Core Summary

  • FedEx CEO Raj Subramaniam said on a June 23 earnings call that the company plans to return all of its Boeing MD-11 freighters to service before the peak season.
  • FedEx's MD-11 fleet was grounded last year following a fatal crash involving a UPS MD-11 freighter. Before the grounding, 25 of the company's 34 MD-11s were in service.
  • Subramaniam told analysts that the company began the return-to-service process last month in coordination with Boeing, the U.S. Federal Aviation Administration (FAA), and the National Transportation Safety Board (NTSB), and that four MD-11s have already resumed flying.

In-Depth Analysis

After the fleet was grounded in November last year, FedEx was forced to outsource capacity during the peak season. To minimize operational disruptions, the company turned to commercial air cargo partners, resulting in an adverse impact of approximately $120 million due to higher operating costs and lower revenue. Former Executive Vice President and Chief Financial Officer John Dietrich told analysts in March that as MD-11s gradually return to service, the company expects an adverse year-over-year impact of up to $55 million in the fourth fiscal quarter.

FedEx has been working to build a more efficient global network to better match capacity with expected demand. As part of its network restructuring, the company launched the "Tricolor" program in 2023, dividing its air network into three segments.

Earlier this month, FedEx announced the signing of a memorandum of understanding with China Southern Airlines Logistics Co., Ltd. to share air network resources to enhance connectivity and reliability. The agreement aims to explore cooperation opportunities in areas such as cargo space, routes, fleet, operations, and digitalization. FedEx's hub at Guangzhou Baiyun International Airport (CAN) currently handles intra-Asia express and heavy freight transportation, among other services.

According to the company's 2025 annual report, as part of its fleet reduction and modernization strategy, FedEx plans to retire all 34 MD-11s by 2032. Chief Financial Officer Claude Russ told analysts this month that the company retired 10 jet aircraft in the fourth fiscal quarter, including five MD-11s.

"These initiatives are aligned with our Tricolor and Network 2.0 strategies, which are designed to enhance the efficiency and density of our global air network and North American ground operations," the CFO said.