FedEx Corp. (FDX) said Monday it had permanently retired or will accelerate the retirement of 86 aircraft and 308 related engines as it continues to modernize its aircraft fleet and improve the global network of FedEx Express.
The permanent retirement of aircraft and related engines announced today includes: two A310-200 aircraft and four related engines; three A310-300 aircraft and two related engines; and five MD10-10 aircraft and 15 related engines.
FedEx noted that the impact of retiring the aircraft, engines and parts resulted in an impairment charge of $100 million recorded in May 2013.
In addition, FedEx said it will accelerate by several years the retirement of: 47 MD10-10 aircraft and 172 related engines; 13 MD10-30 aircraft and 55 related engines; and 16 A310-200 aircraft and 60 related engines.
As of July 1, 2013, FedEx Express will complete the final retirement of the B727-200 fleet.
"We are modernizing our aircraft fleet by retiring older, less-efficient, and less-reliable aircraft and replacing them with modern aircraft to build a fleet with higher reliability and better cost efficiency," said FedEx CEO David Bronczek.
"With the planned acquisition of new aircraft and projected slower economic growth than previously forecast, FedEx Express is lowering maintenance costs by aggressively parking and retiring aircraft," added Bronczek.
The impact of accelerating the retirement of aircraft will result in additional year-over-year depreciation expense of $74 million in Fiscal year 2014.
As of February 2013, FedEx Express's fleet totaled 660 aircraft, including 368 jet aircraft.
Meanwhile, FedEx's Board declared a quarterly cash dividend of $0.15 per share on its common stock, an increase of $0.01 per share over the previous dividend payment. The dividend is payable on July 1 to stockholders of record at the close of business on June 17.
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