FedEx revenue up 7% for latest quarter despite MD-11F headwind

FedEx reported positive results in its second quarter but, through the remainder of fiscal 2026, will continue to battle headwinds from grounding of its MD-11F fleet, global trade policy changes and a weakened industrial economy, according to the integrator’s chief executive. FedEx reported $23.5 billion in adjusted revenue for fiscal 2026’s Q2, which ended Nov. 30, an increase of 6.8% year over year, according to the company’s earnings report. Yield and volume strength across FedEx’s U.S. domestic package service drove the increase, CEO Raj Subramaniam said on the company’s Dec. 18 earnings call. [caption id="attachment_57293848" align="aligncenter" width="1920"] (Courtesy/FedEx)[/caption] The company reported a $30 million loss in Q2 from the expiration of its contract with the U.S. Postal Service . The contract ended in September 2024 and was taken over by UPS. Headwind from MD-11F grounding FedEx also reported a $25 million impact from the grounding of its MD-11 fleet , which it hopes to return to service in the company’s Q4, which runs March 1 to May 31, Chief Financial Officer John Dietrich said on the earnings call. The FAA issued an emergency airworthiness directive Nov. 8 grounding all MD-11s and requiring the aircraft to undergo inspections before flying again, following the Nov. 4 crash of UPS flight 2976 . The Q4 return to service is tentative, as FedEx awaits inspection protocols from the FAA and Boeing, Dietrich said. FedEx expects to see a $150 million headwind from the MD-11F grounding in Q3, which runs Dec. 1 to Feb. 28, he said. “Of the thirty-four MD-11s we own, twenty-five were in operation at the time of the groundings,” Subramaniam said. “We revised our November schedule quickly, condensing our planning process into three days, and the actions we took included: Trucking more volume in the United States instead of flying, given eighteen of our MD-11 flights were U.S. domestic; Shifting volume to other types of aircraft within our FedEx-owned fleet; Adding capacity via third-party lift; and Adjusting the timing of maintenance for our remaining fleet while staying compliant with regulatory guidelines.” Shifting trade lanes FedEx predicted in September that it would see a $1 billion headwind to its operating income in fiscal 2026 due to tariffs and the volatile global trade environment. The trade war between the U.S. and China has resulted in a YoY decrease in trans-Pacific air cargo traffic , according to data from IATA. FedEx reduced its trans-Pacific outbound capacity by about 25% YoY in Q2, Subramaniam said. “We continue to shift some of our capacity to the Asia-Europe lane and, importantly, these flights typically have an attractive B2B mix of over 75% with high load factors,” he said. Q2 results The company reported a Q2 adjusted net income of $1.1 billion, up 15.2% YoY. FedEx also reported in Q2: Adjusted operating income of $1.6 billion, up 16.7% YoY; Income before taxes of $1.3 billion, up 31.4% YoY; Diluted earnings per share of $4.82, up 19% YoY; FedEx Express segment revenue of $20.4 billion, up 8.4% YoY; FedEx Freight segment revenue of $2.1 billion, down 1.7% YoY; Package revenue of $18.6 billion, up 9% YoY; S. domestic package revenue of $13.4 billion, up 11.6% YoY; International export package revenue of $3.9 billion, up 2% YoY; and Freight revenue of $1.5 billion, down 3.2% YoY. FedEx expects to complete the spin-off of FedEx Freight into a publicly traded company by June 1, 2026, according to the report. Once separated, FedEx Freight will be listed on the New York Stock Exchange under the ticker symbol FDXF. Outlook FedEx bought back about 1.2 million shares, worth $276 million, in Q2. The year-to-date decrease in outstanding shares benefited Q2 results by 5 cents per diluted share, according to the report. As of Nov. 30, $1.3 billion worth of shares remained available for buyback under FedEx’s 2024 stock repurchase authorization. FedEx forecasts a 5% to 6% YoY revenue growth rate in fiscal 2026, up from its forecast of 4% to 6% in its Q1 results report. Shares of FedEx ( NYSE: FDX ) were up 0.57% from market open to $288.75 as of market close today. FedEx has a market capitalization of $67.5 billion. Cargo Facts LATAM 2026, the essential event for stakeholders in Latin America, will take place Feb. 10-12 at the Marquis Reforma in Mexico City. Learn more and register by Dec. 26 to take advantage of early-bird pricing. Cargo Facts Asia 2026, the indispensable event for Asia-Pacific stakeholders, will take place March 23-25 at the W Shanghai. Learn more and register by Feb. 6 to take advantage of early-bird pricing. The inaugural Cargo Facts Routes and Airport Conference will take place April 27-28 at the Marriott Al Forsan Abu Dhabi. 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