10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2013.

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number 1-15829

FEDEX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	62-1721435
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
942 South Shady Grove Road, Memphis, Tennessee	38120
(Address of Principal Executive Offices)	(ZIP Code)

Registrant’s telephone number, including area code: (901) 818-7500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.10 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

Indicate by check mark if the Registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Exchange Act. Yes ¨ No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a smaller reporting  company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The aggregate market value of the common stock held by non-affiliates of the Registrant, computed by reference to the closing price as of the last business day of the Registrant’s most recently completed second fiscal quarter, November 30, 2012, was approximately $26.3 billion. The Registrant has no non-voting stock.

As of July 12, 2013, 316,584,465 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement to be delivered to stockholders in connection with the 2013 annual meeting of stockholders to be held on September 23, 2013 are incorporated by reference in response to Part III of this Report.

TABLE OF CONTENTS

	Page
PART I
ITEM 1. Business		3
ITEM 1A. Risk Factors		23
ITEM 1B. Unresolved Staff Comments		23
ITEM 2. Properties		23
ITEM 3. Legal Proceedings		28
ITEM 4. Mine Safety Disclosures		28
Executive Officers of the Registrant		28
PART II
ITEM  5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		31
ITEM 6. Selected Financial Data		31
ITEM 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition		31
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk		31
ITEM 8. Financial Statements and Supplementary Data		31
ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		32
ITEM 9A. Controls and Procedures		32
ITEM 9B. Other Information		32
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance		33
ITEM 11. Executive Compensation		33
ITEM  12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		33
ITEM 13. Certain Relationships and Related Transactions, and Director Independence		33
ITEM 14. Principal Accountant Fees and Services		33
PART IV
ITEM 15. Exhibits, Financial Statement Schedules		34
FINANCIAL SECTION
Table of Contents		37
Management’s Discussion and Analysis		39
Consolidated Financial Statements		82
Other Financial Information		132
EXHIBITS
Exhibit Index		E-1
Exhibit 10.52
Exhibit 10.53
Exhibit 10.73
Exhibit 12
Exhibit 21
Exhibit 23
Exhibit 24
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINK BASE DOCUMENT
EX-101 DEFINITIONS LINK BASE DOCUMENT
EX-101 LABELS LINK BASE DOCUMENT
EX-101 PRESENTATION LINK BASE DOCUMENT

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PART I

ITEM 1. BUSINESS

Overview

FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. These companies are included in four business segments:

• FedEx Express: Federal Express Corporation (“FedEx Express”) is the world’s largest express transportation company, offering time-certain delivery to more than 220 countries and territories, connecting markets that comprise more than 90% of the world’s gross domestic product. The FedEx Express segment also includes FedEx Trade Networks, Inc., which provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding, and FedEx SupplyChain Systems, Inc., which offers a range of supply chain solutions.

• FedEx Ground: FedEx Ground Package System, Inc. (“FedEx Ground”) is a leading North American provider of small-package ground delivery services. FedEx Ground provides low-cost, day-certain service to every business address in the United States and Canada, as well as residential delivery to nearly 100% of U.S. residences through its FedEx Home Delivery service. The FedEx Ground segment also includes FedEx SmartPost, Inc., which specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages using the U.S. Postal Service (“USPS”) for final delivery to any residential address or PO Box in the United States.

• FedEx Freight: FedEx Freight, Inc. (“FedEx Freight”) is a leading North American provider of less-than-truckload (“LTL”) freight services across all lengths of haul, offering: FedEx Freight Priority, when speed is critical to meet supply chain needs; and FedEx Freight Economy, when time can be traded for cost savings. The FedEx Freight segment also offers freight delivery service to most points in Canada, Mexico, Puerto Rico and the U.S. Virgin Islands and includes FedEx Custom Critical, Inc., a leading North American provider of time-specific, critical shipment services.

• FedEx Services: FedEx Corporate Services, Inc. (“FedEx Services”) provides our other companies with sales, marketing, information technology, communications and back-office support. The FedEx Services segment also includes FedEx TechConnect, Inc., which is responsible for customer service, billings and collections for our U.S. customers and offers technical support services, and FedEx Office and Print Services, Inc. (“FedEx Office”), which provides document and business services and retail access to our package transportation businesses.

For financial information concerning our reportable business segments, refer to the accompanying financial section, which includes management’s discussion and analysis of results of operations and financial condition and our consolidated financial statements.

Our Web site is located at fedex.com. Detailed information about our services, e-commerce tools and solutions, and citizenship efforts can be found on our Web site. In addition, we make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports available, free of charge, through our Web site, as soon as reasonably practicable after they are filed with or furnished to the SEC. These and other SEC filings are available through the Investor Relations page of our Web site, http://investors.fedex.com. The information on our Web site, however, is not incorporated by reference in, and does not form part of, this Annual Report on Form 10-K.

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Except as otherwise specified, any reference to a year indicates our fiscal year ended May 31 of the year referenced.

Strategy

FedEx was incorporated in Delaware on October 2, 1997 to serve as the parent holding company and provide strategic direction to the FedEx portfolio of companies. We intend to continue leveraging and extending the FedEx brand and providing our customers with convenient, seamless access to our entire portfolio of integrated services.

We believe that sales and marketing activities, as well as the information systems that support the extensive automation of our delivery services, are functions that are best coordinated across operating companies. Through the use of advanced information systems that connect the FedEx companies, we make it convenient for customers to use the full range of FedEx services. We believe that seamless information integration is critical to obtain business synergies from multiple operating units. For example, our Web site,  fedex.com, provides a single point of contact for our customers to access FedEx Express, FedEx Ground and FedEx Freight shipping, pick-up, shipment tracking, customer service and invoicing information, as well as FedEx Office services. Similarly, by making one call to FedEx Expedited Freight Services, our customers can quickly and easily evaluate surface and air freight shipping options available from FedEx Express, FedEx Freight and FedEx Custom Critical in order to select the service best meeting their needs. Through this one point of contact, customers can select from a broad range of freight services, based on their pickup and delivery requirements, time sensitivity and the characteristics of the products being shipped. Also, we have integrated our LTL and parcel sales teams to enhance the effectiveness of our sales efforts and provide additional simplicity for our customers.

We manage our business as a portfolio — in the long-term best interest of the enterprise, not a particular operating company. As a result, we base decisions on capital investment, expansion of delivery, information technology and retail networks, and service additions or enhancements on achieving the highest overall long-term return on capital for our business as a whole. For each FedEx company, we focus on making appropriate investments in the technology and assets necessary to optimize our long-term earnings performance and cash flow. As an example of our commitment to managing collaboratively, all our management incentive compensation programs across the enterprise are tied to the performance of FedEx as a whole.

While we have increased our emphasis on competing collectively and managing collaboratively, we continue to believe that operating independent networks, each focused on its own respective markets, results in optimal service quality, reliability and profitability from each business unit. Each FedEx company focuses exclusively on the market sectors in which it has the most expertise and can be independently enhanced and managed to provide outstanding service to our customers. Each company’s operations, cost structure and culture are designed to serve the unique customer demands of a particular market segment and as a result, we are able to adapt our networks in response to changing needs.

Our “compete collectively, operate independently, manage collaboratively” strategy also provides flexibility in sizing our various operating companies to align with varying macro-economic conditions and customer demand for the market segments in which they operate, allowing us to leverage and manage change. Volatility and uncertainty have become the norms in the global transportation market, and we are able to use our flexibility to accommodate changing conditions in the global economy. For example, in response to sluggish economic growth, we recently retired from service 10 aircraft and related engines and shortened the depreciable lives of an additional 76 aircraft and related engines. In addition, we have decreased capacity between Asia and the United States.

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At the same time, we continue to expand network capacity at our growing and highly successful FedEx Ground segment. Strategic management of the FedEx Ground business resulted in higher yields and volumes boosted by e-commerce and market share gains from continued growth in our FedEx Home Delivery service in 2013.

The following four trends have driven world commerce and shaped the global marketplace, and we believe they will continue to do so over the long term:

• Globalization: As the world’s economy has become more fully integrated, companies are sourcing and selling globally. With customers in more than 220 countries and territories, we facilitate this supply chain through our global reach, delivery services and information capabilities.

• Supply Chain Acceleration: While the growth of global trade has slowed, companies of all sizes continue to depend on the delivery of just-in-time inventory to help them compete. We have taken advantage of the move toward more efficient supply chains by helping customers obtain more visibility into their supply chains and near real-time information to manage inventory in motion, thereby reducing overhead and obsolescence and speeding time-to-market.

• Increase in High-Tech and High-Value-Added Businesses: High-tech and high-value-added goods have increased as a percentage of total economic output, and our various operating companies offer a unique menu of services to fit virtually all shipping needs of high-tech and high-value-added industries.

• Growth of E-Commerce: E-commerce acts as a catalyst for the other three trends and is a vital growth engine for businesses, as the Internet is increasingly being used to purchase goods and services. Through our global transportation and technology networks, we contribute to and benefit from the growth of e-commerce.

These trends have produced an unprecedented expansion of customer access — to goods, services and information. Through our global transportation, information technology and retail networks, we help to make this access possible. We continue to position our companies to facilitate and capitalize on this access and move toward stronger long-term growth, productivity and profitability. To this end, we are investing in long-term strategic projects focused on expanding and modernizing our global networks to accommodate future volume growth and increase customer convenience, such as investments in B777F and B767F aircraft. We also continue to broaden and more effectively bundle our portfolio of services in response to the needs and desires of our customers. For example, since the beginning of 2013, we:

• Continued to reduce transit times and provide a better pickup experience within FedEx Ground’s growing and highly profitable network.

• Made strategic acquisitions in Poland, France and Brazil, and entered into agreements to acquire the businesses operated by our current service provider in five countries in Southern Africa, which are giving and will give us more robust transportation networks in these countries and added capabilities in these important international markets.

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• Continued to execute our aggressive plan to expand the global freight forwarding presence of FedEx Trade Networks — by opening additional facilities (over 140 freight forwarding offices are now open), including in Glasgow, Scotland, Bangkok, Thailand, Rio de Janeiro, Brazil, Guadalajara and Monterrey, Mexico, and Dublin, Ireland, and establishing new alliances throughout the world.

• Introduced enhancements to the FedEx Deep Frozen Shipping Solution that offer more options and broader access to the end-to-end service that helps customers move temperature-sensitive samples and specimens around the world using an innovative liquid nitrogen dry vapor technology that maintains a temperature below -150 degrees Celsius for up to 10 days.

• Expanded the availability of our sensor-based SenseAware service, which provides customers with near real-time tracking of a package’s vital statistics within the in-transit supply chain or stationary inventory monitoring, to international markets in Canada, the United Kingdom, Australia and Singapore, all the while adding new capabilities to provide customers with greater flexibility and reach.

• Continued to utilize FedEx Freight’s expertise in technology and operational excellence under the unified LTL network to provide a powerful value proposition to customers.

Business Realignment

During 2013, we saw a more challenging business environment — particularly for FedEx Express, as ongoing shifts from priority to deferred shipping services significantly impacted profitability. In response to these trends, in addition to the continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs announced in 2013 are targeting annual profitability improvement of $1.6 billion at FedEx Express by the end of 2016 (from the full year 2013 base business). The plan identifies several things the company will do, including reducing our costs, modernizing our aircraft fleet as discussed above, adjusting our transportation networks to meet changing customer needs and remaining dedicated to our people and culture, which have made us what we are today. In the face of tepid global economic growth, shifting customer preferences and volatile fuel prices, we continue to adapt our networks, striking the right balance between volume and yield improvements.

