KarlB737
Topic Author
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FedEx To Offer Staff Buyouts To Cut Costs

Thu Aug 16, 2012 4:07 pm

As successful as I imagine FedEx to be all the time this kind of news surprises me. Obviously Fedex employees would be more keen to see something like this coming based on visable demand or lack of it. I'm glad if there is going to be some reductions that they will at least off the buyouts. The article linked below spells this situation out better and provides information on how UPS if doing as well. Best of luck to all FedEx employees affected.

Courtesy: Associated Press Via Quad-Cities Online

FedEx To Offer Staff Buyouts To Cut Costs

"The world's second largest package delivery company hinted at cutbacks earlier this summer when it said that slowing economic growth would crimp its earnings well into next year. It has already removed some aircraft from its fleet of more than 600 to account for a loss of demand."

http://qconline.com/archives/qco/display.php?id=604157
 
stlgph
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Thu Aug 16, 2012 5:20 pm

More details are expected at an Oct 9-10 investor conference. If FedEx wants to return to margins of 10%, they'll need to cut about $1.3 billion in annual costs - which probably won't be attained solely through employee buy outs.

24 jets and 43 engines are being retired ... 21 Boeing 727's will be retired this fiscal year.
if assumptions could fly, airliners.net would be the world's busiest airport
 
LAXintl
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Thu Aug 16, 2012 5:43 pm

Earlier in the summer they announced the fleet cuts

Unlike UPS, things are not that rosy at FX.

Fedex To Retire 50-aircraft; Establish Japan Hub (by LAXintl Jun 4 2012 in Civil Aviation)
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FlyBTV
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Thu Aug 16, 2012 5:52 pm

Quoting stlgph (Reply 1):
24 jets and 43 engines are being retired ... 21 Boeing 727's will be retired this fiscal year.

Is that a net reduction are or some of those going to be replaced by other aircraft? I know the original plan was to replace the 727s with 757s. We currently have a 727 that comes into BTV (from EWR via SYR) and I was wondering whether they will convert that to a 757 or whether FX will discontinue that in favor of contracting the flight to a third party with a smaller aircraft.
 
stlgph
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Thu Aug 16, 2012 6:07 pm

Hard telling - buy outs would probably not start until March... but it goes beyond cuts, service levels and flight schedules will have to be tweaked, too.

757's and 767's are being brought in to replace the 727's.
if assumptions could fly, airliners.net would be the world's busiest airport
 
bhmdiversion
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Thu Aug 16, 2012 7:38 pm

Most of these positions being offered the buyout are from the station side (RT's, Ramps, etc.)
 
HPRamper
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Fri Aug 17, 2012 1:21 am

Quoting LAXintl (Reply 2):
Unlike UPS, things are not that rosy at FX.

Things are fine at FX. The shareholders, however, want higher profit margins regardless of reinvestment in equipment. None of the core FX companies (Express, Ground, Freight) are losing money nor are the margins sliding toward the red.

Quoting flyBTV (Reply 3):
Is that a net reduction are or some of those going to be replaced by other aircraft? I know the original plan was to replace the 727s with 757s. We currently have a 727 that comes into BTV (from EWR via SYR) and I was wondering whether they will convert that to a 757 or whether FX will discontinue that in favor of contracting the flight to a third party with a smaller aircraft.

757s are replacing 727s on a 1-to-1 basis. If your ramp currently sees a 727, you are assured to get a 757 at some point. The replacement process has been greatly sped up as of late. FX really wants to fast-track the 757 rollouts.

Quoting bhmdiversion (Reply 5):
Most of these positions being offered the buyout are from the station side (RT's, Ramps, etc.)

Nobody who deals with handing anything, packages or aircraft, will be affected. Nearly the entirety of these buyouts will be from administrative and managerial workgroups. Hourly employees are generally not eligible.
 
iowaman
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Fri Aug 17, 2012 6:41 pm

Quoting HPRamper (Reply 6):
Quoting flyBTV (Reply 3):Is that a net reduction are or some of those going to be replaced by other aircraft? I know the original plan was to replace the 727s with 757s. We currently have a 727 that comes into BTV (from EWR via SYR) and I was wondering whether they will convert that to a 757 or whether FX will discontinue that in favor of contracting the flight to a third party with a smaller aircraft.
757s are replacing 727s on a 1-to-1 basis. If your ramp currently sees a 727, you are assured to get a 757 at some point. The replacement process has been greatly sped up as of late. FX really wants to fast-track the 757 rollouts.

Out of curiousity, where is the savings coming from switching from 727's to 757's? Less fuel and maintnance costs I'm assuming?
 
FlyBTV
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Sat Aug 18, 2012 1:28 am

Quoting iowaman (Reply 7):
Out of curiousity, where is the savings coming from switching from 727's to 757's? Less fuel and maintnance costs I'm assuming?

From what I understand, yes and yes. Also reduced labor costs as a result of going from a crew of three to two.
 
HPRamper
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Sat Aug 18, 2012 1:57 am

Quoting flyBTV (Reply 8):
From what I understand, yes and yes. Also reduced labor costs as a result of going from a crew of three to two.

Yes. Plus dispatch reliability, as the 727s are going down all the time on hard mx.

Fuel savings is generally about 40% over the 727 which is quite notable.
 
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Revelation
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Sat Aug 18, 2012 2:51 pm

Quoting HPRamper (Reply 6):
The shareholders, however, want higher profit margins regardless of reinvestment in equipment.

True, but what is interesting is that they are doing quite aggressive change outs of equipment. 757s and 767s for 727s and A310s, 777s pushing MD-11s into traditional MD-10 roles with DC-10s leaving, etc. Maybe the buyouts are a management's response to the investor's demands to "do something", while the real change will be that in a few years time they'll have a much more efficient air fleet.

[Edited 2012-08-18 07:56:13]
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KDAYflyer
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Sat Aug 18, 2012 2:54 pm

Quoting HPRamper (Reply 9):
Fuel savings is generally about 40% over the 727 which is quite notable.

Wow, I didnt think it was that high. Is there a source for fuel burn figures for different airframes?
 
HPRamper
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Sat Aug 18, 2012 10:30 pm

Quoting KDAYflyer (Reply 11):
Wow, I didnt think it was that high. Is there a source for fuel burn figures for different airframes?

I dont know of a source for those figures, but we are talking about three *old* engines versus two newer, more efficient ones. I don't think 40% is super crazy sounding. The 727 burns almost as much fuel as an Airbus on similar flight length.

The 777 also burns 18% less fuel than the 11.
 
CosmicCruiser
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RE: FedEx To Offer Staff Buyouts To Cut Costs

Sun Aug 19, 2012 2:21 pm

I think some of you are reading more into this than needed. They offered the same type buyout package a few years ago (pilots not included) and for those that took it, it was a very good deal. I just finished my last sim ride friday and passed by a Basic Indoc class of new hires. Is UPS hiring? Fedex has ALWAYS been very swift to adjust as needed at the moment but if you knew the plans for the future as far as equipment and technology you would be amazed.