FlyBoeingJets
YES, that's NICE
- Joined
- Mar 20, 2003
- Posts
- 1,802
BREAKFAST WITH THE FOOL
FedEx and Postal Service in $7 Billion Deal
http://g.fool.com/art/spacer.gif
By Tom Jacobs (TMF Tom9)
January 11, 2001
You'll get more purple and white with your blue soon at post offices, after the nation's mail carrier decided to fly high with FedEx Corp. (NYSE: FDX) yesterday. In a seven-year pact that could yield $6.3 billion, FedEx will transport U.S. Postal Service Priority and Express Mail between airports. FedEx will also pay between $126 million and $132 million to put its own drop-off boxes in 10,000 post offices over the next 18 months -- with rights to space in up to 38,000 more -- gaining up to $900 million in estimated new revenue.
And that may not be all. "The conversation doesn't end with this," Postmaster General William Henderson said, adding that more discussions could lead to FedEx depositing its own packages at post offices or the Postal Service using FedEx's system for better tracking of Priority Mail shipments.
But the deal does not yet provide that letter carriers will deliver FedEx packages or that FedEx will deliver mail. Rather, FedEx estimates it will hire about 500 new pilots, 200 mechanics, and 1,000 cargo handlers to handle about 30 DC-10 aircraft a day of Express and Priority Mail. Alan B. Graf Jr, FedEx's chief financial officer, saw a "great marginal return for the amount of variable costs we have to put in," and downplayed any overlap between the two entities' delivery services.
This should be a great deal for both parties: FedEx can utilize planes idle at certain hours, and the Postal Service wins another shot at improving its sagging reputation, especially with the business users of its more expensive services. But Postal Service-private company deals have failed to deliver before. Emery Worldwide Airlines, a unit of CNF Inc. (NYSE: CNF), had a 10-year contract to transport Priority Mail until 2002, but in November the Postal Service and Emery agreed to terminate the deal on January 7. Emery yesterday failed to secure a federal court order blocking the FedEx deal.
Is the post office going to split up the contract next time between UPS, FedEx and possibly Astar? I wonder.
FedEx and Postal Service in $7 Billion Deal
http://g.fool.com/art/spacer.gif
By Tom Jacobs (TMF Tom9)
January 11, 2001
You'll get more purple and white with your blue soon at post offices, after the nation's mail carrier decided to fly high with FedEx Corp. (NYSE: FDX) yesterday. In a seven-year pact that could yield $6.3 billion, FedEx will transport U.S. Postal Service Priority and Express Mail between airports. FedEx will also pay between $126 million and $132 million to put its own drop-off boxes in 10,000 post offices over the next 18 months -- with rights to space in up to 38,000 more -- gaining up to $900 million in estimated new revenue.
And that may not be all. "The conversation doesn't end with this," Postmaster General William Henderson said, adding that more discussions could lead to FedEx depositing its own packages at post offices or the Postal Service using FedEx's system for better tracking of Priority Mail shipments.
But the deal does not yet provide that letter carriers will deliver FedEx packages or that FedEx will deliver mail. Rather, FedEx estimates it will hire about 500 new pilots, 200 mechanics, and 1,000 cargo handlers to handle about 30 DC-10 aircraft a day of Express and Priority Mail. Alan B. Graf Jr, FedEx's chief financial officer, saw a "great marginal return for the amount of variable costs we have to put in," and downplayed any overlap between the two entities' delivery services.
This should be a great deal for both parties: FedEx can utilize planes idle at certain hours, and the Postal Service wins another shot at improving its sagging reputation, especially with the business users of its more expensive services. But Postal Service-private company deals have failed to deliver before. Emery Worldwide Airlines, a unit of CNF Inc. (NYSE: CNF), had a 10-year contract to transport Priority Mail until 2002, but in November the Postal Service and Emery agreed to terminate the deal on January 7. Emery yesterday failed to secure a federal court order blocking the FedEx deal.
Is the post office going to split up the contract next time between UPS, FedEx and possibly Astar? I wonder.