Core Insights - FedEx is implementing a company-wide cost realignment initiative called DRIVE, which has resulted in significant savings of $1.8 billion in fiscal 2024 and an additional $2.2 billion in fiscal 2025 [1][10] - The company anticipates $1 billion in transformation-related savings in fiscal 2026 from the DRIVE program and Network 2.0 due to ongoing geopolitical uncertainties and high inflation affecting consumer sentiment and growth expectations [2][10] Cost Reduction Initiatives - FedEx is reducing flight frequencies, parking aircraft, and cutting staff as part of its cost reduction strategy, including layoffs of 611 employees at two distribution centers in Memphis, TN [3][10] - The company reported better-than-expected earnings per share and revenues for the first quarter of fiscal 2026, primarily driven by these cost-cutting initiatives [4] Competitive Landscape - United Parcel Service (UPS) is also cutting costs in response to weak demand, offering buyouts to delivery drivers and trimming its workforce [5] - UPS has agreed to reduce business with Amazon, its largest customer, by more than 50% by June 2026, which has influenced its workforce reduction decisions [6] Financial Performance and Valuation - FedEx shares have gained over 6% in the past six months, outperforming its industry [7] - The company trades at a 12-month forward price-to-earnings ratio of 11.92X, which is considered expensive compared to industrial levels [11] - The Zacks Consensus Estimate for FedEx's earnings has been revised downwards over the past 60 days for fiscal second-quarter, third-quarter, and full-year 2026 and 2027 [12][13]