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FedEx (FDX) Enters Into Long-Term Agreement With Atlas Air

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FedEx (FDX - Free Report) recently announced that it entered into a long-term air freight partnership with Atlas Air Worldwide Holdings’ (AAWW - Free Report) subsidiary Atlas Air. The deal is aimed at boosting air cargo capacity during the peak shipping seasons.

Per the deal, which is a huge positive for the air freight sector, Atlas Air will provide FedEx with two 747-400 freighter aircraft on a full-time aircraft, crew, maintenance and insurance (ACMI) basis. The 747-400 freighters are helping FedEx support its growing express and e-commerce network. Both freighters already came online and are flying on behalf of the Memphis, TN-based package delivery company.

The new deal between the companies is in addition to the existing multi-year peak season contract that provides FedEx with a minimum of five jets during the fourth quarter. Atlas Air Worldwide’s president and CEO John W. Dietrich was visibly delighted with the development and said: “We are pleased to grow our long-term relationship with FedEx. This agreement reflects the continued strong demand for airfreight capacity, particularly in the express and e-commerce markets.”

The deal with Atlas Air comes close on the heels of FedEx’s first-quarter fiscal 2022 results. The company reported lower-than-expected earnings per share due to escalating costs and supply-chain disruptions. The same headwinds are responsible for the company lowering its earnings outlook for fiscal 2022.

Zacks Rank & Stocks to Consider

FedEx currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Transportation sector are Schneider National (SNDR - Free Report) and Matson (MATX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Schneider National and Matson have increased 43.7% and 10.7%, respectively, year to date.