FedEx’s profits drop due to weak airfreight market

FedEx’s profits took a downward spiral.

FedEx reported earnings of US$1.23 per diluted share for the third quarter ending Feb. 28, excluding business realignment costs. Last year’s third quarter earnings were US$1.55 per diluted share.

FedEx’s net income fell by 31 percent – from US$521 million last year to US$361 million.

“The third quarter was very challenging due to continued weakness in international airfreight markets, pressure on yields due to industry overcapacity and customers selecting less expensive and slower-transit services,” Frederick W. Smith, FedEx chairman, president and CEO, said. “In response, beginning April 1, FedEx Express will decrease capacity to and from Asia and will aggressively manage traffic flows to place low yielding traffic in lower-cost networks.”

Smith also said the company is looking into retiring older aircraft.