FedEx Corp. (FDX) said it will record an impairment charge in its fiscal fourth quarter related to the retirement of certain Airbus and Boeing aircraft. The company also raised its quarterly dividend by 7.7%.
FedEx said it would permanently retire 18 Airbus 310-200 aircraft and 26 related engines, as well as six Boeing MD10-10 aircraft and 17 related engines and as a result will record a charge of 26 cents per share in the fourth quarter.
The decision to retire these aircraft will better align FedEx's U.S. domestic air network capacity to better match current and anticipated shipment volumes, the company said. The retirements are in addition to five Boeing 727-200 aircraft that were retired in the latest period and the planned retirement of 21 B727 aircraft.
"Along with the decisions to retire these 50 aircraft, we are also developing detailed operating and cost structure plans to further improve our efficiency," said Chief Executive David J. Bronczek, saying additional information will be provided in the fall.
FedEx also said its one-cent dividend increase brings FedEx's quarterly payout to 14 cents a share and will cost the company about $12.6 million more a year.
In March, FedEx said that the U.S. and global economies have slowed, even as it reported fiscal third-quarter earnings that more than doubled from a year earlier, helped by strong holiday shipping and higher prices.
FedEx had also said it's taking action to reduce capacity in its U.S. domestic express business--where volume slumped 4% in its fiscal third quarter--including trimming its work force through attrition and putting some aircraft into storage.
Shares were off by 40 cents to $84.80 in recent after-hours trading. The stock has fallen 6.2% over the past three months.
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