FedEx to get boost from government compensation

Package delivery giant FedEx Corp. of Memphis, TN, said it will get an earnings boost in the second quarter of its fiscal 2002 (which ends November 30) from government financial aid as a result of the September 11 terrorist attacks.

FedEx said it expected its second quarter earnings to be in the range of 40 to 45 cents per diluted share, which includes negative financial effects from the attacks on September 11, primarily from the closing of U.S. airspace for several days to passenger and cargo aircraft.

FedEx added, however, that it has received $101 million in compensation under the Air Transportation Safety and System Stabilization Act in the second quarter. With this compensation, earnings are expected to be 61 to 66 cents per share. Additional payments are expected under this Act, although the timing is uncertain, the company said.

Alan Graf, Jr., FedEx’s executive VP and CFO, said ground package volume will grow approximately 9% and that yields will increase about 6%, similar to first quarter growth rates. However, he also said that express domestic daily package volumes will decline 11% year-over-year while FedEx International Priority shipments will decline about 5%, both about four percentage points below first quarter growth rates.

A fuel surcharge for FedEx Express services, Graf added, that goes into effect November 5 will have no material impact on the quarter.

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