FedEx paring costs, grounding more planes as margin pressure persists

FedEx, which is slashing costs to protect profits as demand wanes, said on Tuesday that ongoing "demand challenges" prompted its plans to ground 29 more aircraft in the fiscal year that started on June 1. The global shipping downturn has hurt margins for the sector and FedEx's challenge is matching costs and capacity to lower demand. E-commerce has been particularly hard hit as the pandemic-driven online shopping bubble burst when consumers returned to stores, resumed eating at restaurants and started traveling again. FedEx CEO Raj Subramaniam said on a conference call with analysts that the fresh cost-cutting moves would support sustained profit improvement in the current 2024 fiscal year "through an environment that we expect to remain marked by demand challenges, particularly in the first half." The first half of FedEx's fiscal year runs through November. Last fiscal year, FedEx slashed 29,000 jobs, retired 18 planes, shuttered offices and pared back profit-sapping Sunday deliveries in a bid to cut $4b in permanent costs by the end of its 2025 financial year.<br/>