A：The company's thoughts and prayers are with those affected by the recent tragedy, and they are working closely with Boeing and the FAA to ensure the safety of their MD 11 fleet.

A：During peak season, the company focuses on delivering a successful peak for customers and ensuring every FedEx experience is outstanding. They also work on network integration and optimization, maintaining strong revenue quality, and improving profitability through transformation efforts.

A：The company's Q2 performance was affected by external headwinds such as the unexpected grounding of their MD 11 fleet, nationwide air traffic constraints, weakness in the industrial economy, and impacts from global trade policy changes.

A：The company is using data and technology to transform its operations, scale AI adoption across the company, and develop a global AI program to help teams innovate and solve challenges. Additionally, they are exploring new approaches to leverage real-world operational data and bringing digital solutions to the market, starting with logistics intelligence.

A：Strategic moves include the preparation for the spin-off of FedEx Freight, with the appointment of CFO Marshall Witt, and the ongoing efforts to reduce structural costs which are leading to significant improvements in profitability. The company is also focused on improving operations in Europe and continuing the digital transformation with AI adoption and strategic collaborations like the one with ServiceNow.

A：During the quarter, the company reducedPurple Tail Trans Pacific Asia outbound capacity by about 25% year over year and decreased third-party capacity by nearly 35%. They also shifted capacity to maintain an attractive B2B mix on flights to Asia and Europe, implemented contingencies, revised their network schedule, and prioritized customer commitments to stabilize the network.

A：The projected impact of the MD 11 fleet grounding on the company's Q2 adjusted operating income is a pressure of about $25 million.

A：The company is preparing for the future by focusing on network transformation, organizational and digital transformation efforts, and scaling AI adoption. They are also working on strategic initiatives and will share more information on their medium-term financial outlook at the February Investor Day.

A：The strategic collaboration with ServiceNow is designed to make life easier for businesses managing complex sourcing and procurement operations by providing a system that anticipates and adapts to supply chain disruptions, thus monetizing proprietary insights and supporting real-world logistics intelligence for AI systems and workflows.

A：The acquisition of a new Amazon business focused on large and heavyweight shipments is going well and has positively contributed to robust growth in the United States priority and deferred express services.

A：International export volumes declined primarily due to lower volumes on the China to US lane; however, this was partially offset by strong growth on the Asia to Europe lane and continued growth in US international outbound revenue.

A：The decline in FedEx's freight revenue was primarily due to lower average daily shipments, impacted by the weakness in the industrial economy.

A：FedEx is performing well with service quality, as indicated by Q2 service quality metrics with claims and damage performance at some of the best levels in company history, and on-time performance at the highest level since Q3 of fiscal year 21.

A：The strong yield performance is attributed to efforts to prioritize high value shipments, a strong value proposition, and improvements in the pricing environment. Specifically, domestic package services contributed significantly to the year-over-year adjusted operating income improvement.

A：Vertical strategies, each with dedicated leadership and resources in targeted growth areas such as healthcare and automotive, are contributing to nearly half of FedEx's revenue growth. This strategy has been effective in sustaining and winning new business.

A：FedEx's digital tools are supporting revenue growth by creating better outcomes for customers. An example is Wayfair, which uses a premium integrated visibility tool to improve shipment-related communication and support their customer service teams.

A：The expected revenue growth for fiscal year 26 is 5 to 6% consolidated revenue growth, supported by sustained US domestic yield and volume growth. The second half is expected to be pressured due to the global trade environment, but this is expected to be partially offset by yield.

A：Fiscal year 26 revenue for FedEx Freight is expected to be approximately flat to slightly down on a year-over-year basis, with yield growth providing an offset to a low single-digit percentage decline in shipments.

A：The adjusted earnings per share reported for the second quarter were $4.82, up 19% year over year. Consolidated revenue grew by 7%, supporting 60 basis points of adjusted margin expansion and 17% adjusted operating income growth.

A：FedEx is committed to prudent capital allocation and maximizing stockholder returns. During the quarter, nearly $300 million worth of stock was purchased, alongside an increased dividend payout. There are $1.3 billion remaining under the 2024 stock repurchase authorization.

A：The year-to-date CapEx is $1.4 billion, with a continued focus on investments in the fleet, network enhancements, and hub modernization. The expected pension cash contribution is reduced to $275 million in fiscal 26, from a prior expectation of $400 million.

A：The adjusted EPS outlook for the full fiscal year is now expected to be between $17.80 and $19, reflecting a range of potential scenarios for the back half of the year. The midpoint of the range implies a 7% increase in adjusted operating income for the fiscal second half, with adjusted operating margin up slightly.

A：Discrete items such as higher variable incentive compensation accruals, adjusted FedEx Freight expectations, and headwinds from MD 11 groundings are anticipated to result in a $600 million year-over-year headwind to adjusted operating income in the second half. For the full year, these items represent nearly a $900 million headwind.

A：Q3 revenue is expected to be essentially in line with Q2 with slight increases in operating expenses due to higher costs due to the MD 11 grounding and increased peak demand. Adjusted EPS is anticipated to be sequentially lower than Q2.

A：The spinoff of FedEx Freight is on track for June 1, 2026. FedEx Corp. intends to retain up to 19.9% of FedEx Freight's outstanding shares to preserve the tax-free nature of the spinoff and plans to monetize these shares within a time frame permitted by the IRS.

