Thanks, armand440. I'm looking into the legislation now, and I'll report whatever I find here. Why do you think it should take months for the legislation to proceed?
One of your catalysts may be approaching:
http://www.tradingmarkets.com/news/stock-alert/fdx_u-s-sen-bob-corker-releases-hold-on-controversial-faa-reauthorization-act-fedex-language-will-no-838644.html
Obviously, the idea didn't work ot when posted, but I am wondering oif it is worth another look at these levels?
the company has a huge off-balance sheet liability... but it is very difficult for an outsider to quantify... i've only been able to identify 3 of the 20 plans they are exposed to (none as... login to read the rest
Today the House of Representatives passed a version of the FAA reauthorization bill including the provision to move FDX from regulation under the RLA to regulation under the NRLA. This is still a few steps away... login to read the rest
Coffee1029, regarding your comment "The threat is the substitution of express physical delivery by electronic means, which would include the obvious email, but also many other historic reasons for using express: signed forms, time-sensitive documents,... login to read the rest
armand, i agree that segmenting companies by profitability is a helpful way to look at margins. however, the point is that with FDX, it is possible to further segment by profitability within the express division. ... login to read the rest
gary -- my point was that margins for domestic express are much lower than you think (they are much lower than ground and LTL... not higher!). i like to segment companies by their profiitabilty (instead... login to read the rest
armand, along with international express, the highest margin operations within FDX are express products that are transported by truck, as these products enjoy premium pricing with the lower ground cost structure. this mismatch occurs for... login to read the rest
gi03, regarding your question "armand, on the lease issue, wouldn't this be accounted for in NI and hence in FCF historically?"
My point was that the transistion from only leasing planes to only buying planes (which is... login to read the rest
gary -- express margins have historically been lower than both ground and express (2008 freight margins included the newly acquired lower-margin watkins business, which was not making money due to merger costs).
2008
2007
2006
FedEx Express
7.8%
9.3%
8.8%
FedEx Ground
10.9%
13.6%
13.5%
FedEx Freight
6.7%
10.1%
13.3%
international... login to read the rest
gi03, thanks for the comments.
We are in agreement on the overall magnitude of the cost cuts. They have already taken out $1bn, which was in the last quarters numbers and are targeting another $1bn, which... login to read the rest
gocanucks97,
I don't think the rail analogy works for the express / small package space. A major reason the rails have been taking price despite weak volumes is due to the long term legacy contracts rolling... login to read the rest
Gary, interesting idea. I tend to agree with you that FDX had got ahead of itself. I think you are right that the domestic express biz is in secular decline and faces trade-down, but to... login to read the rest
Our short thesis is based upon both cyclical and secular issues.
Near term estimates are highly unrealistic and we expect FDX to miss significantly (~30%) in each of the next two quarters. Having spoken with a number... login to read the rest
this is a very well run company that is very well positioned for the long-term (perhaps with the exception of domestic express, which is very low growth but also has low margins) if one assumes... login to read the rest
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