[170420.EN.BIZ] Fedex Boosts Virus Defences With US$1.5 Billion Line of Credit

FEDEX has secured a US$1.5 billion credit line loan while executives have agreed to pay cuts. The move would enable it to gain financial flexibility to combat the negative effects of the coronavirus pandemic.

FedEx said high-margin business-to-business (B2B) demand across all of its transportation businesses has been negatively impacted by the pandemic.

Meanwhile, its low-margin FedEx Ground residential delivery services has increased due to sharp spikes in e-commerce volume due to social distancing.

"The shift in mix is expected to negatively impact margins and operating results," FedEx said, reported London's Air Cargo News.

The express giant added that its Asian business is currently performing well, but there were no guarantees how long this will last.

"Business demand in Asia remains elevated due to backlogs caused by the Covid-19 pandemic and the impact of responsive measures in Asia in early calendar 2020, as well as decreases in cargo capacity on passenger airlines," FedEx said.

"However, due to weakening economic conditions in Europe and the United States, and resulting decreases in demand for goods manufactured in Asia, there are no assurances that these increased levels of demand will be sustainable."

In a related development, chief executive Fred Smith has cut his base salary by 90 per cent for the next six months.

Source : HKSG.