More specifically, multiple initiatives primarily across FedEx Express and FedEx Services are reducing our overall cost structure. For example, we completed a voluntary program offering cash buyouts to eligible U.S.-based employees in certain staff functions, and approximately 3,600 employees either have left or will be leaving voluntarily by the end of 2014. We are also streamlining support functions and eliminating redundant systems and processes. At the same time, in addition to modernizing our air fleet, we are transforming our U.S. domestic express network by closing and realigning regional and district facilities, reorganizing pickup and delivery operations while maintaining our outstanding service levels, improving flight and crew scheduling, refining aircraft maintenance processes and improving fuel efficiency of our vehicle fleet. Internationally, we are working to improve the quality of our international revenue as customers continue to make more economical choices in a low-growth global economy by moving the line-haul of certain slower-moving shipments to third-party transportation providers and better leveraging capacity within the FedEx Express international network through, for example, the reduction of flights to and from Asia. The international acquisitions discussed above will also help drive significant increases in international domestic revenues. Lastly, we are improving revenue quality by adding value for our customers with innovative and market-leading solutions, expanding our small and medium-size customer base and adding services for vertical industries such as healthcare and aerospace. Our way forward is clear, as we continue to make FedEx an even leaner, more efficient business.

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Reputation and Responsibility

By competing collectively under the FedEx brand, our operating companies benefit from one of the world’s most recognized brands. FedEx is one of the most trusted and respected companies in the world, and the FedEx brand name is a powerful sales and marketing tool. Among the many reputation awards we received during 2013, FedEx ranked 10^th in FORTUNE magazine’s “World’s Most Admired Companies” list — the 12^th consecutive year we have been ranked in the top 20 on the list. Additionally, FedEx recently ranked 12^th on the Reputation Institute’s “U.S Reputation Pulse” list, which measures the corporate reputations of the largest U.S. companies based on consumers’ trust, esteem, admiration and good feeling about a company. Lastly, in a 2012 survey of U.S. consumers conducted by the Reputation Institute and the Boston College Center for Corporate Citizenship, FedEx placed 7^th on the Corporate Social Responsibility Index (CSRI) 50 — a list of the most socially responsible companies in the United States.

FedEx is well recognized as a leader, not only in the transportation industry and technological innovation, but also in global citizenship. We understand that a sustainable global business is tied to our global citizenship, and we are committed to connecting the world responsibly and resourcefully. Our latest published update to our global citizenship report is available at http://csr.fedex.com. These reports describe how we think about our responsibilities in the area of global citizenship and include important goals and metrics that demonstrate our commitment to fulfilling these responsibilities.

Our People

Along with a strong reputation among customers and the general public, FedEx is widely acknowledged as a great place to work. In 2012, FedEx Express was named as one of the top five global companies to work for by The Great Place to Work^® Institute in its inaugural ranking of the World’s Best Multinational Workplaces. FedEx Express made this ranking’s top 10 list again in 2013. In order to even be considered for this honor, a company must appear on at least five national Great Place to Work lists and have at least 5,000 employees worldwide. Additionally, in 2013, we were listed among Black Enterprise magazine’s “40 Best Companies for Diversity,” a list that we have made for eight consecutive years. Most recently, FedEx was named among FORTUNE magazine’s 2013 “100 Best Companies to Work For” in the United States, a list we have made 11 of the past 14 years. It is our people — our greatest asset — that give us our strong reputation. In addition to superior physical and information networks, FedEx has an exemplary human network, with more than 300,000 team members who are “absolutely, positively” focused on safety, the highest ethical and professional standards, and the needs of their customers and communities. Through our internal Purple Promise and Humanitarian Award programs, we recognize and reward employees who enhance customer service and promote human welfare. For additional information on our people-first philosophy and workplace initiatives, see http://csr.fedex.com.

Our Community

FedEx is committed to actively supporting the communities we serve worldwide through the strategic investment of our people, resources and network. We provide financial contributions, in-kind charitable shipping services and volunteer efforts by our team members to help a variety of non-profit organizations achieve their goals and make a measurable impact on the world. We have three core focus areas: disaster preparedness, relief and recovery (American Red Cross, The Salvation Army, Direct Relief and Heart to Heart International); pedestrian and road safety (Safe Kids Worldwide and United Nations Decade of Action for Road Safety); and environmental sustainability (Arbour Day Foundation, EMBARQ, National Fish & Wildlife Foundation and The Nature Conservancy). We support minority access to higher education by funding scholarships, are a major sponsor of the National Civil Rights Museum and also support Teach for America, Junior Achievement and ORBIS International. Additionally, FedEx supports

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communities throughout the United States with an annual United Way employee giving campaign. In the aftermath of Superstorm Sandy, FedEx stepped in and assisted in delivering almost 4 million pounds of relief aid on behalf of agencies such as the American Red Cross, Heart to Heart International, Direct Relief and The Salvation Army. For additional information on our community involvement and disaster relief efforts, see http://csr.fedex.com.

The Environment

In furtherance of our commitment to protecting the environment, we recently updated one of our long-term goals to increase FedEx Express vehicle fuel efficiency to reflect the significant progress we have made over the last several years — we have already reached more than 22 percent cumulative improvement in fuel economy since 2005. Our goal is to now increase FedEx Express vehicle fuel efficiency by 30 percent by 2020. We continue with our goal to reduce aircraft emissions by 30 percent by 2020 on an emissions per available-ton-mile basis, a goal that we increased from 20 percent in 2012. We have also established a goal of obtaining 30 percent of our jet fuel from alternative fuels by the year 2030.

We will continue to expand on-site renewable energy generation where feasible. To meet our future operational needs, as discussed above, we are adding more fuel-efficient aircraft to our fleet. The use of newer and more fuel-efficient aircraft is reducing our greenhouse gas emissions and airport noise and increasing our jet fuel efficiency. Our electric delivery fleet has grown to 360 low-emission hybrid-electric vehicles and 165 zero-emission electric vehicles. Additionally, we recently purchased 1,900 lightweight, composite-body Reach vehicles from Utilimaster to join our 400 Reach vehicles already in service, making our FedEx Express lightweight, composite-body vehicle fleet the largest in the industry. The Reach van is 35% more fuel efficient than traditional vehicles in the FedEx Express fleet. Our solar power generation systems represent another step we are taking toward progressive environmental stewardship and resource sustainability. We operate nine solar facilities around the world, including the newest roof top solar-electric system at FedEx Express’s distribution hub in Newark, New Jersey, with 8,684 solar modules covering 3.5 acres across three buildings on the roof of the Newark hub. In addition, nine FedEx facilities in the United States, including our FedEx Express facility in Las Vegas, Nevada, our FedEx Express World Headquarters in Memphis and our enterprise data center in Colorado Springs, Colorado, have received certification by Leadership in Energy and Environmental Design (LEED^®), the U.S. Green Building Council’s system for rating the environmental performance of buildings. FedEx Express has made LEED certification the standard for newly built U.S. facilities.

We also continue to evaluate the environmental impacts of our packaging and copy and print services, and minimize waste generation through efforts that include recycling, pollution prevention and the use of copy paper with recycled content, among other environmentally-responsible available choices. For additional information on the ways we are minimizing our impact on the environment, see http://csr.fedex.com. In April 2012, we launched our FedEx Carbon-Neutral Envelope shipping program to all FedEx envelope shipping options, making FedEx Express the first global express transportation company to offer carbon-neutral envelope shipping at no extra charge to the customer. Through this program, FedEx Express makes an investment in global projects that displace or sequester greenhouse gas emissions from the atmosphere, neutralizing the impacts of the carbon emissions emitted during the shipment of all FedEx envelopes around the world.

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Governance

FedEx has an independent Board of Directors committed to the highest quality corporate governance. During the past two years, we have added highly qualified, independent directors to the Board in R. Brad Martin, the former CEO of Saks Incorporated, and Joshua Cooper Ramo, Vice Chairman of Kissinger Associates, Inc. The Board has taken significant steps to enhance its accountability to stockholders in recent years. For example, in September 2011, stockholders approved our proposal to amend FedEx’s certificate of incorporation in order to allow holders of 20 percent or more of FedEx’s common stock the right to call special meetings of stockholders. Additionally, in June 2012, the Board adopted a lead independent director corporate governance structure.

Our Board of Directors periodically reviews all aspects of our governance policies and practices, including our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, in light of best practices and makes whatever changes are necessary to further our longstanding commitment to the highest standards of corporate governance. The Guidelines and the Code, which applies to all of our directors, officers and employees, including our principal executive officer and senior financial officers, are available in the corporate governance section of the Investor Relations page of our Web site at http://investors.fedex.com. We will post in the Corporate Governance section of the Investor Relations page of our Web site information regarding any amendment to, or waiver from, the provisions of the Code to the extent such disclosure is required.

Business Segments

The following describes in more detail the operations of each of our reportable segments:

FedEx Express Segment

FedEx Express

Overview

FedEx Express invented express distribution 40 years ago in 1973 and remains the industry leader, providing rapid, reliable, time-definite delivery of packages and freight to more than 220 countries and territories through one integrated global network. FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of package and freight, connecting markets that generate more than 90% of the world’s gross domestic product through door-to-door, customs-cleared service, with a money-back guarantee. FedEx Express’s unmatched air route authorities and extensive transportation infrastructure, combined with leading-edge information technologies, make it the world’s largest express transportation company. FedEx Express employs approximately 160,700 employees and has approximately 52,400 drop-off locations (including FedEx Office centers), 647 aircraft and approximately 54,100 vehicles and trailers in its integrated global network.

Services

FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight. Overnight and deferred package services are backed by money-back guarantees and extend to nearly the entire U.S. population. FedEx Express offers three U.S. overnight package delivery services: FedEx First Overnight, FedEx Priority Overnight and FedEx Standard Overnight. FedEx SameDay service is available for urgent shipments up to 70 pounds to virtually any U.S. destination. FedEx Express also offers U.S. express overnight and deferred freight services backed by money-back guarantees to handle the needs of the time-definite freight market.

International express and deferred package delivery with a money-back guarantee is available to more than 220 countries and territories, with a variety of time-definite services to meet distinct customer needs. FedEx International Priority package services provide time-definite delivery within one, two or three business days worldwide. FedEx International Economy package services

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provide time-definite delivery within five business days worldwide. FedEx International First, which provides a time-definite, customs cleared, door-to-door express service with a pre-defined delivery commitment of as early as 8:00 a.m. in the United States, 9:00 a.m. in Europe, and 10:00 a.m. in Asia, Canada and Latin America, was expanded in 2013 and now covers 19 destination countries. FedEx Express also offers domestic pickup-and-delivery services within certain non-U.S. countries, including the United Kingdom, Canada, China, India, Mexico, Brazil, France and Poland. In addition, FedEx Express offers comprehensive international express and deferred freight services, backed by a money-back guarantee, real-time tracking and advanced customs clearance.

In April 2013, we launched FedEx Delivery Manager, which allows our U.S. residential customers to customize home deliveries to fit their schedule by providing a range of options to schedule dates, locations and times of delivery. By signing up at www.fedex.com, customers can receive notification of FedEx Express packages en route to their homes, and can choose various delivery options.

For information regarding FedEx Express e-shipping tools and solutions, see “FedEx Services — Technology.”

International Expansion

We are focused on the long-term expansion of our international presence, especially in key markets such as China, India, Europe and Latin America. We recently made strategic moves in Europe and Latin America. In 2013, we acquired:

• the Polish domestic express package delivery company Opek Sp. z o.o.;

• the French express transportation company TATEX; and

• the Brazilian transportation and logistics company Rapidão Cometa Logística e Transporte S.A.

These acquisitions, along with our 2012 acquisition of the Mexican domestic express package delivery company Servicios Nacionales Mupa, S.A. de C.V. (Multipack), give us more robust transportation networks within these countries and added capabilities in these important international markets, continue our strategic European and Latin American growth plans and are expected to provide important contributions to our long-term growth, productivity and profitability. Additionally, in 2013, we opened 48 new stations across Europe pursuant to our organic growth strategy. In June 2013, we signed agreements to acquire the businesses operated by our current service provider Supaswift (Pty) Ltd. in five countries in Southern Africa, including South Africa.

