FedEx Projects MD-11 Return by May After $175 Million Outsourcing Loss
FedEx’s grounding of 28 MD-11 freighters has cost about $175 million in outsourced airlift and the company expects the aircraft to resume service between March and May. Transportation stocks rallied after a federal court invalidated tariffs on imported steel and aluminum, boosting FedEx share performance.
1. MD-11 Grounding and Inspection Timeline
Following a fatal November engine separation, the FAA banned FedEx’s 28 MD-11 freighters until inspections and repairs are completed. FedEx management remains highly confident the widebody jets will resume flights on a rolling basis between March and May after safety checks and structural repairs.
2. Costs Incurred from Outsourcing Airlift
To compensate for lost MD-11 capacity during peak season, FedEx outsourced airlift to other carriers and implemented operational adjustments, incurring approximately $175 million in additional expenses. CFO projections at year-end flagged this cost as a significant headwind to segment margins in the current quarter.
3. Impact of Tariff Ruling on Transport Stocks
A federal court invalidated import tariffs on steel and aluminum, triggering a broad rally in transportation stocks. Lower raw material levies and easing input-cost pressure supported a lift in FedEx share performance during trading following the judgment.