High Gas Prices Cause Federal Express to Increase Fuel Surcharge by 4%

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High Gas Prices Cause Federal Express to Increase Fuel Surcharge by 4%

Source: Knight Ridder/Tribune Business News Publication date: Mar 02, 2000

& (By Richard Thompson, The Commercial Appeal, Memphis, Tenn. )

Mar. 2--High fuel costs have pumped up Memphis-based FedEx Express's fuel surcharge once again. Effective April 1, the surcharge will increase one percent to 4 percent on most of the air express company's domestic and international services, FedEx Corp., the holding company, said Wednesday.

The company will also increase its fuel surcharge to 15 cents per kilo on FedEx International Airport to Airport and FedEx International Express Freight, effective April 1 as well.

Analysts said the increase was not a surprise.

"Fuel prices are going up," said Paul Schlesinger, an analyst with [Donaldson Lufkin & Jenrette] in New York. "And it's costing them (FedEx)."

The price of crude oil is around $30 a barrel. Prices for jet fuel delivered at New York harbor have more than doubled to 83.5 cents a gallon from 33.8 cents a year ago, while prices for diesel fuel have climbed 54 percent to $1.46 a gallon. FedEx Express has a fleet of 648 aircraft and more than 44,500 vehicles.

As a result, fuel prices have dogged FedEx's earnings for the past two fiscal quarters. Its third quarter, which ended Tuesday, isn't expected to be much different.

FedEx has already said higher fuel costs would add about $230 million to operating costs for its fiscal year, which ends May 31.

"The continuing rise and sustained high levels of fuel prices have nearly doubled our aircraft fuel costs compared to the levels a year ago," said Alan B. Graf, Jr., FedEx's executive vice president and chief financial officer.

However, FedEx is far from alone in its fuel price drama.

Transportation stocks in general have suffered from high fuel costs as well as the perception that the economy may be slowing down, Schlesinger said.

FedEx's stock was 347/16, down 1/2, at the close of normal trading hours Wednesday. -Bloomberg News contributed to this report. ----- To see more of The Commercial Appeal, or to subscribe to the newspaper, go to http://www.gomemphis.com (c) 2000, The Commercial Appeal, Memphis, Tenn. Distributed by Knight Ridder/Tribune Business News. FDX, Publication date: Mar 02, 2000 ) 2000, NewsReal, Inc. http://beta.newsreal.com/cgi-bin/NewsService?osform_template=pages/newsrealStory&ID=newsreal&storypath=News/Story_2000_03_03.NRdb@2@16@3@181&path=News/Category.NRdb@2@7

-- Crossposter (helping@bring.the.news), March 04, 2000

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