We began serving mainland China in 1984, have expanded our service to cover more than 400 cities across the country and, in 2009, we began operations at our new Asia-Pacific hub at the Guangzhou Baiyun International Airport in southern China. Our new North Pacific regional hub at the Kansai International Airport in Osaka, Japan, which will serve as a consolidation point for shipments from northern Asia to the United States, and will continue to operate as an international gateway for customers in western Japan, is scheduled to open in the spring of 2014. Additionally, in October 2012, we announced plans to establish a new International Express and Cargo Hub in Shanghai. This new facility, with designated onsite customs clearance, will be located at Shanghai’s Pudong International Airport and is slated for completion in early 2017. These hubs will allow us to continue to better serve our global customers doing business in the Asia-Pacific markets.

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To facilitate the use of our growing international network, we offer a full range of international trade consulting services and a variety of online tools that enable customers to more easily determine and comply with international shipping requirements.

U.S. Postal Service Agreement

Under an agreement with the USPS that runs through September 2013, FedEx Express provides domestic air transportation services to the USPS, including for its First-Class, Priority and Express Mail. In April 2013, FedEx Express entered into a new seven-year transportation agreement with the USPS for the provision of domestic air transportation services to the USPS for Priority and Express Mail. The new agreement begins on October 1, 2013 and runs through September 2020. FedEx Express also provides transportation and delivery for the USPS’s international delivery service called Global Express Guaranteed (GXG) under a separate agreement.

Pricing

FedEx Express periodically publishes list prices in its Service Guides for the majority of its services. In general, U.S. shipping rates are based on the service selected, destination zone, weight, size, any ancillary service charge and whether the customer charged the shipment to a FedEx account. International rates are based on the type of service provided and vary with size, weight, destination and, whenever applicable, whether the customer charged the shipment to a FedEx account. FedEx Express offers its customers discounts generally based on actual or potential average daily revenue produced.

FedEx Express has an indexed fuel surcharge for U.S. domestic and U.S. outbound shipments and for shipments originating internationally, where legally and contractually possible. The surcharge percentage is subject to monthly adjustment based on a rounded average of a certain spot price for jet fuel. For example, the fuel surcharge for June 2013 was based on the average spot price for jet fuel published for April 2013. Changes to the FedEx Express fuel surcharge, when calculated according to the average spot price for jet fuel and FedEx Express trigger points, are applied effective from the first Monday of the month. These trigger points may change from time to time, but information on the fuel surcharge for each month is available at fedex.com approximately two weeks before the surcharge is applicable. The weighted average U.S. domestic and U.S. outbound fuel surcharge as a percentage of the base rates for the past three years was: 2013 — 12%; 2012 — 14%; and 2011 — 10%. These percentages include certain fuel surcharge reductions that are associated with our annual base rate increases.

Operations

FedEx Express’s primary sorting facility, located in Memphis, serves as the center of the company’s multiple hub-and-spoke system. A second national hub facility is located in Indianapolis. In addition to these national hubs, FedEx Express operates regional hubs in Newark, Oakland, Fort Worth and Greensboro and major metropolitan sorting facilities in Los Angeles and Chicago.

Facilities in Anchorage, Paris, Guangzhou and Cologne/Bonn serve as sorting facilities for express package and freight traffic moving to and from Asia, Europe and North America. Additional major sorting and freight handling facilities are located at Narita Airport in Tokyo, Stansted Airport outside London, and Pearson Airport in Toronto. The facilities in Guangzhou, Paris and Cologne/Bonn are also designed to serve as regional hubs for their respective market areas. A facility in Miami — the Miami Gateway Hub — serves our South Florida, Latin American and Caribbean markets.

Throughout its worldwide network, FedEx Express operates city stations and employs a staff of customer service agents, cargo handlers and couriers who pick up and deliver shipments in the station’s service area. In some international areas, independent agents (Global Service Participants) have been selected to complete deliveries and to pick up packages. For more information about our sorting and handling facilities, see Part I, Item 2 of this Annual Report on Form 10-K under the caption “FedEx Express Segment.”

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FedEx Office offers retail access to FedEx Express shipping services at all of its U.S. and Canadian retail locations. FedEx Express also has alliances with certain other retailers to provide in-store drop-off sites. Our unmanned FedEx Drop Boxes provide customers the opportunity to drop off packages in office buildings, shopping centers, and corporate or industrial parks.

Fuel Supplies and Costs

During 2013, FedEx Express purchased jet fuel from various suppliers under contracts that vary in length and which provide for estimated amounts of fuel to be delivered. The fuel represented by these contracts is purchased at market prices. Because of our indexed fuel surcharge, we do not have any jet fuel hedging contracts. See “FedEx Express — Pricing.”

The following table sets forth FedEx Express’s costs for jet fuel and its percentage of consolidated revenues for the last five fiscal years:

Fiscal Year	Total Jet Fuel  Cost (in millions)		Percentage  of Consolidated Revenues
2013	$	3,683		8.3	%
2012		3,867		9.1
2011		3,178		8.1
2010		2,342		6.7
2009		2,932		8.3

Most of FedEx Express’s vehicle fuel needs are satisfied by retail purchases with various discounts.

Competition

As described in Item 1A of this Annual Report on Form 10-K (“Risk Factors”), the express package and freight markets are both highly competitive and sensitive to price and service, especially in periods of little or no macro-economic growth. The ability to compete effectively depends upon price, frequency, capacity and speed of scheduled service, ability to track packages, extent of geographic coverage, reliability and innovative service offerings.

Competitors within the United States include other package delivery concerns, principally United Parcel Service, Inc. (“UPS”), passenger airlines offering express package services, regional express delivery concerns, air freight forwarders and the USPS. FedEx Express’s principal international competitors are DHL, UPS, TNT, other foreign postal authorities, freight forwarders, passenger airlines and all-cargo airlines. Many of FedEx Express’s international competitors are government-owned, -controlled or -subsidized carriers, which may have greater resources, lower costs, less profit sensitivity and more favorable operating conditions than FedEx Express.

Employees

David J. Bronczek is the President and Chief Executive Officer of FedEx Express, which is headquartered in Memphis, Tennessee. As of May 31, 2013, FedEx Express employed approximately 112,000 permanent full-time and 48,700 permanent part-time employees, of which approximately 14% are employed in the Memphis area. FedEx Express’s international employees in the aggregate represent approximately 37% of all employees.

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The pilots of FedEx Express, who constitute a small percentage of our total employees, are represented by the Air Line Pilots Association, International (“ALPA”), and are employed under a collective bargaining agreement. This agreement became amendable in March 2013, and the parties are currently in negotiations.

Attempts by other labor organizations to organize certain other groups of employees occur from time to time. Although these organizing attempts have not resulted in any certification of a U.S. domestic collective bargaining representative (other than ALPA), we cannot predict the outcome of these labor activities or their effect, if any, on FedEx Express or its employees. Certain of FedEx Express’s non-U.S. employees are unionized. FedEx Express believes its employee relations are excellent.

FedEx Trade Networks

FedEx Trade Networks provides international trade services, specializing in customs brokerage and global ocean and air freight forwarding. Since the beginning of 2013, FedEx Trade Networks continued to execute an aggressive plan to expand its global freight forwarding presence — by opening additional facilities (over 140 freight forwarding offices are now open), including in Glasgow, Scotland, Bangkok, Thailand, Rio de Janeiro, Brazil, Guadalajara and Monterrey, Mexico, and Dublin, Ireland, and establishing new alliances throughout the world. FedEx Trade Networks provides customs clearance services for FedEx Express at its major U.S. hub facilities. Value-added services include Global Trade Data, an information tool that allows customers to track and manage imports. FedEx Trade Networks provides international trade advisory services, including assistance with the Customs-Trade Partnership Against Terrorism (C-TPAT) program, and through its WorldTariff subsidiary, FedEx Trade Networks publishes customs duty and tax information for approximately 180 customs areas worldwide. In 2013, FedEx Trade Networks completed its mission to enable ACE (Automated Commercial Environment) entry summary filing at all U.S. ports of entry — ACE is U.S. Customs and Border Protection’s new automation system, and by getting on board early, FedEx Trade Networks has developed its expertise and improved its system capabilities for the new regulatory environment. FedEx Trade Networks has approximately 4,570 employees and 146 offices in 123 service locations throughout North America and in Asia, Europe, the Middle East, Latin America and Africa. FedEx Trade Networks maintains a network of air and ocean freight-forwarding service providers and has entered into strategic alliances to provide services in certain countries in which it does not have owned offices.

FedEx SupplyChain Systems

FedEx SupplyChain is an integrated logistics provider offering a range of supply chain solutions that leverage FedEx information technology and transportation networks around the world. The company offers services that include critical inventory logistics, transportation management and temperature-controlled transportation through a network of owned and managed resources — all tightly integrated via advanced information technology systems. FedEx SupplyChain also now offers expanded visibility and control features, as well as new stocking locations to support worldwide FedEx Critical Inventory Logistics customers with high-value, critical orders.

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FedEx Ground Segment

FedEx Ground

Overview

By leveraging the FedEx brand, maintaining a low cost structure and efficiently using information technology and advanced automation systems, FedEx Ground continues to enhance its competitive position as a leading provider of business and residential money-back guaranteed ground package delivery services. FedEx Ground serves customers in the North American small-package market, focusing on business and residential delivery of packages weighing up to 150 pounds. Ground service is provided to 100% of the continental U.S. population and overnight service of up to 400 miles to nearly 100% of the continental U.S. population. Service is also provided to nearly 100% of the Canadian population. In addition, FedEx Ground offers service to Alaska and Hawaii through a ground and air network operation coordinated with other transportation providers.

FedEx Ground continues to improve the speed, reach and service capabilities of its network, by reducing transit time for many of its lanes and introducing or expanding overnight ground service in many metropolitan areas. For example, during the most recent two-year period, FedEx Ground has reduced the transit times of 4.4% of its lanes. FedEx Ground’s ongoing network expansion program is substantially increasing the company’s daily pickup capacity through the addition of new hubs featuring the latest automated sorting technology, the expansion of existing hubs, and the expansion or relocation of other existing facilities.

The company offers our FedEx Home Delivery service, which reaches nearly 100% of U.S. residences. FedEx Home Delivery is dedicated to meeting the delivery needs of residential customers and provides routine Saturday and evening delivery and premium options such as day-specific, appointment and signature delivery. FedEx Home Delivery brings unmatched services to residential shippers and their customers and is the first residential ground package delivery service to have offered a money-back guarantee.

In April 2013, we launched FedEx Delivery Manager, which allows our U.S. residential customers to customize home deliveries to fit their schedule by providing a range of options to schedule dates, locations and times of delivery. By signing up at www.fedex.com, customers can receive notification of FedEx Ground packages en route to their homes, and can choose various delivery options.

Pricing

FedEx Ground periodically publishes list prices for the majority of its services in its Service Guide. In general, U.S. shipping rates are based on the service selected, destination zone, weight, size, any ancillary service charge and whether the customer charged the shipment to a FedEx account.

FedEx Ground has an indexed fuel surcharge, which is subject to a monthly adjustment. The surcharge percentage is based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel as published monthly by the U.S. Department of Energy. For example, the fuel surcharge for June 2013 was based on the average diesel fuel price published for April 2013. Changes to the FedEx Ground fuel surcharge, when calculated according to the rounded index average and FedEx Ground trigger points, are applied effective from the first Monday of the month. These trigger points may change from time to time, but information on the fuel surcharge for each month is available at fedex.com approximately two weeks before the surcharge is applicable.

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Operations

FedEx Ground operates a multiple hub-and-spoke sorting and distribution system consisting of 528 facilities, including 33 hubs, in the United States and Canada. FedEx Ground conducts its operations primarily with approximately 35,640 owner-operated vehicles and approximately 38,100 company-owned trailers. To provide FedEx Home Delivery service, FedEx Ground leverages its existing pickup operation and hub and linehaul network. FedEx Home Delivery’s operations are often co-located with existing FedEx Ground facilities to achieve further cost efficiencies.

