MEMPHIS, TENN. To slash costs, FedEx cuts thousands of jobs

Job cuts will save the company at least $150 million a year.
MEMPHIS, Tenn. (AP) -- FedEx Corp. announced plans Monday to trim about 14,000 jobs from its domestic express service in an attempt to cut long-term costs.
With 116,000 workers nationwide, FedEx Express has the world's biggest cargo airline and is the largest operating unit of FedEx Corp., which also owns FedEx Ground and FedEx Freight.
To achieve the job reduction, the company said it would offer early retirement and voluntary severance programs to about 14,000 management and salaried employees across the United States -- about 12 percent of the unit's work force.
The company expects the new job reductions to produce annual operating savings of $150 million to $190 million by 2005.
Domestically, the company ships about 2.8 million express packages daily, which is down by 200,000 packages a day from three years ago. International express and ground shipments have continued to increase over the past several fiscal quarters.
While FedEx Express has cut back hiring over the past two years, the incentive programs are the company's largest attempts to date for reducing its staff, said company spokesman Jess Bunn.
Expecting higher costs
FedEx said it expects significant increases in pension and health care costs in the 2004 fiscal year, which began June 1.
Depending on employee acceptance rates, the pretax charge for these programs is estimated to be in the range of $230 million to $290 million in fiscal 2004, the company said.
The company said it expects earnings for the year of $3 to $3.15 per share, excluding the cost of the early retirement and severance programs. With those programs, earnings for the year could decrease 25 cents to 30 cents a share, the company said.
The early retirement program will be available to employees who are 50 or older and have been with the company at least five years.
The job cuts will not affect flight crews or workers who come in direct contact with FedEx Express customers, such as couriers and customer service agents.