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The
freight bellwether firm, which competes with direct rival United
Parcel Service and Amazon.com's growing delivery operation, is
racing to reduce overhead costs that have pressured profits as
demand for deliveries cools and global recession threatens.
FedEx had come under criticism from investors last year for its
subpar performance compared to UPS, which has a unionized
workforce.
In response, FedEx outlined extensive plans to cut costs,
including parking planes and reducing headcount. The Memphis,
Tennessee-based package delivery company aims to cut $4 billion
in permanent costs by the end of fiscal 2025 and is scheduled to
present more details on their progress at an event on Wednesday.
FedEx executives said last month they were on track to hit $1
billion in permanent cost cuts this fiscal year ending May 31 -
putting the company well on its way toward its 2025 goal.
The phased transition announced Wednesday will ultimately bring
FedEx Express, FedEx Ground, FedEx Services and other FedEx
operating companies into Federal Express Corporation and will be
headed by present Chief Executive Officer Raj Subramaniam, the
company said.
John Smith will become president and CEO of U.S. and Canada
Ground Operations at FedEx Express and assume leadership of
surface operations across the FedEx Express, FedEx Ground and
FedEx Freight businesses, effective April 16.
FedEx Freight will continue to provide freight transportation
services as a stand-alone company under the Federal Express Corp
banner, the company added.
The transition is expected to be completed by June 2024.
Shares of FedEx were up 3.2% before the bell as it also boosted
dividend by 10%.
(Reporting by Lisa Baertlein in Los Angeles and Abhijith
Ganapavaram and Kannaki Deka in Bengaluru; Editing by Himani
Sarkar and Krishna Chandra Eluri)
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