FedEx Express Receives Federal Compensation
FedEx Express said that it has received $101 million from the federal government, under the Air Transportation Safety and System Stabilization Act.The payment compensates FedEx for a portion of its direct losses incurred as a result of the grounding of aircraft after the terrorist attacks on Sept. 11. The money also is for subsequent losses through Dec. 31.
Additional payments are expected before the end of the calendar year.
FedEx said last week that fiscal first-quarter earnings fell 36 percent on reduced demand for its FedEx Express premium services.
For the first quarter, which ended Aug. 31, FedEx had net income of $109 million compared with $169 million a year earlier. Results include a noncash charge of 5 cents a diluted share related to an accounting change. Operating income was $235 million, down 24 percent from $311 million a year ago.
At the time, FedEx said operations were disrupted by the two-day suspension in air traffic stemming from the attacks on the World Trade Center and the Pentagon.
"It is extremely difficult for us to fully assess the financial effects of last [month's] events at this point, but our volumes at FedEx Express were substantially reduced ... while our aircraft were grounded and our volumes have not yet recovered to levels existing prior to the tragedy," said Alan B. Graf Jr., executive vice president and chief financial officer.
However, the company said it continues to implement revenue enhancement and cost reduction programs to provide long-term revenue and profit growth and to reduce costs to match near-term business levels.
The Airline Stabilization Act, which was enacted after the Sept. 11 terrorist attacks, provides $15 billion in aid to U.S. air carriers to help prevent bankruptcies and minimize other financial hardships. About $500 million will go to cargo airlines.
