TNT Express would be “too expensive” for FedEx to buy and the company is more interested infollowing its own organic growth strategy in Europe, a top executive has said. A new pilots deal
has also been sealed.Asked about a possible acquisition of TNT, Alan Graf, FedEx’s CFO, told analysts at a JP Morgantransport conference yesterday that the Dutch-based express company already has “more than astrategic premium” and would be “too expensive” to buy. He reiterated that FedEx has its own growthstrategy for Europe and does not need to make any large acquisitions there, news agenciesreported.
Both FedEx and UPS have frequently been mentioned as potential buyers of TNT Express, which willbe separated from TNT NV in June and floated as an independent company.
Graf also said that FedEx has ordered four more B777 freighters to continue its fleetexpansion. Boeing had previously disclosed the company’s latest order on its fleet orderwebsite. FedEx now has 12 B777s in operation, 32 ordered for delivery and options for 13 more, hesaid.
In his presentation, the CFO reiterated FedEx’s long-term financial goals of revenue growth,achieving an operating margin of more than 10% and increasing Earnings per Share by 10-15%annually.
FedEx Express was the “air express export” market leader in the USA, Canada, Asia Pacific andLatin America, Graf claimed. He stated that UPS was number two in the US, Canada and Europe, aheadof DHL, while DHL was number two in Asia ahead of UPS. In Europe, DHL was market leader, followedby UPS and FedEx, he added.
International business now accounted for 45% of FedEx Express’ total revenues, and the companyhad competitive advantages in China, India and Mexico, Graf said. It was also targeting the$150-200 billion global freight market, he pointed out.
FedEx Ground, the US ground parcel business, was gaining market share with faster or equal speeddelivery compared to UPS and was benefiting from e-commerce growth, the CFO also told analysts.
* FedEx Express pilots, represented by the Air Line Pilots Association (ALPA), have approved aunique short duration contract agreement that provides across-the-board increases to hourly payrates, a pensionable lump sum payment for pilots, increases to domestic and foreign per diem rates,an improved Foreign Duty Assignment Letter of Agreement, three vital safety programs, and otherpositive modifications.
The two-year agreement, covering 4,500 FedEx pilots, goes into effect February 28, 2011. Theagreement runs through March 2013 subject to an ALPA option to make it amendable effective March2012. ALPA must exercise this duration option by January 24, 2012.
“This FedEx agreement is an innovative approach to negotiations. This agreement recognizes thatthe pilots deserve improvements in pay and benefits, while also allowing ALPA and management tocontinue discussions on other issues as they move forward,” said ALPA President Capt. Lee Moak. “Inparticular, given the uncertainty associated with the FAA’s NPRM on flight time/duty time, thisshort duration agreement is an outstanding achievement.”
