FedEx plans up to 6,300 job cuts in Europe with TNT air network integration
FedEx Express today announced plans to lay off between 5,500 and 6,300 staff in Europe as it merges its two “duplicate” air networks in Europe in a final step in the TNT network integration.
In future, the express giant will operate a ‘dual air hub’ model in Europe, with Paris Charles de Gaulle as the ‘main’ hub and Liege as a ‘secondary’ hub. The workforce reduction plans were presented today to company unions, including those representing workers at Liege Airport, the former TNT Airways base.
FedEx said in an 8-K form: “We expect the pre-tax cost of the severance benefits to be provided under the plan to range from $300 million to $575 million in cash expenditures. These charges are expected to be incurred through fiscal 2023 and will be classified as business realignment expenses. We expect savings from the plan to be between $275 million and $350 million on an annualized basis beginning in fiscal 2024.”
Slow integration
FedEx described the proposals as “part of a wider, multi-year growth strategy that enables the European Express business to confidently build on the momentum created in recent years”.
The company stressed that since buying TNT for €4.4 billion in 2016, “successful integration has taken place across IT systems and key parts of the air, road and ground networks, and investments have been made in technology and infrastructure”.
However, experts pointed out that integration has proven much more complex and slower than originally expected, and the company notably still operates the partly overlapping FedEx Express and TNT air networks in Europe.
“Crucial to unlocking integration benefits”
Karen Reddington, President of FedEx Express Europe, said: “We acquired the TNT business in 2016 for one reason: to open up the world for our customers by connecting the global FedEx air network with TNT’s extensive European road network to become a top tier player in Europe.
“This process, whilst difficult, will allow us together with the completion of the network integration to operate as one company offering greater coverage, speed of delivery, extended operational capabilities and enhanced service levels.”
She added: “Changes like this are never easy because they impact our people. However, they are crucial to unlocking the benefits of integration and enhancing our competitiveness in a fast-changing marketplace. None of this changes our values as a company and we are committed to an open dialogue, working closely with our social partners and completing this process with the utmost care and respect for our affected team members.”
Duplicate European air networks
In its announcement, FedEx said: “Plans to address the duplication resulting from operating two large European networks connecting similar geographies were presented to European employee representatives and team members today.
“These proposals will regrettably have a workforce impact of between 5,500 – 6,300 people across operational teams and back-office functions. In the course of these consultations, the full range of support measures for affected team members will be discussed with works council representatives from across the region.
“These measures differ by country and may include voluntary redundancy, reassignment to other roles and priority access to open positions. The consultation process will take place over an eighteen-month period in line with local country processes and regulations.”
US-style dual air hub model for Europe
The company said that a central pillar of the proposals presented today “involves physical integration of the FedEx Express and TNT air networks”.
FedEx Express currently operates two duplicate air networks out of two main hubs in Roissy-Charles de Gaulle Airport in France and Liège Airport in Belgium.
Under the plans presented today, FedEx Express would establish a dual-hub model in Europe, with the FedEx Roissy-Charles de Gaulle hub serving as a primary hub, universally linking all European flight points and connecting European customers to the rest of the world.
The Liège air hub would operate as a secondary hub, providing flexibility and continuing to provide excellent service to customers year-round.
The company stressed that FedEx Express’s dual hub network in the U.S. has been proven over decades with Memphis as the universal hub and Indianapolis as the secondary hub as will be the case with Liège in central Europe.
Dave Canavan, Chief Operating Officer of FedEx Express Europe, explained: “Moving towards a dual-hub model is a strategic advantage for us: improving the competitiveness of our Express business, providing us flexibility, and enhancing our growth opportunities.
“We understand that while these intended changes are absolutely necessary to put us on the right path, our team members, particularly in Liège, will be concerned about the future. We will do everything we can to conduct these consultations constructively, with a mindset of collaboration and care for those impacted.”
