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( BW)(TN-FEDEX)(FDX) FedEx Corp. Updates Second Quarter Earnings Outlook

    Business Editors

    MEMPHIS, Tenn.--(BUSINESS WIRE)--Oct. 29, 2001--FedEx Corporation (NYSE:FDX) today announced that earnings for the second quarter ended November 30 are expected to be in the range of $0.40 to $0.45 per diluted share, excluding any government assistance but including the other financial effects from the attacks on September 11. The company has received $101 million in compensation under the Air Transportation Safety and System Stabilization Act in the second quarter which will be reflected in operating income. With this compensation, earnings are expected to be $0.61 to $0.66 per share. Additional payments are expected under this Act, although the timing is uncertain.
    "Solid growth at FedEx Ground and outstanding cost management across the entire corporation will contribute to profitability for this quarter," said Alan B. Graf, Jr., executive vice president and chief financial officer. "We believe that FedEx Ground package volume will grow approximately 9% and that yields will increase about 6%, similar to first quarter growth rates. These projections are based on a combination of rapid acceleration of FedEx Home Delivery business and growth in our core business-to-business services.
    "Among our operating companies, FedEx Express has felt the greatest effect from the September 11 events, but FedEx Corporation's broad and diverse portfolio of services has helped offset this impact," said Graf. "We anticipate that Express' U.S. domestic second quarter average daily package volumes will decline 11% year-over-year while FedEx International Priority shipments will decline about 5%, both about four percentage points below first quarter growth rates. Although FedEx Express experienced volume losses and significant cost increases related to the events on September 11, increased freight revenue and excellent cost management mitigated the impact to earnings. U.S. freight revenue will increase substantially due to the U.S. Postal Service line-haul agreement which began on August 27."
    The recently announced Dynamic Fuel Surcharge at FedEx Express will have no material impact on the quarter. The Dynamic Fuel Surcharge will be effective November 5.
    With annual revenues of $20 billion, FedEx Corp. is the premier global provider of transportation, e-commerce and supply chain management services. The company offers integrated business solutions through a network of subsidiaries operating independently, including: FedEx Express, the world's largest express transportation company; FedEx Ground, North America's second largest provider of small-package ground delivery service; FedEx Freight, a leading provider of regional less-than-truckload freight services; FedEx Custom Critical, the world's largest provider of expedited time-critical shipments; and FedEx Trade Networks, a provider of customs brokerage, consulting, information technology and trade facilitation solutions.

    Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, any impacts on the company's business resulting from the events that occurred on September 11, 2001, the timing and amount of any money that FedEx is entitled to receive under the Air Transportation Safety and System Stabilization Act, as well as general economic and competitive conditions in the markets we serve, matching capacity to volume levels and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.

    --30--KO/na*

    CONTACT: FedEx Corp., Memphis
             Media Contact:
             Shirlee Clark, 901/818-7463
             or
             Investor Contact:
             Jim Clippard, 901/818-7468
             www.fedex.com

    KEYWORD: TENNESSEE
    INDUSTRY KEYWORD: TRANSPORTATION AIRLINES
    SOURCE: FedEx Corp.