FedEx is moving to ground an additional 29 aircraft during the current fiscal year, starting from June 1, citing ongoing "demand challenges" as it strives to optimize costs and maintain its financial performance in the face of current market conditions.

On Tuesday's earnings result call, Raj Subramaniam said FedEx will park 20 planes in the fiscal year 2024 and permanently retire nine MD-11 freighters as the express giant saw both its revenues and operating income decline during its fiscal fourth quarter of the year, which it attributed to "demand weakness and cost inflation".

The e-commerce sector has, particularly, experienced significant challenges as the COVID-19 pandemic-induced surge in online shopping subsided, following the resurgence of in-store shopping, restaurant dining, and increased travel by consumers.

Subramaniam said the cost-cutting measures would support sustained profit improvement in the current 2024 fiscal year "through an environment that we expect to remain marked by demand challenges, particularly in the first half."

The decision to "take out" the 29 aircraft in the coming fiscal year was prompted by a decline of 13% in FedEx's fourth-quarter revenues compared to the previous year.

"The quarter's results were negatively affected by continued demand weakness and cost inflation, partially offset by cost-reduction actions and US domestic package yield improvement," FedEx said in a separate statement. 

Flight hours for the period were also down 12% year-on-year.

In the fourth quarter, FedEx saw revenues at its Express unit decline 12.8% year-on-year to US$10.4 billion, while operating income also dropped 51.5% to US$430 million.

"FedEx Express operating results declined due to lower global volumes, partially offset by decreased expenses and higher US domestic yields," the statement said.

It added that FedEx Express continues to implement volume-related and structural cost-reduction actions, including further reductions in flight hours and the early retirement of certain aircraft and related assets, to mitigate the negative effect of ongoing demand weakness.

FedEx Ground's operating results improved primarily due to higher revenue per package and cost-reduction actions. These factors were partially offset by lower package volume, higher infrastructure costs and increased other operating expenses.

Meanwhile, FedEx Freight's operating results declined primarily due to decreased shipments and lower weight per shipment, partially offset by improved revenue quality.

The American multinational noted that FedEx Freight remains focused on cost discipline, supported by a "fourth round of furloughs to match staffing with demand and network optimization from the planned permanent closure of 29 facilities."

For fiscal 2024, FedEx is forecasting "flat to low-single-digit-percent revenue growth year over year."

It is also aiming at permanent cost reductions from the DRIVE transformation program of US$1.8 billion; and capital spending of US$5.7 billion, with a priority on investments to improve efficiency, including fleet and facility modernization, network optimization and automation.

FedEx had already retired 18 aircraft, including 12 MD-11Fs, four Boeing 757-200s and two Airbus A300-600s, in the quarter ended May 29.

In a bid to reduce costs by US$4 billion by the 2025 financial year, FedEx took several cost-cutting measures in the previous fiscal year. These included the elimination of 29,000 jobs, the retirement of 18 planes, the closure of offices, and the reduction of Sunday deliveries that were impacting profitability.