Pension costs hurt FedEx

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Pension costs hurt FedEx

Nzoom.com

June 2, 2003

FedEx, the largest overnight package deliverer, said on Monday it plans to offer voluntary buyouts to 14,000 management and salaried employees at its main US express delivery unit in an effort to save as much as $US190 million a year.

The Memphis, Tennessee-based company said it expects to take a $US230 million to $US290 million pretax charge to pay for the retirement and severance packages at its largest operating unit, FedEx Express, as higher pension and health-care costs hurt overall profit.

Sandra Munoz, a FedEx spokeswoman, said the company is offering the packages to about 12% of FedEx Express's 116,000 US employees. The retirement and severance packages are not being offered to couriers, pilots or customer service representatives, she said.

FedEx also said it expects to miss analysts' profit forecasts for its current quarter and fiscal 2004, excluding the charge, because of "significant increases" in pension and health-care costs in an economy that it called "sluggish."

The company said it hopes starting in fiscal 2005 to save between $US150 million and $US190 million a year from the retirement and severance programmes.