by Calculated Risk on 12/08/2008 04:52:00 PM

Press Release:

[S]ignificantly weaker macroeconomic conditions are expected to offset the benefits from lower fuel prices and the announced departure of DHL from the U.S. domestic package market.
...
Second quarter results benefited from rapidly declining fuel prices and continued cost management,” said Alan B. Graf, Jr., executive vice president and chief financial officer. “However, demand for our services weakened sequentially throughout the quarter and global economic trends continue to worsen, substantially reducing our second half outlook. We are adjusting our expense plans to more closely align with the weaker business conditions, and are now targeting capital spending of $2.5 billion for fiscal 2009, down from $3.0 billion at the start of the year.”

There are a couple of key points: 1) the weaker economy is more than offsetting any fuel savings for FedEx, and 2) capital spending plans have been reduced significantly (we are seeing company after company announce lower capital spending plans for 2009).