Fedex has strengthened its cash reserves with a $1.5bn credit line loan while executives have agreed to pay reductions.
In a stock exchange announcement, the US express company said that the move would allow it to gain financial flexibility to combat the negative effects of the coronavirus outbreak.
FedEx said high-margin business-to-business (B2B) demand across all of its transportation businesses has been negatively impacted by the pandemic.
Meanwhile, its low-margin FedEx Ground residential delivery services has increased due to sharp increases in e-commerce volume as a result of social distancing and other measures.
“The shift in mix is expected to negatively impact margins and operating results,” FedEx said.
The express giant added that its Asian business is currently performing well, but there were no guarantees how long this will last.
“Business demand in Asia remains elevated due to backlogs caused by the Covid-19 pandemic and the impact of responsive measures in Asia in early calendar 2020, as well as decreases in cargo capacity on passenger airlines,” FedEx said.
“However, due to weakening economic conditions in Europe and the United States, and resulting decreases in demand for goods manufactured in Asia, there are no assurances that these increased levels of demand will be sustainable.
Meanwhile, chief executive Fred Smith has cut his base salary by over 90% for the next six months.
By Damian Brett