FedEx Plans to Return Grounded MD-11s to Service in May

FedEx (FDX) is preparing to return its MD-11 cargo jets to service next month, according to an internal memo seen by The Wall Street Journal. The move will enable the company to reduce its reliance on expensive leased planes it enlisted after regulators grounded all MD-11s following a fatal crash of a United Parcel Service (UPS) aircraft in November.

Details of the Return to Service

The memo stated that Boeing (BA) has tested and produced a new bearing for a part of the decades-old jet. This component is critical for safe operation after the accident that led to the grounding.

Background of the Incident

A UPS jet bound for Honolulu crashed shortly after takeoff from the carrier's cargo hub at Muhammad Ali International Airport in Louisville, Ky. Images from the scene showed the 34-year-old plane's left engine detaching from the wing and falling on the airfield during takeoff.

Context

The UPS crash led to a worldwide grounding of the MD-11 fleet, forcing cargo carriers like FedEx to lease alternative aircraft at high costs. With the MD-11s returning to service, FedEx expects to lower these expenses.

What This Means for Investors

The return of MD-11s could improve FedEx's profit margins by reducing leasing costs. It also signals confidence in resolving safety issues, potentially lowering operational risks. However, the pace of full fleet return without further incidents remains a key watchpoint.