10/10/2012 1:00:00 PM Investors get 1st look at big FedEx cost cut plan
NEW YORK (AP) — Investors are driving up shares of FedEx Corp. after the world’s second-largest package delivery company promised to boost profits by shedding jobs, aircraft and underused assets.
FedEx plans to boost profit by $1.7 billion within three years. The much anticipated restructuring is a response to a shift by customers to slower, less expensive means of delivery as the global economy struggles to grow.
Founder and CEO Fred Smith said most of the cost cuts will come in the company’s Express and Services units, which have been hurt the most by the global economic conditions. Smith said a voluntary buyout program announced in August should reduce “fixed head count by several thousand people.” A majority of those employees are in the U.S.
Express is where FedEx got its start in 1971, and is still the company’s biggest segment by far. The division moves 3.5 million packages on an average day, mostly by air.