Advanced automated sorting technology is used to streamline the handling of millions of packages daily. Using overhead laser and six-sided camera-based bar code scan technology, hub conveyors electronically guide packages to their appropriate destination chute, where they are loaded for transport to their respective destination terminals for local delivery. Software systems and Internet-based applications are also deployed to offer customers new ways to connect internal package data with external delivery information. FedEx Ground provides shipment tracing and proof-of-delivery signature functionality through the FedEx Web site, fedex.com. For additional information regarding FedEx Ground e-shipping tools and solutions, see “FedEx Services — Technology.”

FedEx Office offers retail access to FedEx Ground shipping services at all of its U.S. and Canadian retail locations. FedEx Ground is also available as a service option at many FedEx Authorized ShipCenters in the United States.

As of May 31, 2013, FedEx Ground had approximately 53,300 employees. In addition, FedEx Ground relies on independent small businesses to conduct its linehaul and pickup-and-delivery operations, as the use of independent contractors is well suited to the needs of the ground delivery business and its customers. Henry J. Maier is the President and Chief Executive Officer of FedEx Ground. FedEx Ground is headquartered in Pittsburgh, Pennsylvania, and its primary competitors are UPS and the USPS.

Independent Contractor Model

Although FedEx Ground is involved in numerous lawsuits and other proceedings (such as state tax or other administrative challenges) where the classification of its independent contractors is at issue, a number of recent judicial decisions support the company’s classification, and the company believes its relationship with its contractors is generally excellent. For a description of these proceedings, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”) and Note 18 of the accompanying consolidated financial statements.

FedEx Ground has made changes to its relationships with the small businesses it contracts with that, among other things, provide incentives for improved service and enhanced regulatory and other compliance by the contractors. For example, FedEx Ground has implemented or is implementing its Independent Service Provider (“ISP”) model in a number of states. The ISP model requires pickup-and-delivery contractors based in those states to, among other things: (i) assume responsibility for the pickup-and-delivery operations of an entire geographic service area that includes multiple routes, and (ii) negotiate independent agreements with FedEx Ground, rather than agree to a standard contract. To date, FedEx Ground has transitioned to the ISP model in 17 states. Depending on a number of considerations, FedEx Ground may transition to it in other states as well.

In addition, because of state-specific legal and regulatory issues, FedEx Ground only contracts with businesses that (i) are organized as corporations registered and in good standing under applicable state law, and (ii) ensure that their personnel who provide services under an operating agreement with FedEx Ground are treated as their employees. FedEx Ground also has an ongoing nationwide program to incentivize owners who choose to grow their businesses by adding routes. During May 2013, approximately 87% of FedEx Ground’s package volume was delivered by business owners operating multiple routes.

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FedEx SmartPost

FedEx SmartPost (a subsidiary of FedEx Ground) is a leading national small-parcel consolidator, which specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages, using the USPS for final delivery to residences. The company picks up shipments from customers (including e-tailers and catalog companies), provides sorting and linehaul services and then delivers the packages to a USPS facility for final delivery by a postal carrier. Through its network of 26 distribution hubs and approximately 7,430 employees, FedEx SmartPost provides delivery to all residential addresses in the United States, including PO Boxes and military destinations. For more information about our relationship with the USPS, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

FedEx Freight Segment

FedEx Freight

FedEx Freight is a leading North American provider of LTL freight services, offering choice, simplicity and reliability to meet the needs of LTL shippers — FedEx Freight Priority, when speed is critical to meet supply chain needs, and FedEx Freight Economy, when time can be traded for cost savings. Through one comprehensive network of service centers and advanced information systems, FedEx Freight provides service to virtually every U.S. ZIP code (including Alaska and Hawaii) with industry-leading transit times. FedEx Freight Priority, which has the fastest published transit times of any nationwide LTL service, offers a no-fee money-back guarantee on eligible shipments. Internationally, FedEx Freight Canada offers FedEx Freight Priority and FedEx Freight Economy, serving most points in Canada, as well as between Canada and the United States. In addition, FedEx Freight serves Mexico, Puerto Rico and the U.S. Virgin Islands via alliances and purchased transportation.

Through its many service offerings, FedEx Freight can match customers’ time-critical needs with industry leading transit times. With the expansion of FedEx electronic solutions, LTL shippers have the convenience of a single shipping and tracking solution for FedEx Freight, FedEx Express and FedEx Ground. These solutions make freight shipping easier and provide customers easy access to their account information. The FedEx Freight Advance Notice feature available on FedEx Freight Priority shipments uses the company’s innovative technology systems to proactively notify FedEx Freight customers via the Internet, e-mail or fax when a shipment may be delayed beyond its estimated delivery date, providing customers with greater visibility and control of their LTL freight shipments. Customers can also process cross-border LTL shipments to and from Canada and Mexico through FedEx Ship Manager Software, FedEx Ship Manager Server and FedEx Web Services. Additionally, FedEx Freight A.M. offers freight delivery by 10:30 a.m. within and between the United States and Canada, backed by a money-back guarantee. FedEx Freight has an indexed fuel surcharge, which is subject to weekly adjustment based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel.

As of May 31, 2013, FedEx Freight was operating approximately 59,000 vehicles and trailers from a network of 370 service centers, and the FedEx Freight segment had approximately 33,700 employees. William J. Logue is the President and Chief Executive Officer of FedEx Freight, which is based in Memphis, Tennessee. FedEx Freight’s primary competitors are YRC Worldwide Inc. (which includes YRC Regional Transportation and YRC Freight), Con-way Freight (a subsidiary of Con-way Inc.), UPS Freight, Old Dominion Freight Line, Inc. and ABF Freight System, Inc.

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FedEx Custom Critical

FedEx Custom Critical provides a range of expedited, time-specific freight-shipping services throughout the United States, Canada and Mexico. Among its services are Surface Expedite, for exclusive-use and network-based transport of critical shipments and expedited shipments; Air Expedite, which offers an array of air solutions to meet customers’ critical delivery times; and White Glove Services, for shipments that require extra care in handling, temperature control or specialized security. In addition, its subsidiary FedEx Truckload Brokerage provides freight brokerage solutions within the United States and into and out of Canada and Mexico. Service is available 24 hours a day, 365 days a year. FedEx Custom Critical continuously monitors shipments through an integrated proprietary shipment-control system, including two-way satellite communications on exclusive-use shipments. Through the company’s Shipping Toolkit, customers can quote, ship, track and map shipments; view and print out copies of a shipment’s bill of lading, proof of delivery and invoice; and manage their online accounts. In 2013, FedEx Custom Critical launched a new service called ShipmentWatch, an offering through which FedEx Custom Critical manages SenseAware^® devices to track customers’ shipments — by programming the device to the customer’s requirements prior to the shipment, sending the device to the shipper and then proactively monitoring the shipment from pickup to delivery. FedEx Custom Critical utilizes approximately 1,350 vehicles, operated by independent contractors and their drivers, which are dispatched out of approximately 140 geographically-based staging areas.

FedEx Services Segment

FedEx Services

FedEx Services provides our other companies with sales, marketing, information technology, communications, customer service and certain other back-office support. Through FedEx Services and its subsidiary FedEx TechConnect, we provide a convenient single point of access for many customer support functions, enabling us to more effectively sell the entire portfolio of transportation services and to help ensure a consistent and outstanding experience for our customers.

T. Michael Glenn is the President and Chief Executive Officer of FedEx Services, which is based in Memphis, Tennessee. As of May 31, 2013, the FedEx Services segment had approximately 33,300 employees (including approximately 15,500 at FedEx Office).

Customer Technology

FedEx is a world leader in technology, and FedEx founder Frederick W. Smith’s vision that “the information about a package is as important as the delivery of the package itself” remains at the core of our comprehensive technology strategy. In fact, FedEx has been recognized by InformationWeek 500 as a top technology innovator in the United States for 17 consecutive years.

Our technology strategy is driven by our desire for customer satisfaction. We strive to build technology solutions that will solve our customers’ business problems with simplicity, convenience, speed and reliability. The focal point of our strategy is our award-winning Web site, together with our customer integrated solutions.

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The fedex.com Web site was launched nearly 20 years ago, and during that time, customers have shipped and tracked billions of packages at fedex.com. The fedex.com Web site is widely recognized for its speed, ease of use and customer-focused features. At  fedex.com, our customers ship packages, determine international documentation requirements, track package status, pay invoices and access FedEx Office services. The advanced tracking capability within FedEx Tracking provides customers with a consolidated view of inbound and outbound shipments.

FedEx Mobile is a suite of services available on most Web-enabled mobile devices, such as the BlackBerry^® and Android™ smartphones, and includes enhanced support for Apple products, such as the iPhone^®, iPod touch^® and iPad^® mobile digital devices. The FedEx Mobile website has expanded to more than 220 countries and territories and 25 languages. FedEx Mobile allows customers to track the status of packages, create shipping labels, get account-specific rate quotes and access drop-off location information. FedEx Office has its own iPhone^® app that allows customers to print directly from their smartphones to any FedEx Office location in the United States or have the order delivered right to their door, while also allowing customers to get account-specific pricing, track print orders or packages, or find the nearest FedEx Office location. FedEx Office self-serve printers give customers even more flexibility by allowing direct USB access to print documents, as well as the ability to retrieve documents submitted via Google Cloud Print, HP ePrint, Breezy and Canon Forms & Print Services for Salesforce with a secure retrieval code. FedEx also uses wireless data collection devices to scan bar codes on shipments, thereby enhancing and accelerating the package information available to our customers.

FedEx innovation continued in 2013 with the following enhancements:

• FedEx Delivery Manager, which allows our U.S. residential customers to customize home deliveries to fit their schedule by providing a range of options to schedule dates, locations and times of delivery.

• The FedEx Ship to Friends app that allows people who use Facebook^® to prepare and pay for a U.S. domestic shipment without leaving Facebook^®.

• FSM@fedex.com Integration Manager, which is a web-based tool for business owners who manage multiple stores online, working seamlessly with e-commerce platforms such as eBay, Amazon, Etsy, Google Checkout and Yahoo to allow business owners to organize, review and process their shipments from multiple stores in one place.

We design our e-commerce tools and solutions to be easily integrated into our customers’ applications, as well as into third-party software developed by leading e-procurement, systems integration and enterprise resource planning companies. Our FedEx Ship Manager suite of solutions offers a wide range of options to help our customers manage their parcel and LTL shipping and associated processes.

Marketing

The FedEx brand name is symbolic of outstanding service, reliability and speed. Emphasis is placed on promoting and protecting the FedEx brand, one of our most important assets. As a result, FedEx is one of the most widely recognized brands in the world. In addition to television, print and digital advertising, we promote the FedEx brand through corporate sponsorships and special events. For example, FedEx sponsors:

• The National Football League (NFL), as its “Official Delivery Service Sponsor”

• FedExField, home of the NFL’s Washington Redskins

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• The #11 Joe Gibbs Racing Toyota Camry driven by Denny Hamlin in the NASCAR Sprint Cup Series

• PGA TOUR and the Champions Tour golf organizations, as the “Official Shipping Company,” and FedExCup, a season-long points competition for PGA TOUR players

• The FedEx St. Jude Classic, a PGA TOUR event that raises millions of dollars for St. Jude Children’s Research Hospital

• FedExForum, home of the NBA’s Memphis Grizzlies

• ATP World Tour men’s professional tennis circuit and French Open tennis tournament

Information Security

FedEx Services has a team of highly qualified professionals dedicated to securing information about our customers’ shipments and protecting our customers’ privacy, and we strive to provide a safe, secure online environment for our customers. We are committed to compliance with applicable information security laws, regulations and industry standards — including, for example, the Payment Card Industry Data Security Standard, a set of comprehensive requirements for enhancing payment account data security developed by the Payment Card Industry Security Standards Council. For a description of risks related to information security, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

Global ISO 9001 Certification

FedEx Services provides our customers with a high level of service quality, as evidenced by our ISO 9001 certification for our global express and ground operations. ISO 9001 registration is required by thousands of customers around the world. FedEx’s global certification, encompassing the processes of FedEx Express, FedEx Ground and FedEx Services, enhances our single-point-of-access strategy and solidifies our reputation as the quality leader in the transportation industry. ISO 9001 is currently the most rigorous international standard for Quality Management and Assurance. ISO standards were developed by the International Organization for Standardization in Geneva, Switzerland to promote and facilitate international trade. More than 150 countries, including European Union members, the United States and Japan, recognize ISO standards.

