FedEx Expects MD-11 Freighters to Return to Service in Spring, Bracing for $175 Million Cost Impact
FedEx expects MD-11 freighter operations to resume in the spring after a temporary grounding that reduced peak-season air cargo capacity and increased costs. CFO John Dietrich said the company now anticipates $175 million in additional expenses to offset lost capacity and maintain service levels.
The MD-11 fleet was removed from service following a fatal UPS accident on 8 November, after a potential safety risk was identified across the aircraft type. FedEx grounded 28 widebody MD-11 freighters, including spares. Investigators found structural fatigue cracks in the pylon structure connecting the engine to the wing on the UPS aircraft, while regulators have yet to issue final inspection and corrective-action requirements.
FedEx said the grounding reduced adjusted operating income by $25 million in its fiscal second quarter. Dietrich noted that this marks the company’s first public timing estimate, with planning assumptions that MD-11s could return during the fiscal fourth quarter, between March and the end of May.
With the MD-11s grounded, FedEx lost about 4 percent of its global air cargo capacity during the busiest shipping period of the year. To mitigate the impact, the company redeployed larger aircraft, combined flights, adjusted maintenance schedules, increased trucking, and sourced capacity from third-party carriers. Shipment flows were largely maintained.
FedEx expects December to be the most cost-intensive month, with approximately $150 million in additional expense tied to outsourced air cargo capacity, bringing total incremental costs to $175 million.
CEO Raj Subramaniam said emniyet remains the top priority and that FedEx is working with authorities on the protocol required for returning the MD-11s to service.
Separately, FedEx reported strong fiscal second-quarter results, with revenue rising 7 percent year on year to $23.5 billion and adjusted operating income increasing 17 percent to $1.6 billion. Adjusted earnings per share reached $4.82, exceeding expectations. The company raised the lower end of its full-year profit outlook to $17.80–$19.00 per share and continues preparations to separate FedEx Freight into a standalone company on 1 June.
