Hows that for spin
FedEx could restructure Express division due to disappointing profits, analysts say - Memphis Business Journal
Analysts predict restructuring at FedEx Express before October � The Commercial Appeal
Restructuring at FedEx Express likely to resemble 2004 not 2009 � The Commercial Appeal
FedEx set to unveil restructuring – analyst | Trading Desk | Investing | Financial Post
Analysts are already all over this one... get those resumes polished up boys and girls... its gonna be bumpy.
Excellent summary... note they are all stories of about a week ago, when FedEx started rolling out hints of its intended changes. This was as I stated, an effort to start boosting the stock price NOW.
Some quotes...
Commercial Appeal
"We believe it is reasonable to expect FDX to announce a restructuring of its Express business in the near future that will include: a reduction in head count through attrition and voluntary severance, an acceleration in on-boarding of more fuel-efficient aircraft, and a rationalization of the Express network," Broughton wrote.
Bizjournal
Analysts aren't sure the size or scope of the restructuring but most expect some personnel changes, although the Memphis-based shipping giant is likely to rely on buyouts and attrition. FedEx will report its earnings June 19 and hold an investor conference in October.
CA again
"We believe the focus will be on replacing three-crew, three-engine aircraft with two-crew, two-engine aircraft," Becker wrote. "This will save approximately $500 million annually on maintenance costs, fuel costs and crew costs. Older aircraft comprise about 25 percent of FedEx's fleet, so the bottom line impact of $1 a share is very real."
There's half of the anticipated savings of 1 BILLION in expenses (going to become profit margin).
Financial Post
The analyst estimates aircraft retirements and employee severance could reach US$270-million, or US55¢ per share. This would provide an 8.5% boost to current base year earnings, while the retirements could generate another US$250-million, for a total of more than a half billion in headline restructuring.
What the articles/analyst are missing, is that there will be buyouts/retirements of topped out wage employees, to be replaced with entry level wage employees doing the same work (at two-thirds the compensation rate) with assistance of the "technology" to be rolled out this fall to get the job done. This is where the other half a billion in annual savings are going to occur.
Back in March, bbsam came out with the "28% of Volume" source. It is looking more and more like that rumor/source was right on the button. I couldn't verify 28% directly at the time (all domestic non-overnight volume would fit this criteria, but there was no way to have the full implementation of the master plan completed in such a short time as this July), but it does look like a significant portion of that will come from the elimination of Economy Saver service.
I'm left thinking that 28% number may have been a number "tuned" to a specific region of Ground (anticipating the volume shiftover from Express within that region) and NOT a number that was NATIONAL in scope. If my suspicion is true, then the source of bbsam's was quoting from an expected jump in
regional level Ground volume due to anticipated elimination of Express Economy Saver service.
Using an analogy from "Mythbusters", back in March/April I stated "busted" regarding the timing of the shiftover (just wasn't enough confirming data to support "plausible"). Well now, it is beyond "plausible", but firmly in the "confirmed" category (the show never "confirms" anything).