FedEx Office

FedEx Office’s network of digitally-connected locations offers access to copying and digital printing through retail and Web-based platforms, signs and graphics, professional finishing, computer rentals, and the full range of FedEx day-definite ground shipping and time-definite global express shipping services. FedEx Office’s network of locations provides convenient access points to FedEx Express and FedEx Ground services for higher margin retail customers. Customers may also have their FedEx Express, FedEx Ground and FedEx Home Delivery packages delivered to any FedEx Office location nationwide by choosing the Hold at FedEx Location option when initiating a shipment — or even when a shipment is on its way — free of charge.

In addition, FedEx Office offers packing services, and packing supplies and boxes are included in its retail product assortment. By allowing customers to have items professionally packed by specially trained FedEx Office team members and then shipped using any of the full range of FedEx day-definite ground shipping and time-definite global express shipping services, FedEx Office provides a complete “pack-and-ship” solution.

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Almost all FedEx Office locations provide local pick-up and delivery service — an offering whereby a FedEx courier picks up a customer’s job at the customer’s location and then returns the finished product to the customer — with options and service areas varying by location. Additionally, through cloud printing with FedEx Office Print Online, customers can upload files from some of the most popular cloud Web sites including Box, Dropbox and Google Drive™ and then select from a variety of printing options, and can choose to pick up their completed order at FedEx Office locations nationwide or have the order delivered right to their door. Customers also have the ability to access these same cloud files through a USB drive or mobile device at self-serve copiers in FedEx Office locations, giving them seamless access to their files across our online and retail channels. Lastly, we now offer our FedEx SameDay City service in select U.S. ZIP codes, which allows customers to get their packages across town in the same day with local delivery by FedEx Office uniformed employees.

As of May 31, 2013, FedEx Office operated approximately 1,800 locations, including 30 locations in four foreign countries, as well as 20 closed production centers. FedEx Office is headquartered in Dallas, Texas.

Trademarks

The “FedEx” trademark, service mark and trade name is essential to our worldwide business. FedEx, FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Services, FedEx SupplyChain Systems, FedEx TechConnect, FedEx Trade Networks, FedEx SmartPost and FedEx Custom Critical, among others, are trademarks, service marks and trade names of Federal Express Corporation, or the respective companies, for which registrations, or applications for registration, are on file, as applicable. We have authorized, through licensing arrangements, the use of certain of our trademarks, service marks and trade names by our contractors and Global Service Participants to support our business. In addition, we license the use of certain of our trademarks, service marks and trade names on promotional items for the primary purpose of enhancing brand awareness.

Regulation

Air. Under the Federal Aviation Act of 1958, as amended, both the U.S. Department of Transportation (“DOT”) and the Federal Aviation Administration (“FAA”) exercise regulatory authority over FedEx Express.

The FAA’s regulatory authority relates primarily to operational aspects of air transportation, including aircraft standards and maintenance, as well as personnel and ground facilities, which may from time to time affect the ability of FedEx Express to operate its aircraft in the most efficient manner. FedEx Express holds an air carrier certificate granted by the FAA pursuant to Part 119 of the federal aviation regulations. This certificate is of unlimited duration and remains in effect so long as FedEx Express maintains its standards of safety and meets the operational requirements of the regulations.

In September 2010, the FAA proposed rules that would significantly reduce the maximum number of hours on duty and increase the minimum amount of rest time for our pilots, and thus require us to hire additional pilots and modify certain of our aircraft. When the FAA issued final regulations in December 2011, all-cargo carriers, including FedEx Express, were exempt from these new pilot fatigue requirements, and instead required to continue complying with previously enacted flight and duty time rules. In December 2012, the FAA reaffirmed the exclusion of us from the new rule. It is reasonably possible, however, that future security or flight safety requirements could impose material costs on us.

The DOT’s authority relates primarily to economic aspects of air transportation. The DOT’s jurisdiction extends to aviation route authority and to other regulatory matters, including the transfer of route authority between carriers. FedEx Express holds various certificates issued by the DOT, authorizing FedEx Express to engage in U.S. and international air transportation of property and mail on a worldwide basis.

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Under the Aviation and Transportation Security Act of 2001, as amended, the Transportation Security Administration (“TSA”), an agency within the Department of Homeland Security, has responsibility for aviation security. The TSA continues to require FedEx Express to comply with a Full All-Cargo Aircraft Operator Standard Security Plan, which contains evolving and strict security requirements. These requirements are not static, but change periodically as the result of regulatory and legislative requirements, imposing additional security costs and creating a level of uncertainty for our operations. It is reasonably possible that these rules or other future security requirements could impose material costs on us.

FedEx Express participates in the Civil Reserve Air Fleet (“CRAF”) program. Under this program, the U.S. Department of Defense may requisition for military use certain of FedEx Express’s wide-bodied aircraft in the event of a declared need, including a national emergency. FedEx Express is compensated for the operation of any aircraft requisitioned under the CRAF program at standard contract rates established each year in the normal course of awarding contracts. Through its participation in the CRAF program, FedEx Express is entitled to bid on peacetime military cargo charter business. FedEx Express, together with a consortium of other carriers, currently contracts with the U.S. Government for such charter flights.

Ground. The ground transportation performed by FedEx Express is integral to its air transportation services. The enactment of the Federal Aviation Administration Authorization Act of 1994 abrogated the authority of states to regulate the rates, routes or services of intermodal all-cargo air carriers and most motor carriers. States may now only exercise jurisdiction over safety and insurance. FedEx Express is registered in those states that require registration.

The operations of FedEx Ground, FedEx Freight and FedEx Custom Critical in interstate commerce are currently regulated by the DOT and the Federal Motor Carrier Safety Administration, which retain limited oversight authority over motor carriers. Federal legislation preempts regulation by the states of rates and service in intrastate freight transportation.

Like other interstate motor carriers, our operations, including those at FedEx Express, are subject to certain DOT safety requirements governing interstate operations. In addition, vehicle weight and dimensions remain subject to both federal and state regulations.

International. FedEx Express’s international authority permits it to carry cargo and mail from points in its U.S. route system to numerous points throughout the world. The DOT regulates international routes and practices and is authorized to investigate and take action against discriminatory treatment of United States air carriers abroad. The right of a United States carrier to serve foreign points is subject to the DOT’s approval and generally requires a bilateral agreement between the United States and the foreign government. In addition, the carrier must then be granted the permission of such foreign government to provide specific flights and services. The regulatory environment for global aviation rights may from time to time impair the ability of FedEx Express to operate its air network in the most efficient manner. Additionally, global air cargo carriers, such as FedEx Express, are subject to current and potential additional aviation security regulation by foreign governments.

Our operations outside of the United States, such as FedEx Express’s growing international domestic operations, are also subject to current and potential regulations, including certain postal regulations and licensing requirements, that restrict, make difficult and sometimes prohibit, the ability of foreign-owned companies such as FedEx Express to compete effectively in parts of the international domestic transportation and logistics market.

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Communication. Because of the extensive use of radio and other communication facilities in its aircraft and ground transportation operations, FedEx Express is subject to the Federal Communications Commission Act of 1934, as amended. Additionally, the Federal Communications Commission regulates and licenses FedEx Express’s activities pertaining to satellite communications.

Environmental. Pursuant to the Federal Aviation Act, the FAA, with the assistance of the U.S. Environmental Protection Agency, is authorized to establish standards governing aircraft noise. FedEx Express’s aircraft fleet is in compliance with current noise standards of the federal aviation regulations. In addition to federal regulation of aircraft noise, certain airport operators have local noise regulations, which limit aircraft operations by type of aircraft and time of day. These regulations have had a restrictive effect on FedEx Express’s aircraft operations in some of the localities where they apply but do not have a material effect on any of FedEx Express’s significant markets. Congress’s passage of the Airport Noise and Capacity Act of 1990 established a National Noise Policy, which enabled FedEx Express to plan for noise reduction and better respond to local noise constraints. FedEx Express’s international operations are also subject to noise regulations in certain of the countries in which it operates.

Concern over climate change, including the impact of global warming, has led to significant U.S. and international legislative and regulatory efforts to limit greenhouse gas (“GHG”) emissions, including our aircraft and diesel engine emissions. For example, during 2009, the European Commission approved the extension of the European Union Emissions Trading Scheme (“ETS”) for GHG emissions, to the airline industry. Under this decision, all FedEx Express flights to and from any airport in any member state of the European Union are now covered by the ETS requirements, and each year we are required to submit emission allowances in an amount equal to the carbon dioxide emissions from such flights. Because the European Union ETS is being contested by many countries on a number of fronts, and the effective date for parts of the ETS has been delayed until next year, the future impact on us is unclear. For a description of such efforts and their potential effect on our cost structure and operating results, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

We are subject to federal, state and local environmental laws and regulations relating to, among other things, the shipment of dangerous goods, contingency planning for spills of petroleum products, the disposal of waste oil and the disposal of toners and other products used in FedEx Office’s copy machines. Additionally, we are subject to numerous regulations dealing with underground fuel storage tanks, hazardous waste handling, vehicle and equipment emissions and noise and the discharge of effluents from our properties and equipment. We have environmental management programs to ensure compliance with these regulations.

Customs. Our activities, including customs brokerage and freight forwarding, are subject to regulation by the Bureau of Customs and Border Protection and the TSA within the Department of Homeland Security (customs brokerage and security issues), the U.S. Federal Maritime Commission (ocean freight forwarding) and the DOT (air freight forwarding). Our offshore operations are subject to similar regulation by the regulatory authorities of foreign jurisdictions.

Labor. All U.S. employees at FedEx Express are covered by the Railway Labor Act of 1926, as amended (the “RLA”), while labor relations within the United States at our other companies are governed by the National Labor Relations Act of 1935, as amended (the “NLRA”). Under the RLA, groups that wish to unionize must do so across nationwide classes of employees. The RLA also requires mandatory government-led mediation of contract disputes supervised by the National Mediation Board before a union can strike or an employer can replace employees or impose contract terms. This part of the RLA helps minimize the risk of strikes that would shut down large portions of the economy. Under the NLRA, employees can unionize in small localized groups, and government-led mediation is not a required step in the negotiation process.

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The RLA was originally passed to govern railroad and express carrier labor negotiations. As transportation systems evolved, the law expanded to cover airlines, which are the dominant national transportation systems of today. As an air express carrier with an integrated air/ground network, FedEx Express and its employees have been covered by the RLA since the founding of the company in 1971. The purpose of the RLA is to offer employees a process by which to unionize (if they choose) and engage in collective bargaining while also protecting global commerce from damaging work stoppages and delays. Specifically, the RLA ensures that an entire transportation system, such as at FedEx Express, cannot be shut down by the actions of a local segment of the network.

The U.S. Congress has, in the past, considered adopting changes in labor laws that would make it easier for unions to organize units of our employees. For example, there is always a possibility that Congress could remove most FedEx Express employees from the jurisdiction of the RLA, thereby exposing the FedEx Express network to sporadic labor disputes and the risk that small groups of employees could disrupt the entire air/ground network. In addition, federal and state governmental agencies have and may continue to take actions that could make it easier for our employees to organize under the RLA or NLRA. For a description of these potential labor law changes, see Item 1A of this Annual Report on Form 10-K (“Risk Factors”).

