FedEx told investors on Tuesday that it will offer a voluntary buyout program for US employees.
Those who participate will receive four weeks of pay and healthcare coverage for every year of employment for a maximum of two years.
The Memphis, Tenn.-based company will spend $450 million to $575 million on buyouts, depending on how many participate. That will save FedEx $225 million to $275 million in fiscal 2020, it estimates.
It's quite a different tune than what FedEx was whistling just a few months ago.
In April, FedEx bumped compensation by $200 million among its 425,000-plus employees. Two-thirds went to hourly employees and the rest to salaried workers. The delivery company announced those annual raises, which normally take place in October, in January.
FedEx also announced contributions of $1.5 billion to its pension plan and domestic investments of $1.5 billion in January.
The announcement of $3.2 billion of increased spending followed the US tax reform that cut corporate rates.
But unexpected economic downturns in Europe and looming troubles in China sank FedEx's profit outlook, even though its domestic business has been flourishing. On Tuesday, FedEx dropped its 2019 earnings guidance to $15.50 to $16.60 per share. Previously, the company forecasted $17.20 to $17.80 a share.
"Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term," said Alan Graf, FedEx executive vice president and chief financial officer, on Tuesday.
The buyout program is one of FedEx's planned measures to cost cuts. FedEx will also limit hiring, reduce discretionary spending, and reduce international network capacity.
Are you a FedEx employee with thoughts on the buyout program? Contact the reporter at rpremack@bjinnox.com.
