FedEx plans to return grounded MD-11 cargo aircraft to service in May, a move aimed at cutting costs by reducing its use of leased planes.
"The organizations that have responded most effectively have moved beyond episodic cost programs toward something more durable: cost discipline embedded into how the supply chain operates every day," Masha Chandrasekaran, a supply-chain finance leader, wrote for Forbes Finance Council, highlighting the industry-wide pressure.
The decision is part of FedEx's aggressive DRIVE restructuring program, which delivered $2.2 billion in savings in fiscal 2025 and targets another $1 billion in permanent reductions for fiscal 2026. The company recently raised its full-year EPS guidance to a range of $16.05 to $16.85 after a strong third quarter that saw adjusted EPS beat consensus by nearly 27 percent.
While returning owned aircraft is a minor operational change, it reflects the intense focus on efficiency across the logistics sector ahead of FedEx's planned June 1, 2026, spin-off of its Freight division.
The move to bring the wide-body jets back online is a direct tactic to lower operational expenses tied to leasing alternative aircraft. This aligns with the company's broader Network 2.0 plan, designed to streamline operations and improve cost-effectiveness. FedEx's focus on structural cost reduction has been a key driver for the stock, which has gained over 83 percent in the past year.
The logistics industry is navigating a complex environment of high fuel costs, tariff uncertainties, and shifting e-commerce volumes. Competitor United Parcel Service is also reconfiguring its network, notably reducing its business with Amazon by a planned 50 percent by June 2026 to focus on more profitable small and medium-sized businesses and high-margin healthcare logistics. UPS aims to double its healthcare revenues to $20 billion by 2026.
FedEx's strategy appears to be paying off, with management raising its fiscal 2026 revenue growth forecast to a range of 6 percent to 6.5 percent. The upcoming spin-off of FedEx Freight is intended to unlock further value by creating a pure-play less-than-truckload (LTL) carrier, which is expected to command a higher valuation multiple.
The reactivation of the MD-11s, while small, signals FedEx's commitment to leveraging its existing assets to improve margins. Investors will be watching for further efficiency gains in the upcoming Q4 earnings report and more details on the Freight spin-off.
This article is for informational purposes only and does not constitute investment advice.
