FedEx plans to trim its workforce and aircraft fleet to boost profit by $1.7 billion in three years, as the parcel giant sees shippers shift toward slower, less-costly transport services, founder and CEO Fred Smith told investors on Tuesday.
Smith is expected to reveal more about how the cost cutting, primarily focused on Express and Service units, on the second day of the company’s investors meeting in Memphis, Tenn., on Wednesday. As part of its cost-cutting efforts, the company unveiled a voluntary buyout program in August. FedEx said earlier this year would retire 24 domestic aircraft and shorten the depreciable life of 54 older aircraft.
“We are confident we will deliver the performance to ensure the near- and long-term success of FedEx,” Smith said. “And, we believe we can do this even in low-growth environments for global trade and within the major economies.”
He said the success of FedEx Ground and FedEx Freight would be instrumental in driving the company toward its profit goals. Both units experienced a jump in revenue as shippers opted for cheaper delivery services in the first fiscal quarter.
FedEx last month warned its earnings for the next fiscal year that ends next May could slip as much as 6 percent, after the carrier reported a 1 percent year-over-year profit drop in its fiscal first quarter. Investors are keen to learn how the company will keep its companywide capital spending goal of $3.8 billion for fiscal 2013, considering the cuts it to undertake.