FEDEX, which is slashing costs to protect profits as demand wanes, said on Tuesday (Jun 20) that ongoing “demand challenges” prompted its plans to ground 29 more aircraft in the fiscal year that started on Jun 1. The global shipping downturn has hurt margins for the sector and FedEx’s challenge is matching costs and capacity to lower demand. E-commerce has been particularly hard hit as the pandemic-driven online shopping bubble burst when consumers returned to stores, resumed eating at restaurants and started travelling again. FedEx CEO Raj Subramaniam said on a conference call with analysts that the fresh cost-cutting moves would support sustained profit improvement in the current 2024 fiscal year “through an environment that we expect to remain marked by demand challenges, particularly in the first half”. The first half of FedEx’s fiscal year runs through November. Last fiscal year, FedEx slashed 29,000 jobs, retired 18 planes, shuttered offices and pared back profit-sapping Sunday deliveries in a bid to cut US$4 billion in permanent costs by the end of its 2025 financial year. Shares in the company fell 2.7 per cent in extended trading on Tuesday after FedEx posted an adjusted profit of US$4.94 per share for the fourth quarter that ended May 31, compared with US$6.87 per share a year earlier. Its flagship Express service, which depends on aircraft to quickly whisk packages to recipients, reported weakness in the latest quarter on softer demand and customers trading down to slower and less-expensive transportation options, although executives said margins in that business would improve. For fiscal 2024, FedEx forecast flat to low-single-digit-percent revenue growth versus the prior year. That would put the range of adjusted earnings, excluding items, at US$16.50 to US$18.50 per share. The company said it would buy back US$2 million of its common stock in the new fiscal year. It also said chief financial officer Michael Lenz would retire effective Jul 31. He will remain a senior adviser to the company until Dec 31. REUTERS