FedEx Express (FX, Memphis International) plans to lay-off up to 6,300 employees in Europe as it nears the completion of its network integration with TNT Express and establishes a dual-hub air network on the continent.
The European Commission in 2016 approved FedEx's acquisition of European operator TNT, which specialises in shipments between businesses, as part of FedEx's European expansion plans. The companies since integrated their IT systems and key parts of the air, road, and ground networks.
Following the FedEx Express and TNT air networks' physical integration, FedEx Express would establish a dual-hub air network model in Europe, with Paris CDG serving as its primary hub; with Liège in Belgium as its secondary hub. FedEx Express currently operates two duplicate air networks out of two main hubs at Paris and Liège.
The company in a statement said its dual hub network in the US had been proven over decades with Memphis International as the universal hub and Indianapolis International as the secondary hub.
FedEx Express Europe Chief Operating Officer Dave Canavan 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”.
Duplications resulting from operating two large European networks connecting similar geographies would result in redundancies across operational teams and back-office staff, the company said in a statement. A range of support measures would be discussed with affected employees and works council representatives from across the region during a consultation period over the next 18 months. These measures would differ by country and may include voluntary redundancy, reassignment to other roles, and priority access to open positions.
“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,” Canavan said.
Over the past few years, weak shipment sales in Europe have led to sluggish growth in the TNT unit and have weighed on FedEx’s results. The plan is expected to result in savings of between USD275-350 million on an annual basis beginning in the fiscal year of 2024, FedEx said, adding that it expects to incur severance charges of between USD300 million and USD575 million through the fiscal year 2023, Reuters reported.
Belgian media reported the scale of the planned restructuring had taken FedEx Express's partners by surprise, including Liège airport's management. FedEx Express business currently makes up almost half of all freight handled at Liège, which will be significantly impacted by the downsizing of its status. Freight traffic via Liège is expected to gradually shrink by 70%. The number of aircraft based there is likely to drop from 40 to 15, with no clarity yet on the impact on night flights. Some 671 out of 1,532 employees at the airport are expected to lose their jobs, with new working hours and work schedules for the remaining 861 staff.
“We were amazed that, without any prior consultation, FedEx decided to restructure its activities and position Liège Airport as a secondary hub,” commented airport Managing Director, Luc Partoune. He said the airport would meet with FedEx management to better understand the rationale for the restructuring and its operational implications. Despite the setback, he maintained the airport’s growth prospects remain strong thanks to its other customers. Liège Airport earlier had expected a 5% increase in business in 2021.