A：The company has been very pleased with its profitable market share and the flow-through of profit, as well as the margin expansion of 100 basis points at FEC. The strategy for acquiring new B2B market share involves continued focus on B2B, metrics within the sales organization, and the compensation model, as well as overall rate discipline and the capture on surcharges.

A：The over half revenue growth in Q2 was influenced by acquiring new B2B customers, improving share of wallet, and having the strongest quarter from a small business B2B perspective. These factors combined with the company's revenue quality strategy contributed to the growth.

A：The service component in the annual incentive compensation has led to payouts being well below target last year, while this year they have included the service component and anticipated several headwinds. Despite these, the team is performing exceptionally well. The focus remains on good service quality, which is less wasteful. Progress made in Canada is contributing to a forecast expectation of roughly 3 to 6 months for efficiency gains.

A：LTL business and spin-related costs have impacted earnings with $25 million in the quarter mentioned, with an anticipated $300 million to $100 million of the $200 million of separation costs attributed to the LTL business. The $100 million represents the result of the separation cost and includes the acceleration of sales force hiring. The decline in EBIT is influenced by market conditions and the LTL business's performance.

A：The financial impact of the MD 11 grounding in Q3 includes incremental costs with $25 million in November and significantly higher costs in December, which is a peak season. The company's priority is safety, and they are working with authorities to get the aircraft back in flight as soon as possible. The timing and protocol for the aircraft return to service are crucial factors.

A：The three components of the $600 million headwind are 160 million due to expected continued softness in the LTL business, up to a total of about 175 million for the MD 11 grounding, and $265 million for increased variable compensation. It is expected that about the majority of the headwind will be in Q3.

A：The company expects Q3 this year to be sequentially lower than Q3 last year, which was unusually strong seasonally, and they had a lot of driver benefits in that quarter. They also expect Q4 to be their strongest dividend quarter for the fiscal year.

A：The company does not provide specific guidance on future incentive comp but acknowledges the tendency to run into the incentive comp bucket as they develop momentum, which can create headwinds for a period of time. However, for the upcoming fiscal year, it is not expected to be a headwind. The company is very pleased with the underlying momentum in the business and does not foresee it as a headwind in the next 3 to 6 months on an ongoing basis.

A：Revenue could potentially push the outlook above the midpoint if it is stronger and the cost environment is better than anticipated. The company is comfortable with the assumptions laid out and focused on being as far into the range as possible.

A：The company expects domestic parcel growth rates to continue to be solid in the next year, with potential benefits from competitive advantages with the Postal Service and some of the share shift that occurred. However, there is a possibility of headwinds in fiscal 27 if the growth cannot be maintained at a high level.

A：The company does not view the relationship between FedEx and the Postal Service as a competitive threat to its high-value segments such as B2B, home delivery ground commercial. They believe they have a stronger value proposition and are focused on continuing to take profitable market share.

A：The $300 million impact is a result of lower revenue and pressure on the business that's consistent with the LTL industry. The $152 million mentioned are spin-off preparation costs, which are one-time costs. The company is beginning to see some level of industry consolidation, especially in the truckload business, which they believe will eventually benefit the LTL sector.

A：The company believes that industry consolidation in the truckload business is underway and that this process seems to have begun. They are encouraged by the positive inflection in yield and the discipline in the pricing environment in their LTL business. They expect this to lead to a reduction of capacity in the truckload business, which will eventually benefit the LTL sector.

A：It is very early to predict the implications of a potential Supreme Court ruling on tariffs for trade activity or for FedEx's performance. While an international volume increase would be beneficial, the company is not counting on any such thing in their outlook. They are, however, positioned to quickly adapt to changes in trade and supply chain patterns due to their global scale network.

A：The company is tracking in line with their forecast for peak season. They are expecting a mid single-digit year-over-year growth in advertising revenue, with a total volume growth forecasted to be in the high single digits due to an extra operating day. Early in peak, the base and small and medium businesses are slightly ahead of forecast, while larger retailers are slightly below, which is beneficial for revenue quality.

A：The company's strong peak season performance is attributed to running the network effectively with an eye on keeping port cities clear and managing volume distribution by bypassing some sorts and hubs. Additionally, the team is focused on executing without a specific aircraft (MD 11) next week, and they are confident about the outcome due to their preparation and performance.

A：The Network 2.0 benefits are expected to have a tangible financial impact later in fiscal year 27, which will be a great contribution to operational efficiency. The financial impact is not considered material for the current fiscal year but is anticipated to lead to improved margins structurally going forward.

A：In the healthcare market, the company has a robust digital portfolio and offers customized visibility and business rules for intervention and monitoring to healthcare customers, which is critical for patient care. They have also introduced a new quality program important for the pharma segment and continue to expand cold chain capabilities, moving towards end-to-end cold chain solutions that are gaining momentum in the U.S. and being extended to Europe and Asia. On the SMB front, the company is experiencing the best performance in several years and plans to continue expanding with their value proposition.

A：The company views the data centers market as a significant opportunity, with global CapEx expected to be around $550 billion, representing a market size of approximately $7 to $8 billion. They believe they are well-positioned in this market due to their precision capabilities, winning current business, and the potential for continued growth, although it is considered a smaller opportunity compared to the healthcare sector.

A：The non-SAP add backs are predominantly tied to freight separation, with smaller portions related to the change in the fiscal year calendar and ongoing business optimization. The overwhelming majority of these costs will be realized in the fiscal third quarter due to the nature of the expenses being mostly related to freight.