FedEx Earnings Call Insights: Fleet Reduction, Express vs. Ground
Tom Wadewitz – JPMorgan: I wanted to ask you about the, let’s see, the restructuring in a sense that you gave us some initial information on fleet reduction. It sounded like in that release that a lot of the aircraft that you were reducing or retiring were actually already part and I think one of the things you’re trying to figure out is what’s the magnitude of the potential capacity take out that you have. So I understand you’re saving a lot of this for the fall, but I was wondering if you could give us kind of a directional comment on how big is the opportunity to actually take out capacity in domestic Express?
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Frederick W. Smith – Chairman, President and CEO: I think we’ll wait until the fall to talk about that because it’s a comprehensive program. I’m not sure we could do it just as here on a telephone call.
Express vs. Ground
Justin Yagerman – Deutsche Bank: When you guys think about your networks (as they are staying,) right now, especially in Express, in the domestic market how much of what’s being moved in the Express market could really find a home in Ground? I guess, as you’ve seen this accelerated Ground growth and continue to see strong margin improvement there, Fred, I think you talked to getting to a 20% goal last quarter, you are there now. Where does the bogy move to? So, two part question, how much from Express can move into Ground and as you get that density, how much better can Ground margins get?
T. Michael Glenn – EVP, Market Development and Corporate Communications: Justin, first, I think it’s important to point out that the growth in the Ground segment is largely driven by a superior value proposition, which is based on a significantly faster network and outstanding service levels. And the Ground also benefited from some growth in the e-commerce sector. Having said that, anytime you see softness in the economy, you see some mode shift where customers reevaluate their supply chains and look to see if they could rely on a slower mode of transportation in some cases or the lack of the time definite service. So, we do see some of that. We work with customers to put their products in the right network that’s going to benefit them and, of course, benefit FedEx, as well. So, it’s hard to put a specific number on that because it gets down to the requirements of individual customers in terms of what their needs are.
David F. Rebholz – President and CEO, FedEx Ground: Justin, this is Dave Rebholz. First of all, let me make the comment that every day we strive for improved margins and service and that’s not loss commitment on the entire organization and they buy into it, because that’s how we grow. Having said that, there were a lot of headwinds in the Q4, you heard me tease you previously about my boss with me which is totally appropriate. The reality here is, is that we had a lot of good things come together, we had great revenue growth, as Mike already mentioned on the yields. We had great volume growth, both in Ground and Home as was evidenced earlier by the additional surcharges we benefited from and SmartPost. So we’re a healthy proposition. We will continue to strive for 20% each and every quarter. I don’t know that I can commit that each and every quarter. What I can commit to is that we will continue to improve our performance, both on a margin and service spaces, so that we differentiate ourselves in the marketplace. So far it’s playing out very well for us.