FedEx Corp. said about 10 percent of its senior U.S. executives have accepted buyouts under a program to cut spending and boost profits by $1.7 billion over three years.
FedEx declined to specify how many managers will leave the Memphis, Tennessee-based shipping company through May 2014, said Glen Brandow, a spokesman. The changes are part of a new "organizational structure" at FedEx Express, the company's largest division, and FedEx Services.
The overhaul, announced in October, reflects FedEx's view that a shift of some customers to less expensive ground, freight and even ocean shipping isn't a temporary change linked to a slowing economy. Express, whose operations include the world's largest cargo airline, will account for about $1.55 billion of the targeted amount.
"This is one piece of the $1.7 billion profit improvement plan," Brandow said in an interview yesterday on the buyouts. The changes were announced internally to FedEx rank-and-file employees, who will find out Feb. 15 whether they are eligible to apply for buyouts, he said.
The shipping company, which had 101,000 workers as of Dec. 31, previously said that "several thousand" employees would probably accept the offers.
The restructuring, targeted for completion by the end of May 2016, also includes the replacement of fuel-guzzling aircraft and about 5,000 older vehicles at the Express division, which uses planes to expedite shipments of goods from electronics to pharmaceuticals.
Expense-reduction efforts have been under way since December 2011, including the deferral of some new jet-freighter deliveries.
In June, FedEx said it was retiring 24 cargo planes and 43 older engines to match shipping volumes. It also plans to retire 21 Boeing Co. 727s this fiscal year. Those aircraft will be replaced with Boeing 767-300 and 757-200 aircraft that burn less fuel and cost less to fly, FedEx said.
FedEx also ordered 19 767s, to be delivered from fiscal 2015 to 2019, replacing Boeing MD-10s and Airbus SAS A310 models. The twin-engine 767s will be about 30 percent more fuel- efficient than the three-engine MD-10s, FedEx has said.