Cautious words from Mr. Smith...
06-19-2012, 06:34 PM
#1
Gets Weekends Off
Thread Starter
Joined APC: May 2006
Posts: 998
Cautious words from Mr. Smith...
Do you think FedEx will decrease the size of the airline and follow UPS's model of utilizing more trucks/rail?
From today's Wall Street Journal:
FedEx Corp. Chief Executive Fred Smith predicted fundamental changes in the global freight business, with air carriers facing added competition from ships and the industry putting more focus on providing clients with customized, door-to-door delivery options.
The FedEx founder, who pioneered the modern airfreight business and has built the world's largest cargo airline by revenue, cautioned that the traditional airport-to-airport business "is not growing."
"It's very clear that the door-to-door express segment is growing, and the movement of goods on the water is growing," Mr. Smith said Tuesday on a conference call after FedEx reported a 1.4% decline in profit for its fiscal fourth quarter. The company also promised to release details in the fall on a plan to cut costs.
Mr. Smith said FedEx is in a strong position to take advantage of the industry's shifting trends, despite the company's history in the express-air segment, citing FedEx's scale and combined air, ground and freight capabilities. The company also operates a freight-forwarding business, FedEx Trade Networks, which provides logistical services and arranges third-party shipping for customers, including via sea.
Recent industry changes have hurt FedEx as some customers have opted for slower-moving, nonpremium delivery services in the soft global economy. Volume for FedEx's international-priority-airfreight business declined 3% in the company's fourth quarter, which ended May 31, after falling 1% in the fiscal third quarter. U.S. domestic-express volume fell 5% in the fourth quarter, compared with a 4% decline in the third.
The Memphis, Tenn., company plans to disclose a "comprehensive program" in October to cut costs and better align the size of its express air fleet with anticipated market demand, Mr. Smith said.
The company predicted earning $1.45 to $1.60 a share for the current quarter, below the $1.70 forecast by analysts polled by Thomson Reuters.
FedEx predicted earning $6.90 to $7.40 a share for the year, compared with a forecast by analysts of $7.39 a share, although the company stressed that its full-year forecast didn't include the impact of "significant" cost reductions that are under review.
BB&T Capital Markets analyst Kevin Sterling said it has been evident for some time that growth in the traditional air-cargo segment is on the wane, although he said Mr. Smith's comments were significant. "When he speaks…people listen," Mr. Sterling said.
The analyst said he thinks the three biggest integrated, global airfreight shippers—FedEx, United Parcel Service Inc. and Deutsche Post AG unit DHL—stand to benefit from the broad industry changes in the long term because of the companies' scale and flexibility.
But Bill Flynn, chief executive of air-cargo carrier Atlas Air Worldwide Holdings Inc., said the airfreight industry is solid and remains a good business. "The rate of growth may be slowing down, but it is a rate of growth on a much larger absolute base of cargo," Mr. Flynn said in an interview.
He noted that there is little option for perishable and other time-sensitive items to move except by air, particularly as container ships cut fuel costs through "slow steaming."
"What we have not seen is a fundamental shift from air back to sea," Mr. Flynn said. "I just think it is going to be harder to take high-value, time-sensitive commodities off of an air carrier and onto a ship."
He agreed with Mr. Smith that there is an increasing opportunity for airfreight carriers to offer value-added services to customers, such as tracking capabilities.
FedEx said fourth-quarter earnings were hurt by volume declines in its express-shipping business and by a $134 million charge to retire aircraft because of sluggish domestic demand.
FedEx reported profit of $550 million, or $1.73 a share, down from $558 million, or $1.75 a share, a year earlier. Excluding the charge, earnings rose to $1.99 a share.
Revenue rose 3.8% to $11 billion.
Revenue for express shipping, by far the company's largest top-line contributor, rose 2.6% to $6.8 billion. The segment's operating profit declined 35%.
FedEx's ground-shipping segment posted a 9.7% increase in revenue to $2.48 billion. The segment's operating profit rose 18% as average daily volume increased 3%.
FedEx shares were up 3.2% in afternoon trading on the New York Stock Exchange.
From today's Wall Street Journal:
FedEx Corp. Chief Executive Fred Smith predicted fundamental changes in the global freight business, with air carriers facing added competition from ships and the industry putting more focus on providing clients with customized, door-to-door delivery options.
The FedEx founder, who pioneered the modern airfreight business and has built the world's largest cargo airline by revenue, cautioned that the traditional airport-to-airport business "is not growing."
"It's very clear that the door-to-door express segment is growing, and the movement of goods on the water is growing," Mr. Smith said Tuesday on a conference call after FedEx reported a 1.4% decline in profit for its fiscal fourth quarter. The company also promised to release details in the fall on a plan to cut costs.
Mr. Smith said FedEx is in a strong position to take advantage of the industry's shifting trends, despite the company's history in the express-air segment, citing FedEx's scale and combined air, ground and freight capabilities. The company also operates a freight-forwarding business, FedEx Trade Networks, which provides logistical services and arranges third-party shipping for customers, including via sea.
Recent industry changes have hurt FedEx as some customers have opted for slower-moving, nonpremium delivery services in the soft global economy. Volume for FedEx's international-priority-airfreight business declined 3% in the company's fourth quarter, which ended May 31, after falling 1% in the fiscal third quarter. U.S. domestic-express volume fell 5% in the fourth quarter, compared with a 4% decline in the third.
The Memphis, Tenn., company plans to disclose a "comprehensive program" in October to cut costs and better align the size of its express air fleet with anticipated market demand, Mr. Smith said.
The company predicted earning $1.45 to $1.60 a share for the current quarter, below the $1.70 forecast by analysts polled by Thomson Reuters.
