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Thu, Dec 18, 2008

FedEx May Park More Planes As Economy Struggles

Analyst Believes Shipping Giant Will "Suffer A Lot"

You know things are bad when FedEx talks about drastic cutbacks to its operation. Last week, the shipping conglomerate took a hatchet to its own profit forecast, scaring investors off and sending its stock price plummeting to depths not seen since 1987.

More bad news may be in store Thursday. Bloomberg reports FedEx is expected to announce its US express and freight numbers are off by as much as 10 percent over the same period in 2007... and that may be just the beginning.

"Even in a best-case scenario, they’re still going to suffer a lot," said Dan Ortwerth, an analyst with Edward Jones & Co. "FedEx is a premium services company and a transportation company, and both of those sectors get hit badly in an economy like this."

In addition to some 1,100 job cuts already announced and closing its less-profitable FedEx Office (nee Kinkos) printing shops, FedEx may also park more its 80 Boeing 727 Freighters. FedEx had planned to ground five of the fuel-thirsty tri-jets in 2009, and 40 more over the next three years. Those numbers are probably conservative.

The company operates the world's largest fleet of aircraft, with 672 planes of varying stripes. The B727s are among the oldest in its fleet, averaging 29 years old.

FMI: www.fedex.com

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