FedEx’s capex in fiscal 2018
In fiscal 2018, FedEx (FDX) anticipates spending $5.9 billion on capex (capital expenditure). In the previous fiscal year, it incurred $5.1 billion in capex, which was 8.5% of revenues.
Capex for the FedEx Express segment
Even though FedEx has a higher capex priority for its FedEx Ground segment, it has also focused on the modernization speed of its Express aircraft fleet. On November 8, 2017, the Express segment announced a purchase agreement with ATR, the world’s largest manufacturer of turboprop planes. According to the agreement, ATR will start modernizing FedEx’s fleet of feeder aircraft.
FedEx Express will be buying 30 ATR 72-600F aircraft with an option to acquire an additional 20 aircraft of the same design. Delivery of the first ATR 72-600F is expected in 2020. That’s expected to improve FDX’s fuel efficiency and fleet reliability in the air freight markets where shipments are larger and heavier. The acquisition is expected to help the company carry containers or palletized freight, which it currently cannot do.
On November 28, 2017, FedEx announced a purchase agreement with Textron Aviation. The Express segment has agreed to buy 50 clean-sheet design Cessna SkyCourier 408 aircraft. The segment has the option to buy 50 additional aircraft. Deliveries are expected in 2020, including the ATR 72-600F. These are all part of FedEx’s fleet modernization program.
FedEx ground investments
FedEx has been investing significantly in technology as well as the hub-and-spoke Ground segment’s network. It has tied up with Walgreen Company, a prominent US drugstore chain, to offer package pick-up and drop-off services at 7,500 Walgreen locations in 50 US states. FedEx plans to expand its FedEx OnSite program across the nation. FedEx OnSite is a network of retail locations that offer FedEx pick-up and drop-off services and will hold packages for up to five business days.