Make your home page

FedEx combines air, ground, other operations to slash costs

A FedEx truck makes deliveries in Mount Lebanon, Pa., on Monday, Jan. 23, 2023. FedEx will combine its air, ground and other divisions as part of a $4 billion cost cutting plan. The delivery company said Wednesday, April 5, that FedEx Express, FedEx Ground, FedEx Services and other FedEx operating companies will be rolled into Federal Express Corp. by June 2024. (AP Photo/Gene J. Puskar)

NEW YORK (AP) — FedEx will combine almost all of its ground, air and other operations by next year as part of a $4 billion cost-cutting plan.

The package delivery company said Wednesday that FedEx Express, FedEx Ground, FedEx Services and other FedEx operating companies will be rolled into a single entity by June 2024 in a companywide reorganization. FedEx Freight, the company’s freight transportation services division, will continue as a stand-alone company within Federal Express Corp.

Raj Subramaniam will serve as president and CEO of the combined organization. John Smith will become president and CEO of U.S. and Canada ground operations at FedEx Express and assume leadership of surface operations across the FedEx Express, FedEx Ground, and FedEx Freight businesses. Richard Smith will serve as president and CEO, airline and international at FedEx Express, overseeing all other regions and FedEx Logistics.

The company expects to realize permanent cost reductions of $4 billion from the reshuffle at some point during fiscal 2025.

FedEx said in September that its operating expenses were rising and that it was maneuvering to address those costs, including the closure of over 90 FedEx Office locations and five corporate offices. It also said it would defer on new hires and operate fewer flights.

Indianapolis is home to one of FedEx’s largest operations in the United States. The company’s 2022 economic impact report lists roughly 8,600 employees at 27 facilities in and around Indianapolis, including the second largest FedEx Express facility in the world at Indianapolis International Airport.

FedEx said Wednesday that a decision to move airplane heavy maintenance operations from Los Angeles to Indianapolis and Memphis next year is part of the plan, and will save the company $60 million.

The Memphis, Tennessee, company also announced Wednesday that it’s boosting its annual dividend by 10%, or 44 cents per share, to $5.04 per share for fiscal 2024.

Shares rose more than 3% before the opening bell.