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act. We have comprehensive export controls and economic sanctions programs designed to ensure compliance with United States and other applicable export laws, rules and regulations. As part of our ongoing efforts to monitor the effectiveness of our international trade compliance programs, we recently identified the shipments described below involving FedEx Express, which occurred during 2013.

During 2013, a Dubai-based package consolidator tendered approximately 32,000 shipments to FedEx Express for handling, including 16 separate shipments for delivery to branches of Mir Business Bank in Russia and branches of Bank Melli in Azerbaijan, Iraq and Germany. Both banks are identified on the list of Specially Designated Nationals maintained by the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”). Each of these shipments contained only documents. The aggregate revenue for these shipments was $212. There was no profit associated with these shipments.

This consolidator also tendered six separate shipments to FedEx Express for delivery to Iranian embassies and a consulate in Germany, Malaysia, Australia, Thailand and Argentina. These shipments contained documents, books, magazines, CDs, toys, nuts and/or candy. The aggregate revenue for these shipments was $218. There was no profit associated with these shipments.

The tendering of these shipments to FedEx Express violated the terms of the written agreements between FedEx Express and this consolidator.

FedEx Express’s handling of these shipments was inadvertent and not in accordance with our internal policies and procedures. Promptly upon learning of these shipments, FedEx Express canceled its agreements with the consolidator described above and certain other Dubai-based package consolidators and discontinued certain services in Dubai. We have implemented enhanced controls, procedures and other measures in connection with our international trade compliance programs that are designed to prevent these activities from recurring.

Our investigation into past shipments tendered by Dubai-based consolidators is ongoing. We have made initial voluntary disclosures to OFAC and will supplement these disclosures as our investigation is completed. We intend to fully cooperate with OFAC regarding these matters.

ITEM 1A. RISK FACTORS

We present information about our risk factors on pages 76 through 81 of this Annual Report on Form 10-K.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

FedEx Express Segment

FedEx Express’s principal owned and leased properties include its aircraft, vehicles, national, regional and metropolitan sorting facilities, administration buildings, FedEx Drop Boxes and data processing and telecommunications equipment.

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Aircraft and Vehicles

As of May 31, 2013, FedEx Express’s aircraft fleet consisted of the following:

Description	Owned		Leased		Total			Maximum Gross Structural  Payload (Pounds per Aircraft) (1)
Boeing B777F		23		0		23			233,300
Boeing MD11		38		26		64			192,600
Boeing MD10-30		13		4		17			175,900
Boeing MD10-10		47		0		47			137,500
Airbus A300-600		35		36		71			106,600
Airbus A310-200/300		30		0		30			83,170
Boeing B757-200		89		0		89	(2)		63,000
Boeing B727-200		14		0		14			59,300
ATR 72-202/212		21		0		21			17,970
ATR 42-300/320		26		0		26			12,070
Cessna 208B		245		0		245			2,830
Total		581		66		647

⁽¹⁾  Maximum gross structural payload includes revenue payload and container weight.

⁽²⁾  Includes 16 aircraft not currently in operation and awaiting completion of modification.

• The B777Fs are two-engine, wide-bodied cargo aircraft that have a longer range and larger capacity than any other aircraft we operate.

• The MD11s are three-engine, wide-bodied aircraft that have a longer range and larger capacity than MD10s.

• The MD10s are three-engine, wide-bodied aircraft that have received an Advanced Common Flightdeck (ACF) modification, which includes a conversion to a two-pilot cockpit, as well as upgrades of electrical and other systems.

• The A300s and A310s are two-engine, wide-bodied aircraft that have a longer range and more capacity than B757s and B727s.

• The B757s are two-engine, narrow-bodied aircraft configured for cargo service.

• The B727s are three-engine, narrow-bodied aircraft configured for cargo service. The B727 fleet was retired in June 2013.

• The ATR and Cessna 208 turbo-prop aircraft are leased to independent operators to support FedEx Express operations in areas where demand does not justify use of a larger aircraft.

An inventory of spare engines and parts is maintained for each aircraft type.

In addition, FedEx Express leases smaller aircraft to operators, and these operators use the aircraft to move FedEx packages to and from airports served by FedEx Express’s larger jet aircraft. The lease agreements generally call for the lessee to provide the flight crews, maintenance, fuel and other supplies required to operate the aircraft, and FedEx Express reimburses the lessee for these items. The lease agreements are for terms not exceeding one year and are generally cancelable upon 30 days’ notice.

At May 31, 2013, FedEx Express operated approximately 54,100 ground transport vehicles, including pickup and delivery vans, larger trucks called container transport vehicles and over-the-road tractors and trailers.

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Aircraft Purchase Commitments

The following table is a summary of the number and type of aircraft we were committed to purchase as of May 31, 2013, with the year of expected delivery:

	B757		B767F(1)		B777F(2)		Total
2014		13		4		2		19
2015		—		12		—		12
2016		—		10		2		12
2017		—		10		—		10
2018		—		10		2		12
Thereafter		—		4		14		18
Total		13		50		20		83

⁽¹⁾ As of May 31, 2013, our obligation to purchase four of these aircraft was conditioned upon there being no event that causes FedEx Express or its employees to not be covered by the RLA.

⁽²⁾  As of May 31, 2013, our obligation to purchase nine of these aircraft was conditioned upon there being no event that causes FedEx Express or its employees to not be covered by the RLA.

As of May 31, 2013, deposits and progress payments of $414 million had been made toward aircraft purchases and other planned aircraft-related transactions. Also see Note 17 of the accompanying consolidated financial statements for more information about our purchase commitments.

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Sorting and Handling Facilities

At May 31, 2013, FedEx Express operated the following major sorting and handling facilities:

Location	Acres		Square Feet		Sorting Capacity   (per hour) (1)		Lessor	Lease      Expiration     Year
National
Memphis, Tennessee		784		3,514,000		475,000	Memphis-Shelby County Airport Authority		2036
Indianapolis, Indiana		316		2,509,000		214,000	Indianapolis Airport Authority		2017/2028	(5)
Regional
Fort Worth, Texas		168		948,000		76,000	Fort Worth Alliance Airport Authority		2021
Newark, New Jersey		70		595,000		156,000	Port Authority of New York and New Jersey		2030
Oakland, California		75		320,000		54,000	City of Oakland		2031
Greensboro, N. Carolina		165		593,000		29,000	Piedmont Triad Airport Authority		2031
Metropolitan
Chicago, Illinois		66		597,000		23,000	City of Chicago		2018/2028	(6)
Los Angeles, California		34		305,300		57,000	City of Los Angeles		2021/2025	(7)
International
Anchorage, Alaska (2)		64		332,000		25,000	Alaska Department of Transportation and Public Facilities		2023
Paris, France (3)		111		1,238,000		63,000	Aeroports de Paris		2029
Cologne, Germany (3)		7		325,000		20,000	Cologne Bonn Airport		2040
Guangzhou, China (4)		155		882,000		64,000	Guangdong Airport Management Corp.		2029

⁽¹⁾  Documents and packages.

⁽²⁾  Handles international express package and freight shipments to and from Asia, Europe and North America.

⁽³⁾  Handles intra-Europe express package and freight shipments, as well as international express package and freight shipments to and from Europe.

⁽⁴⁾  Handles intra-Asia express package and freight shipments, as well as international express package and freight shipments to and from Asia.

⁽⁵⁾  Property is held under two separate leases — lease for original hub expires in 2017, and lease for additional buildings expires in 2028.

⁽⁶⁾  Property is held under two separate leases — lease for original hub expires in 2018, and lease for new facility expires in 2028.

⁽⁷⁾  Property is held under two separate leases — lease for sorting and handling facility expires in 2021, and lease for ramp expansion expires in 2025.

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FedEx Express’s primary sorting facility, which serves as the center of its multiple hub-and-spoke system, is located at the Memphis International Airport. FedEx Express’s facilities at the Memphis International Airport also include aircraft hangars, aircraft ramp areas, vehicle parking areas, flight training and fuel facilities, administrative offices and warehouse space. FedEx Express leases these facilities from the Memphis-Shelby County Airport Authority (the “Authority”). The lease obligates FedEx Express to maintain and insure the leased property and to pay all related taxes, assessments and other charges. The lease is subordinate to, and FedEx Express’s rights thereunder could be affected by, any future lease or agreement between the Authority and the U.S. Government.

FedEx Express has additional international sorting-and-handling facilities located at Narita Airport in Tokyo, Stansted Airport outside London, and Pearson Airport in Toronto. FedEx Express also has a substantial presence at airports in Hong Kong, Taiwan, Dubai and Miami.

Administrative and Other Properties and Facilities

The World Headquarters of FedEx Express is located in southeastern Shelby County, Tennessee. FedEx Express owns its headquarters campus, which comprises nine separate buildings with approximately 1.3 million square feet of space. FedEx Express also leases 39 facilities in the Memphis area for administrative offices and warehouses.

FedEx Express owns or leases 645 facilities for city station operations in the United States. In addition, 560 city stations are owned or leased throughout FedEx Express’s international network. The majority of these leases are for terms of five to ten years. City stations serve as a sorting and distribution center for a particular city or region. We believe that suitable alternative facilities are available in each locale on satisfactory terms, if necessary.

As of May 31, 2013, FedEx Express had approximately 38,500 Drop Boxes. FedEx Express also has approximately 12,900 FedEx Authorized ShipCenters and other types of staffed drop-off locations, such as FedEx Office centers. Internationally, FedEx Express had approximately 4,850 drop-off locations.

FedEx Ground Segment

FedEx Ground’s corporate offices are located in the Pittsburgh, Pennsylvania, area in an approximately 500,000 square-foot building owned by FedEx Ground. As of May 31, 2013, FedEx Ground had approximately 38,100 company-owned trailers and owned or leased 528 facilities, including 33 hubs. In addition, approximately 35,640 owner-operated vehicles support FedEx Ground’s business. Of the 331 facilities that support FedEx Home Delivery, 243 are co-located with existing FedEx Ground facilities. Leased facilities generally have terms of five years or less. The 33 hub facilities are strategically located to cover the geographic area served by FedEx Ground. The hub facilities average 357,000 square feet and range in size from 54,000 to 715,000 square feet.

FedEx Freight Segment

FedEx Freight’s corporate headquarters are located in Memphis, Tennessee, with some administrative offices for the FedEx Freight business in Harrison, Arkansas. As of May 31, 2013, FedEx Freight operated approximately 59,000 vehicles and trailers and 370 service centers, which are strategically located to provide service throughout North America. These facilities range in size from 850 to 220,000 square feet of office and dock space. FedEx Custom Critical’s headquarters are located in Green, Ohio.

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FedEx Services Segment

FedEx Services’ corporate headquarters are located in Memphis, Tennessee. FedEx Services and FedEx Express lease state-of-the-art technology centers in Collierville, Tennessee, Irving, Texas, Colorado Springs, Colorado, and Orlando, Florida. These facilities house personnel responsible for strategic software development and other functions that support FedEx’s technology and e-commerce solutions. FedEx Office’s corporate headquarters are located in Dallas, Texas in leased facilities. As of May 31, 2013, FedEx Office operated approximately 1,800 locations, including 30 locations in four foreign countries, as well as 20 closed production centers. Substantially all FedEx Office centers are leased, generally for terms of five to ten years with varying renewal options. FedEx Office centers are generally located in strip malls, office buildings or stand-alone structures and average approximately 4,000 square feet in size. We have a multi-year agreement with OfficeMax to offer U.S. domestic FedEx Express and FedEx Ground shipping services at all U.S. OfficeMax retail locations (more than 940 locations).

