32 Slices
Medium 9781576754139

23. America, You’ve Got a New Airline

Roger Frock Berrett-Koehler Publishers ePub

141

In December 1974, after the end of the UPS strike, volumes dropped back to a more normal level but remained more than double the level of the previous December. We added fifteen new cities to the network during the second half of the year. The rapid pace of expansion and the explosive growth of the volume kept everyone running at maximum effort. The days were long, the weekends short, and pressure was intense. Nevertheless, we were meeting the challenge and we all loved the excitement! The financial picture was even beginning to look better: December was the first month that cash income was greater than expenses.

We were now concerned that our volume might exceed the capacity of the Falcon fleet, so we decided to discontinue the Economy Air service. We began to anticipate a time when we would need to cancel the mail contracts and place those planes in the small-package service.

Then another surprise: The package volume for the first few months of 1975—in fact, for the rest of the fiscal year—remained stubbornly flat. However, since we attained the volumes without Economy Air packages, the revenue was elevated, and cash receipts continued to run about equal to disbursements. We were all breathing a little easier and even managed to feel a little bit smug about our success. We were finally reaching the initial point of financial stability and were confident that real profits were just around the corner.

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4. This Dog Might Hunt!

Roger Frock Berrett-Koehler Publishers ePub

23

In mid-April 1972 I arrived at the offices of Arkansas Aviation Sales to present our last progress report prior to preparing a final report. We started with a tour of the facilities and met some of the employees, most of whom were involved with sales operations and care of the corporate jets. While the offices at Arkansas Aviation were at best Spartan, the hangar area was quite a different story. Crammed into every possible parking space were beautiful, shining, expensive corporate jets of various configurations and with a variety of company logos and color schemes designed by their previous owners, which Arkansas Aviation had purchased for resale.

There was even an Aston Martin sports car parked in the corner of the hangar similar to the James Bond model. Curiosity got the better of me and I just had to ask what that beautiful car was doing parked in an airplane hangar. Fred had taken the car as a down payment in trade for one of his smaller propeller planes, as he turned his attention to the more rewarding corporate jet market. As he explained, “It takes up a lot less space than the plane.”

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7. A Climate of Chaos

Roger Frock Berrett-Koehler Publishers ePub

37

In my 12 years at A. T. Kearney, I had adjusted to the realization that corporations rarely conducted their operations in the crisp, professional manner we had presumed in the business school classroom, but even the more disappointing consulting experiences had not prepared me for the chaos I encountered at the Arkansas Aviation Sales facility.

Irby Tedder, a retired air force colonel, was the executive vice president, controller, and “mother hen” of the group. He was well qualified for his role at Arkansas Aviation. Irby had served as inspector general of the Continental Air Command and as commander of two large air bases. The “Colonel,” as he was frequently addressed, had amassed over 8,000 hours of command pilot experience and served as deputy wing commander in the Strategic Air Command, which operated B-47 jet aircraft.

Irby was a calming and mature influence on the group, but in some respects, the staff was almost unmanageable. He described Fred as “a nitpicker who had his hand in everything. He worried about seemingly insignificant problems that other people could easily have handled.” However, after my first few days of “managing by walking around” and just observing the confusion, I concluded that Fred had a right to be concerned about the trivial problems. People were doing a lot of talking but had no idea of the enormous tasks required in the next 10 months to launch our small-package service.

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31. Changing How the World Does Business

Roger Frock Berrett-Koehler Publishers ePub

211

The most significant achievements of FedEx since 1982 are linked to the evolution of our global culture and the purchase of companies that widened the scope of operations.

The company’s second decade, ending in 1992, was a time for unfettered expansion as gross revenue climbed to nearly seventeen times that of the first decade. The company extended its reach to 90 percent of the Canadian population; all of Puerto Rico; Mexico; more than twenty Caribbean islands; and much of South America. European operations covered London, Paris, Frankfurt, Milan, Brussels, Geneva, Zurich, Basel, Antwerp, Amsterdam, Eindhoven, and many smaller communities. After the purchase of Flying Tigers in 1989, direct Asian service included Tokyo, Osaka, Hong Kong, Taipei, Singapore, Seoul, and Panang. By the end of 1992, the company fleet had grown to 444 planes, including 151 B-727s, 45 wide-bodies, and 248 feeder aircraft; employees numbered just over 84,000.

The third decade witnessed continued expansion of the company, both geographically and in its service offerings. In the middle of the decade, the company entered the small-package ground delivery industry and the less-than-truckload freight market when it purchased Caliber Systems, Inc. In 2000 the company officially changed its name to FedEx Corporation, the name most familiar to its customers worldwide.

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16. An Inauspicious Beginning

Roger Frock Berrett-Koehler Publishers ePub

89

We needed to show our potential customers that we were very different from any other shipping service. We tried to keep things simple by providing representatives with a sales talker, a Dick and Jane story: These are our planes, these are our trucks, this is our system, here is our sorting facility. Our system was so simple, so unique, and so new that it required explaining. Our sales group put up posters of the Federal Express planes in each prospect’s shipping area as a reminder of our closed-loop system, but that still wasn’t enough.

In the early days, people had a difficult time understanding the concept of shipping through the hub. Diane, one of our customer service agents doing telemarketing at the time, was explaining to a prospect that our central sorting hub was the reason we were so reliable.

The prospect said, “You mean that if I ship a package from Milwaukee to Chicago, it has to go through Memphis?”

Diane responded, “Look, sir, if you don’t tell your customer, we won’t. It just will be there by noon tomorrow. Will that work?”

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