FedEx to buy new planes as profits rise

City A.M. Reporter
FEDEX reported a higher-than-expected quarterly profit yesterday and said it is buying 27 new Boeing aircraft to update its fleet for fuel efficiency and cost savings.

The company also said it is deferring delivery of some Boeing freighter aircraft, adjusting for slowing volume out of Asia.

The world’s second-biggest package delivery company reported second-quarter net profit of $497m (£320.3m), or $1.57 per share, up from $28m, or 89 cents per share, a year ago. Analysts had been expecting a profit of $1.52 a share.

FedEx also affirmed its 2012 guidance for $6.25 to $6.75 per share, after trimming it in September on tepid global economic growth and high fuel costs.

“Our improved performance was largely a result of effective yield management programs and strong demand for FedEx Home Delivery and FedEx SmartPost services,” FedEx chief executive Frederick Smith said.

“With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services.”

FedEx Express has signed an agreement with Boeing to buy 27 new 767-300F aircraft, replacing some that are more than 40 years old.

The company said the 767s will provide similar capacity as the MD10s being retired, with about 30 per cent more fuel efficiency and a minimum 20 per cent reduction in unit operating costs.