ITEM 3. LEGAL PROCEEDINGS

FedEx and its subsidiaries are subject to legal proceedings and claims that arise in the ordinary course of their business. For a description of material pending legal proceedings, see Note 18 of the accompanying consolidated financial statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers of FedEx is as follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K):

Name and Office	Age	Positions and Offices Held and Business Experience
Frederick W. Smith Chairman, President and Chief Executive Officer	68	Chairman, President and Chief Executive Officer of FedEx since January 1998; Chairman of FedEx Express since 1975; Chairman, President and Chief Executive Officer of FedEx Express from April 1983 to January 1998; Chief Executive Officer of FedEx Express from 1977 to January 1998; and President of FedEx Express from June 1971 to February 1975.
David J. Bronczek President and Chief Executive Officer, FedEx Express	59	President and Chief Executive Officer of FedEx Express since January 2000; Executive Vice President and Chief Operating Officer of FedEx Express from January 1998 to January 2000; Senior Vice President — Europe, Middle East and Africa of FedEx Express from June 1995 to January 1998; Senior Vice President — Europe, Africa and Mediterranean of FedEx Express from June 1993 to June 1995; Vice President — Canadian Operations of FedEx Express from February 1987 to March 1993; and several sales and operations managerial positions at FedEx Express from 1976 to 1987. Mr. Bronczek serves as a director of International Paper Company, an uncoated paper and packaging company.

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Name and Office	Age	Positions and Offices Held and Business Experience
Robert B. Carter Executive Vice President — FedEx Information Services and Chief Information Officer	54	Executive Vice President — FedEx Information Services and Chief Information Officer of FedEx since January 2007; Executive Vice President and Chief Information Officer of FedEx from June 2000 to January 2007; Corporate Vice President and Chief Technology Officer of FedEx from February 1998 to June 2000; Vice President — Corporate Systems Development of FedEx Express from September 1993 to February 1998; Managing Director — Systems Development of FedEx Express from April 1993 to September 1993. Mr. Carter serves as a director of Saks Incorporated, a retailer operating luxury, specialty and traditional department stores, and as a director of First Horizon National Corporation, a financial services holding company.
T. Michael Glenn Executive Vice President — Market Development and Corporate Communications	57	Executive Vice President — Market Development and Corporate Communications of FedEx since January 1998; Senior Vice President — Marketing, Customer Service and Corporate Communications of FedEx Express from June 1994 to January 1998; Senior Vice President — Marketing and Corporate Communications of FedEx Express from December 1993 to June 1994; Senior Vice President — Worldwide Marketing Catalog Services and Corporate Communications of FedEx Express from June 1993 to December 1993; Senior Vice President — Catalog and Remail Services of FedEx Express from September 1992 to June 1993; Vice President — Marketing of FedEx Express from August 1985 to September 1992; and various management positions in sales and marketing and senior sales specialist of FedEx Express from 1981 to 1985. Mr. Glenn serves as a director of Pentair, Inc., a diversified industrial manufacturing company operating in water and technical products business segments, and as a director of Level 3 Communications, Inc., a global communications services company.
Alan B. Graf, Jr. Executive Vice President and Chief Financial Officer	59	Executive Vice President and Chief Financial Officer of FedEx since January 1998; Executive Vice President and Chief Financial Officer of FedEx Express from February 1996 to January 1998; Senior Vice President and Chief Financial Officer of FedEx Express from December 1991 to February 1996; Vice President and Treasurer of FedEx Express from August 1987 to December 1991; and various management positions in finance and a senior financial analyst of FedEx Express from 1980 to 1987. Mr. Graf serves as a director of Mid-America Apartment Communities Inc., a real estate investment trust that focuses on acquiring, constructing, developing, owning and operating apartment communities, and as a director of NIKE, Inc., a designer and marketer of athletic footwear, apparel, equipment and accessories for sports and fitness activities.

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Name and Office	Age	Positions and Offices Held and Business Experience
William J. Logue President and Chief Executive Officer, FedEx Freight Corporation	55	President and Chief Executive Officer of FedEx Freight Corporation (parent of FedEx Freight) since March 2010; President of FedEx Freight Corporation from December 2009 to February 2010; Executive Vice President and Chief Operating Officer — U.S. of FedEx Express from March 2008 to November 2009; Executive Vice President — U.S. Operations and System Support of FedEx Express from September 2006 to March 2008; Senior Vice President — U.S. Operations of FedEx Express from August 2004 to September 2006; Senior Vice President — Air-Ground and Freight Services of FedEx Express from 1999 to August 2004; Vice President — National Hub Operations, Memphis Hub of FedEx Express from 1995 to 1999; and various operations management positions with FedEx Express from 1989 to 1995.
Henry J. Maier President and Chief Executive Officer, FedEx Ground	59	President and Chief Executive Officer of FedEx Ground since June 2013; Executive Vice President — Strategic Planning and Communications of FedEx Ground from September 2009 to June 2013; Senior Vice President — Strategic Planning and Communications of FedEx Ground from December 2006 to September 2009; Vice President — Marketing of FedEx Services from March 2000 to December 2006; Vice President — Marketing and Communications of FedEx Ground from June 1999 to March 2000; and various management positions in logistics, sales, marketing and communications with RPS, Inc. and Caliber Logistics, Inc. from 1986 to 1999.
Christine P. Richards Executive Vice President, General Counsel and Secretary	58	Executive Vice President, General Counsel and Secretary of FedEx since June 2005; Corporate Vice President — Customer and Business Transactions of FedEx from March 2001 to June 2005; Senior Vice President and General Counsel of FedEx Services from March 2000 to June 2005; Staff Vice President — Customer and Business Transactions of FedEx from November 1999 to March 2001; Vice President — Customer and Business Transactions of FedEx Express from 1998 to November 1999; and various legal positions with FedEx Express from 1984 to 1998.

Executive officers are elected by, and serve at the discretion of, the Board of Directors. There is no arrangement or understanding between any executive officer and any person, other than a director or executive officer of FedEx or of any of its subsidiaries acting in his or her official capacity, pursuant to which any executive officer was selected. There are no family relationships between any executive officer and any other executive officer or director of FedEx or of any of its subsidiaries.

30

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

FedEx’s common stock is listed on the New York Stock Exchange under the symbol “FDX.” As of July 12, 2013, there were 13,151 holders of record of our common stock. The following table sets forth, for the periods indicated, the high and low sale prices, as reported on the NYSE, and the cash dividends paid per share of common stock.

	Sale Prices				Dividend
	High		Low
Fiscal Year Ended May 31, 2013
Fourth Quarter	$	109.66	$	90.61	$	0.14
Third Quarter		107.50		87.99		0.14
Second Quarter		94.26		83.92		0.14
First Quarter		93.17		83.80		0.14
Fiscal Year Ended May 31, 2012
Fourth Quarter	$	96.89	$	84.86	$	0.13
Third Quarter		97.19		76.95		0.13
Second Quarter		85.75		64.07		0.13
First Quarter		98.66		72.16		0.13

FedEx also paid a cash dividend on July 1, 2013 ($0.15 per share). We expect to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by our Board of Directors. We evaluate the dividend payment amount on an annual basis at the end of each fiscal year. There are no material restrictions on our ability to declare dividends, nor are there any material restrictions on the ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. FedEx did not repurchase any of its common stock during the fourth quarter of 2013.

ITEM 6. SELECTED FINANCIAL DATA

Selected financial data as of and for the five years ended May 31, 2013 is presented on page 133 of this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Management’s discussion and analysis of results of operations and financial condition is presented on pages 39 through 81 of this Annual Report on Form 10-K.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative information about market risk is presented on page 132 of this Annual Report on Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July 15, 2013 thereon, are presented on pages 84 through 131 of this Annual Report on Form 10-K.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of May 31, 2013 (the end of the period covered by this Annual Report on Form 10-K).

Assessment of Internal Control Over Financial Reporting

Management’s report on our internal control over financial reporting is presented on page 82 of this Annual Report on Form 10-K. The report of Ernst & Young LLP with respect to our internal control over financial reporting is presented on page 83 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

During our fiscal quarter ended May 31, 2013, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

32

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding members of the Board of Directors, compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, FedEx’s Code of Business Conduct and Ethics and certain other aspects of FedEx’s corporate governance (such as the procedures by which FedEx’s stockholders may recommend nominees to the Board of Directors and information about the Audit Committee, including its members and our “audit committee financial expert”) will be presented in FedEx’s definitive proxy statement for its 2013 annual meeting of stockholders, which will be held on September 23, 2013, and is incorporated herein by reference. Information regarding executive officers of FedEx is included above in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant” pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K. Information regarding FedEx’s Code of Business Conduct and Ethics is included above in Part I, Item 1 of this Annual Report on Form 10-K under the caption “Reputation and Responsibility — Governance.”

ITEM 11. EXECUTIVE COMPENSATION

Information regarding director and executive compensation will be presented in FedEx’s definitive proxy statement for its 2013 annual meeting of stockholders, which will be held on September  23, 2013, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information regarding security ownership of certain beneficial owners and management and related stockholder matters, as well as equity compensation plan information, will be presented in FedEx’s definitive proxy statement for its 2013 annual meeting of stockholders, which will be held on September 23, 2013, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information regarding certain relationships and transactions with related persons (including FedEx’s policies and procedures for the review and preapproval of related person transactions) and director independence will be presented in FedEx’s definitive proxy statement for its 2013 annual meeting of stockholders, which will be held on September 23, 2013, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding the fees for services provided by Ernst & Young LLP during 2013 and 2012 and the Audit Committee’s administration of the engagement of Ernst & Young LLP, including the Committee’s preapproval policies and procedures (such as FedEx’s Policy on Engagement of Independent Auditor), will be presented in FedEx’s definitive proxy statement for its 2013 annual meeting of stockholders, which will be held on September 23, 2013, and is incorporated herein by reference.

33

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) and (2) Financial Statements; Financial Statement Schedules

FedEx’s consolidated financial statements, together with the notes thereto and the report of Ernst & Young LLP dated July 15, 2013 thereon, are listed on pages 37 through 38 and presented on pages 84 through 131 of this Annual Report on Form 10-K. FedEx’s “Schedule II — Valuation and Qualifying Accounts,” together with the report of Ernst & Young LLP dated July 15, 2013 thereon, is presented on pages 134 through 135 of this Annual Report on Form 10-K. All other financial statement schedules have been omitted because they are not applicable or the required information is included in FedEx’s consolidated financial statements or the notes thereto.

(a)(3) Exhibits

See the Exhibit Index on pages E-1 through E-10 for a list of the exhibits being filed or furnished with or incorporated by reference into this Annual Report on Form 10-K.

