By Lisa Baertlein and Abhinav Parmar
March 19 (Reuters) – Global delivery company FedEx said on Thursday that global demand is holding steady at the start of March despite the war in Iran, while fuel surcharges are sheltering profits from surging fuel costs.
U.S. and Israeli attacks on Iran quickly spiraled into a regional conflict that has turned parts of the Middle East into disaster zones. The world is monitoring the impact on global businesses and FedEx is seen as an important barometer of business activity.
FedEx, which has the world’s largest cargo air fleet by plane count, with 390 cargo jets and 313 turboprop planes, also raised its full-year profit forecast on strong fiscal earnings for the quarter ended February 28, helped by healthy delivery demand and cost controls during the pivotal holiday quarter, sending shares up 9% in after-hours trading.
Attacks on oil facilities in the Gulf have pushed crude prices up over $100 a barrel and threatened jet fuel supplies, rattling the aviation market, while missile and drone threats have snarled airline traffic to normally busy Middle Eastern transport hubs.
But the fuel surcharge FedEx employs is “doing its job,” said Brie Carere, chief customer officer at FedEx, adding it will “ensure that we maintain profitability.”
The company said its outlook assumes no additional geopolitical disruptions, but the fallout from the U.S.-Israeli war on Iran, which has pushed air freight rates higher and forced carriers to reroute flights, could weigh on fourth-quarter performance if soaring fuel costs prompt customers to pull back.
FedEx bought 274.3 million gallons of jet fuel in the fiscal fourth quarter that ended May 31, 2025, according to FedEx’s Stat Book.
Like most other transportation providers, FedEx adds fuel surcharges that shift volatile fuel costs to its customers. FedEx is a large buyer of jet fuel, has strong relationships with providers and has maintained good supplies.
Demand for the first two weeks of March has been in line with FedEx’s expectations for a continuation of third-quarter trends, CEO Raj Subramaniam said.
“Obviously, we will monitor this extremely carefully,” he said.
The Middle East accounts for a small part of FedEx’s business, executives said.
About 8% of FedEx’s international export volume flows through hubs in the war-affected region, Stifel analysts said.
MOST PROFITABLE PEAK SEASON
FedEx now expects adjusted profit for its fiscal year ending May 31 to be between $19.30 and $20.10 per share. Analysts, on average, expect FedEx to post full-year profit of $18.69 per share, according to data compiled by LSEG.
The company in December forecast annual profit of $17.80 to $19.00 per share.
“This peak season is the most profitable peak in FedEx history,” CEO Raj Subramaniam said.
Adjusted earnings for its crucial winter holiday quarter rose to $5.25 per share, beating analysts’ estimates of $4.14 per share, even as it absorbed millions in unexpected costs related to truck and plane replacements for its MD-11 fleet, which was grounded after a deadly UPS crash in November 2025.
FedEx operating results in its Express unit improved in the third quarter, helped by stronger U.S. and international package pricing, higher domestic volumes and ongoing cost cuts.
“The cost savings from the network reorganization also continue to help expand margins, and all 3 added up to a very surprising beat,” said Evercore ISI analyst Jonathan Chappell.
The company said that gains were partly offset by higher wages and incentive pay, rising transportation costs, the impact of global trade policy changes, and the grounding of MD-11 aircraft.
FedEx had 28 Boeing MD-11 cargo jets in operation when the Federal Aviation Administration grounded the planes after the crash that killed 15 people, including three pilots on board.
FedEx is working with regulators to return its MD-11 fleet to service by the end of May. FedEx paid about $120 million in costs tied to the grounding of those planes during the third quarter and expects expenses of $55 million in the current quarter.
The company also said that it now expects its full-year revenue to be up in the range of 6.0% to 6.5% year-over-year, compared with its prior call for growth between 5% and 6%.
FedEx is in a multi-year restructuring that includes slashing billions of dollars in costs, combining its distinct Ground and Express delivery options, automating some operations and spinning off its Freight trucking business on June 1.
(Reporting by Lisa Baertlein in Los Angeles and Abhinav Parmar in Bengaluru; Editing by Alan Barona)
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