Delivering cuts: FedEx to axe 6,300 staff in Europe
The US delivery giant says the job cuts will happen over 18 months as it integrates former rival TNT which suffered a costly cyberattack in 2017.
Published On 20 Jan 2021
FedEx plans to cut up to 6,300 jobs in Europe as the United States-based parcel delivery giant completes the process of combining its own operations with those of a former Dutch rival it bought in 2016.
FedEx said in a statement on Tuesday that the cuts will take place over 18 months and include express-delivery operations and back-office employees of TNT Express across the continent.
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Memphis, Tennessee-based FedEx said severance payments for between 5,500 and 6,300 layoffs will cost between $300m and $575m through 2023, but that the job cuts will save the company between $275m and $350m a year beginning in 2024.
The president of FedEx’s European express delivery operation, Karen Reddington, said in a statement that the job cuts are crucial to make the company more competitive in a changing market. FedEx had about 245,000 employees worldwide, including about 43,000 at TNT, as of last May 31.
FedEx plans to downgrade an air service hub in Liege, Belgium, to make Paris its sole primary hub. The company compared that set up to its US operation, where Memphis is the main hub and Indianapolis serves a secondary role.
FedEx-TNT deal
FedEx paid $4.8bn to buy TNT and expand its presence in Europe against rivals such as Germany-based DHL. TNT had a large ground delivery business in Europe.
In buying TNT, FedEx succeeded where US rival United Parcel Service (UPS) had failed – European regulators blocked a UPS attempt to buy the company in 2013, arguing that a UPS-TNT combination would face inadequate competition on some routes and lead to higher prices.
FedEx hoped TNT would help it take advantage of the growth in online shopping in Europe, but the acquisition has not gone smoothly.
Europe was in the midst of an economic slowdown. Then TNT’s computer systems became infected during a worldwide cyberattack called NotPetya, disrupting service and causing FedEx to take a $300m charge against earnings in 2017.
FedEx said on Tuesday that it has successfully integrated FedEx and TNT information technology systems and key parts of the air and ground networks.
Shares of FedEx fell 1.2 percent on Tuesday in the US and have lost 3.9 percent in 2021, compared with a 1.1 percent gain this year in the Standard & Poor’s 500 index.
Source: AP