this crap now?

If they come after us with foreign pilots--they better hope those MFs can fly from Dayton to MEM and to FLL too. Because every swinging dick I know is going to taxiing slow, running the APU until takeoff, and flying at mach .84 with the boards out if they start threatening our jobs. Any spirit of cooperation and help will go out the window.

Last I checked--there was still a sense of urgency and respect everytime I've been out on the line. The fuel sense stuff--we are doing it--and without complaints. If they come after FDX pilots on this with job security the house they burn down might be their own. How many flights will be late/divert/etc verses gutting it out and getting that "absolutely, positively" mindset?

I think you are smart to recognize the threat. However--like a dog beat too much (by watching your dad and the state of the industry), I think you are more scared than you need to be.

At the same time--use your free time to build your parachute. I hope and pray to retire from here as a healthy, happy captain with a full pension. I save, invest, and diversify, however, as if we were going out of business in 5 years.

Huck

I was reading your post, planning on replying the same exact thing. I have a five year event window here. Planning on anything else is just not responsible.

The good news is, at least until we vote in Jeb or Jenna or whoever the Bushes have next in the lineup, domestic flying is still pretty safe. (Before you get your republican hackles up, read what all Norman Mineta has been saying to the EU about open skies this year.) I think (hope) that Bush can't do much more damage before he's gone.....

⌐ AV8OR WANNABE

Yeah, sure...
...one could also argue that when Hillary and then Chelsea become our next presidents we'll have to change the name of our country to United Scares of America. Also, FedEx and UPS will be run by the government as one company - AeroFreightFlot.

I’ll take 100 Jebs or Jennas or any other Bush over one Hillary!

HazCan

Oh F&*k, here we go....(BTW, I agree with you about Billary)

AerisArmis

Huck, all that Army helicopter flying shook your brain loose.

Daniel Larusso

Amazing how this part of Huck's post got missed. This particular issues isn't a republican/democrat issue, it's a Bush issue. That's about as far as I go with politics and work, so thus ends my own 'drive-by'!!

FDXLAG

Sounds like a Mineta issue.

GEOFFREY

It will never happen. But, if it did, the pilots at Fedex would take the cuts just like all the other pilots at all the other airlines have done. You can bet on it.