FedEx predicted earning $6.90 to $7.40 a share for the year, compared with a forecast by analysts of $7.39 a share, although the company stressed that its full-year forecast didn't include the impact of "significant" cost reductions that are under review.
BB&T Capital Markets analyst Kevin Sterling said it has been evident for some time that growth in the traditional air-cargo segment is on the wane, although he said Mr. Smith's comments were significant. "When he speaks…people listen," Mr. Sterling said.
The analyst said he thinks the three biggest integrated, global airfreight shippers—FedEx, United Parcel Service Inc. and Deutsche Post AG unit DHL—stand to benefit from the broad industry changes in the long term because of the companies' scale and flexibility.
But Bill Flynn, chief executive of air-cargo carrier Atlas Air Worldwide Holdings Inc., said the airfreight industry is solid and remains a good business. "The rate of growth may be slowing down, but it is a rate of growth on a much larger absolute base of cargo," Mr. Flynn said in an interview.
He noted that there is little option for perishable and other time-sensitive items to move except by air, particularly as container ships cut fuel costs through "slow steaming."
"What we have not seen is a fundamental shift from air back to sea," Mr. Flynn said. "I just think it is going to be harder to take high-value, time-sensitive commodities off of an air carrier and onto a ship."
He agreed with Mr. Smith that there is an increasing opportunity for airfreight carriers to offer value-added services to customers, such as tracking capabilities.
FedEx said fourth-quarter earnings were hurt by volume declines in its express-shipping business and by a $134 million charge to retire aircraft because of sluggish domestic demand.
FedEx reported profit of $550 million, or $1.73 a share, down from $558 million, or $1.75 a share, a year earlier. Excluding the charge, earnings rose to $1.99 a share.
Revenue rose 3.8% to $11 billion.
Revenue for express shipping, by far the company's largest top-line contributor, rose 2.6% to $6.8 billion. The segment's operating profit declined 35%.
FedEx's ground-shipping segment posted a 9.7% increase in revenue to $2.48 billion. The segment's operating profit rose 18% as average daily volume increased 3%.
FedEx shares were up 3.2% in afternoon trading on the New York Stock Exchange.
06-19-2012, 09:47 PM
#4
Gets Weekends Off
Joined APC: Apr 2012
Posts: 260
Cutting costs...Hmmm
Remember that email from the SCP with the following:
"I’m optimistic about our future. But we will need to address this challenge by improving our yield by making cost structure adjustments. While the details of all this needn’t directly concern individual members of the crew force, having an understanding of our overall business operations always helps. If we are to effectively address the overall erosion occurring in priority shipments – particularly domestically – we need to identify and pursue volume growth opportunities, smartly adjust our cost structure, and push our yield upward."
My guess is more interesting creative stuff is on the way...squeezing more out of less, airplane retirements...pitiful little bonus for those in the window for retirement to go out the door, and some backdoor attempt to open up other cost savings as we move forward into the real meat of our contract in the next 12+ months.
Just remember we are still making money, paying dividends, etc, etc, and they will be looking to fix their margins out of our pay, sweat, and days off.
I'm glad the PC, JB, and BM are working to help determine our future, and we need not directly concern ourselves on the details...I hope that ALPA and our negoitating committee is doing the same.
I'm sure hope we have a plan and are ready to fight whatever new fight we have coming up as they get us to pull a greater load and talk about whatever concessions they feel we need to make. Yes, I said the C word...(maybe even 4.a.2.b. rearing its head - that 6% raise could go away REAL quick)
Glad we had this little chat.
"I’m optimistic about our future. But we will need to address this challenge by improving our yield by making cost structure adjustments. While the details of all this needn’t directly concern individual members of the crew force, having an understanding of our overall business operations always helps. If we are to effectively address the overall erosion occurring in priority shipments – particularly domestically – we need to identify and pursue volume growth opportunities, smartly adjust our cost structure, and push our yield upward."
My guess is more interesting creative stuff is on the way...squeezing more out of less, airplane retirements...pitiful little bonus for those in the window for retirement to go out the door, and some backdoor attempt to open up other cost savings as we move forward into the real meat of our contract in the next 12+ months.
Just remember we are still making money, paying dividends, etc, etc, and they will be looking to fix their margins out of our pay, sweat, and days off.
I'm glad the PC, JB, and BM are working to help determine our future, and we need not directly concern ourselves on the details...I hope that ALPA and our negoitating committee is doing the same.
I'm sure hope we have a plan and are ready to fight whatever new fight we have coming up as they get us to pull a greater load and talk about whatever concessions they feel we need to make. Yes, I said the C word...(maybe even 4.a.2.b. rearing its head - that 6% raise could go away REAL quick)
Glad we had this little chat.
06-20-2012, 03:24 AM
#6
Bourgeoisie
Joined APC: Aug 2006
Position: 787 SO
Posts: 617
More dividends financed by 4a2b (or worse) are inevitable, yet somehow they continue to tell us that we are undermanned and therefore keep hiring. The whole notion is short-sighted and naive. Does anyone not feel the tremors of another looming financial meltdown and the necessary, fundamental shift in our contract holder's business model?
Time to dust off the old resume...you know, just in case.
Time to dust off the old resume...you know, just in case.
06-20-2012, 03:39 AM
#7
Gets Weekends Off
Joined APC: Apr 2005
Position: 757/767
Posts: 1,128
06-20-2012, 04:13 AM
#9
Gets Weekends Off
Joined APC: Apr 2005
Position: 757/767
Posts: 1,128
[QUOTE=USMCFDX;1215398]You mean hanging around the farm? Because you seem to be an a$$.
Well don't blame me I called it a message board but it seems to me that you prefer to be refer to as a farm . I guess I just have to agree with you on that.
Well don't blame me I called it a message board but it seems to me that you prefer to be refer to as a farm . I guess I just have to agree with you on that.
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