34

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FEDEX CORPORATION
Dated: July 15, 2013	By:	/s/ FREDERICK W. SMITH
		Frederick W. Smith
		Chairman, President and
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ FREDERICK W. SMITH	Chairman, President and Chief Executive Officer and Director (Principal Executive Officer)	July 15, 2013
Frederick W. Smith
/s/ ALAN B. GRAF, JR.	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	July 15, 2013
Alan B. Graf, Jr.
/s/ JOHN L. MERINO	Corporate Vice President and Principal Accounting Officer (Principal Accounting Officer)	July 15, 2013
John L. Merino
/s/ JAMES L. BARKSDALE *	Director	July 15, 2013
James L. Barksdale
/s/ JOHN A. EDWARDSON *	Director	July 15, 2013
John A. Edwardson
/s/ SHIRLEY ANN JACKSON *	Director	July 15, 2013
Shirley Ann Jackson
/s/ STEVEN R. LORANGER *	Director	July 15, 2013
Steven R. Loranger

35

Signature	Capacity	Date
/s/ GARY W. LOVEMAN *	Director	July 15, 2013
Gary W. Loveman
/s/ R. BRAD MARTIN *	Director	July 15, 2013
R. Brad Martin
/s/ JOSHUA COOPER RAMO *	Director	July 15, 2013
Joshua Cooper Ramo
/s/ SUSAN C. SCHWAB *	Director	July 15, 2013
Susan C. Schwab
/s/ JOSHUA I. SMITH *	Director	July 15, 2013
Joshua I. Smith
/s/ DAVID P. STEINER *	Director	July 15, 2013
David P. Steiner
/s/ PAUL S. WALSH *	Director	July 15, 2013
Paul S. Walsh
*By: /s/ JOHN L. MERINO John L. Merino Attorney-in-Fact		July 15, 2013

36

FINANCIAL SECTION TABLE OF CONTENTS

	PAGE
Management’s Discussion and Analysis of Results of Operations and Financial Condition
Overview of Financial Section		39
Results of Operations		41
Recent Accounting Guidance		50
Reportable Segments		51
FedEx Services Segment		51
FedEx Express Segment		53
FedEx Ground Segment		58
FedEx Freight Segment		61
Financial Condition		64
Liquidity		64
Capital Resources		65
Liquidity Outlook		65
Contractual Cash Obligations and Off-Balance Sheet Arrangements		67
Critical Accounting Estimates		68
Retirement Plans		68
Self-Insurance Accruals		71
Long-Lived Assets		72
Contingencies		74
Risk Factors		76
Forward-Looking Statements		80
Consolidated Financial Statements
Management’s Report on Internal Control over Financial Reporting		82
Reports of Independent Registered Public Accounting Firm		83
Consolidated Balance Sheets May 31, 2013 and 2012		85

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Consolidated Statements of Income Years Ended May 31, 2013, 2012 and 2011	87
Consolidated Statements of Comprehensive Income (Loss) Years Ended May 31, 2013, 2012 and 2011	88
Consolidated Statements of Cash Flows Years Ended May 31, 2013, 2012 and 2011	89
Consolidated Statements of Changes in Stockholders’ Investment Years Ended May  31, 2013, 2012 and 2011	90
Notes to Consolidated Financial Statements	91
Other Financial Information
Quantitative and Qualitative Disclosures about Market Risk	132
Selected Financial Data	133
Report of Independent Registered Public Accounting Firm	134
Schedule II — Valuation and Qualifying Accounts	135
Computation of Ratio of Earnings to Fixed Charges	136

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND

FINANCIAL CONDITION

OVERVIEW OF FINANCIAL SECTION

The financial section of the FedEx Corporation (“FedEx”) Annual Report on Form 10-K (“Annual Report”) consists of the following Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”), the Consolidated Financial Statements and the notes to the Consolidated Financial Statements, and Other Financial Information, all of which include information about our significant accounting policies, practices and the transactions that underlie our financial results. The following MD&A describes the principal factors affecting the results of operations, liquidity, capital resources, contractual cash obligations and the critical accounting estimates of FedEx. The discussion in the financial section should be read in conjunction with the other sections of this Annual Report, particularly “Item 1: Business” and our detailed discussion of risk factors included in this MD&A.

ORGANIZATION OF INFORMATION

Our MD&A is composed of three major sections: Results of Operations, Financial Condition and Critical Accounting Estimates. These sections include the following information:

• Results of operations includes an overview of our consolidated 2013 results compared to 2012, and 2012 results compared to 2011. This section also includes a discussion of key actions and events that impacted our results, as well as our outlook for 2014.

• The overview is followed by a financial summary and analysis (including a discussion of both historical operating results and our outlook for 2014) for each of our reportable transportation segments.

• Our financial condition is reviewed through an analysis of key elements of our liquidity, capital resources and contractual cash obligations, including a discussion of our cash flows and our financial commitments.

• Critical accounting estimates discusses those financial statement elements that we believe are important to understanding certain of the material judgments and assumptions incorporated in our financial results.

• We conclude with a discussion of risks and uncertainties that may impact our financial and operating results.

DESCRIPTION OF BUSINESS

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world’s largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading North American provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing, information technology, communications and back-office support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”). See “Reportable Segments” for further discussion and refer to “Item 1: Business” for a more detailed description of each of our operating companies.

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The key indicators necessary to understand our operating results include:

• the overall customer demand for our various services based on macro-economic factors and the global economy;

• the volumes of transportation services provided through our networks, primarily measured by our average daily volume and shipment weight;

• the mix of services purchased by our customers;

• the prices we obtain for our services, primarily measured by yield (revenue per package or pound or revenue per hundredweight for LTL freight shipments);

• our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and

• the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

The majority of our operating expenses are directly impacted by revenue and volume levels. Accordingly, we expect these operating expenses to fluctuate on a year-over-year basis consistent with the change in revenues and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends impacting expenses other than changes in revenues and volume.

Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2013 or ended May 31 of the year referenced and comparisons are to the prior year. References to our transportation segments include, collectively, our FedEx Express, FedEx Ground and FedEx Freight segments.

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RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The following table compares summary operating results (dollars in millions, except per share amounts) for the years ended May 31:

										Percent Change
	2013(1)			2012(2)			2011(3)			2013/2012			2012/2011
Revenues	$	44,287		$	42,680		$	39,304			4			9
Operating income		2,551			3,186			2,378			(20	)		34
Operating margin		5.8	%		7.5	%		6.1	%		(17	0)bp		14	0bp
Net income	$	1,561		$	2,032		$	1,452			(23	)		40
Diluted earnings per share	$	4.91		$	6.41		$	4.57			(23	)		40

⁽¹⁾  Operating expenses include $560 million for business realignment costs and a $100 million impairment charge resulting from the decision to retire ten aircraft and related engines at FedEx Express.

⁽²⁾  Operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express and the reversal of a $66 million legal reserve which was initially recorded in 2011 at FedEx Express.

⁽³⁾  Operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011, and a $66 million legal reserve at FedEx Express.

The following table shows changes in revenues and operating income by reportable segment for 2013 compared to 2012, and 2012 compared to 2011 (dollars in millions):

	Revenues												Operating Income
	Dollar Change						Percent Change						Dollar Change					Percent Change
	2013/ 2012			2012/ 2011			2013/ 2012			2012/ 2011			2013/ 2012			2012/ 2011		2013/ 2012			2012/ 2011
FedEx Express segment(1)	$	656		$	1,934			2			8		$	(705	)	$	32		(56	)		3
FedEx Ground segment(2)		1,005			1,088			10			13			24			439		1			33
FedEx Freight segment(3)		119			371			2			8			46			337		28			193
FedEx Services segment		(91	)		(13	)		(5	)		(1	)		—			—		—			—
Other and eliminations		(82	)		(4	)		NM			NM			—			—		—			—
	$	1,607		$	3,376			4			9		$	(635	)	$	808		(20	)		34

⁽¹⁾  FedEx Express segment 2013 operating expenses include $405 million of direct and allocated business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines. Additionally, FedEx Express segment 2012 operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines and the reversal of a $66 million legal reserve that was initially recorded in 2011.

⁽²⁾  FedEx Ground segment 2013 operating expenses include $105 million of allocated business realignment costs.

⁽³⁾  FedEx Freight segment 2013 operating expenses include $50 million of direct and allocated business realignment costs. Additionally, FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.

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Overview

Our results for 2013 reflect a significant impact of certain charges (described below), which negatively impacted our earnings by $1.31 per diluted share. Beyond these factors, our results for 2013 benefited from the strong performance of FedEx Ground, which continued to grow market share, and ongoing profit improvement at FedEx Freight. However, a decline in profitability was experienced at our FedEx Express segment resulting from ongoing shifts in demand from our priority international services to economy international services which could not be fully offset by network cost and capacity reductions in 2013.

Our 2013 results include business realignment costs of $560 million, primarily related to our voluntary cash buyout program (see “Business Realignment, Impairment and Other Charges” for additional information). Furthermore, in May 2013, we made the decision to retire from service 10 aircraft and related engines, which resulted in a noncash asset impairment charge of $100 million.

In addition, actions in 2012 at FedEx Express related to fleet modernization resulted in the accelerated retirement of certain aircraft which negatively impacted our 2013 results by $69 million due to additional depreciation recorded for the shortened lives of the aircraft.

Our 2012 revenues, operating income and operating margins reflected the exceptional performance of our FedEx Ground segment, improved profitability at FedEx Freight and increased yields across all our operating segments. Our results significantly benefited in 2012 from the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. Our 2012 results included the reversal of a $66 million legal reserve initially recorded in 2011 and an aircraft impairment charge of $134 million at FedEx Express.

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The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected volume trends (in thousands) for the years ended May 31:

⁽¹⁾  International domestic average daily package volume includes our international intra-country express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).

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The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected yield trends for the years ended May 31:

Revenue

Revenues increased 4% in 2013 primarily driven by increases in international domestic revenue at FedEx Express and volume growth at FedEx Ground. At FedEx Ground, revenues increased 10% in 2013 primarily due to volume growth from market share gains. At FedEx Express, revenues increased 2% due to increases in international domestic revenues from recent acquisitions and growth in our freight-forwarding business at FedEx Trade Networks. Base revenue growth at FedEx Express in 2013 was constrained by global economic conditions as shifts in demand from our priority international services to our economy international services and lower rates resulted in declines in international export package yields. At FedEx Freight, revenues increased 2% as a result of higher yield and average daily LTL shipments.

During 2012, revenues increased 9% due to yield growth across all our transportation segments. At FedEx Express, revenues increased 8% in 2012 led by higher U.S. domestic and international export package yields. However, U.S. domestic package and international export package volumes declined due to weakening global economic conditions. Revenues increased 13% during 2012 at our FedEx Ground segment due to higher yields and strong demand for all our major services. At FedEx Freight, revenues increased 8% during 2012 due to higher LTL yield as a result of higher fuel surcharges and yield management programs, despite a decrease in volume.

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Operating Income

The following tables compare operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the years ended May 31:

	2013			2012			2011
Operating expenses:
Salaries and employee benefits	$	16,570		$	16,099		$	15,276
Purchased transportation		7,272			6,335			5,674
Rentals and landing fees		2,521			2,487			2,462
Depreciation and amortization		2,386			2,113			1,973
Fuel		4,746			4,956			4,151
Maintenance and repairs		1,909			1,980			1,979
Business realignment, impairment and other charges		660	(1)		134	(2)		89	(3)
Other (4)		5,672			5,390			5,322
Total operating expenses	$	41,736		$	39,494		$	36,926

	Percent of Revenue
	2013			2012			2011
Operating expenses:
Salaries and employee benefits		37.4	%		37.7	%		38.9	%
Purchased transportation		16.4			14.9			14.4
Rentals and landing fees		5.7			5.8			6.3
Depreciation and amortization		5.4			5.0			5.0
Fuel		10.7			11.6			10.6
Maintenance and repairs		4.3			4.6			5.0
Business realignment, impairment and other charges		1.5	(1)		0.3	(2)		0.2	(3)
Other (4)		12.8			12.6			13.5
Total operating expenses		94.2			92.5			93.9
Operating margin		5.8	%		7.5	%		6.1	%

⁽¹⁾  Includes predominantly severance costs associated with our voluntary buyout program and charges resulting from the decision to retire 10 aircraft and related engines at FedEx Express.

⁽²⁾  Represents charges resulting from the decision to retire 24 aircraft and related engines at FedEx Express.

⁽³⁾  Represents charges associated with the combination of our FedEx Freight and FedEx National LTL operations effective January 30, 2011.

⁽⁴⁾  Includes the 2012 reversal of a $66 million legal reserve at FedEx Express that was initially recorded in 2011.

Our 2013 operating income and operating margin decreased primarily due to the impact of business realignment costs, aircraft impairment charges and accelerated aircraft depreciation (see “Overview” section above). Beyond these factors, operating income was positively impacted in 2013 by higher volumes and increased yields at our FedEx Ground segment and by increased yields and higher volumes at our FedEx Freight segment. However, the ongoing shifts in demand from priority international services to economy international services and lower rates resulted in a substantial decline in profitability at FedEx Express.

Purchased transportation increased 15% in 2013 due to volume growth at FedEx Ground, recent international business acquisitions and the expansion of our freight forwarding business at FedEx Trade Networks. Salaries and benefits increased 3% in 2013 primarily due to increases in pension and group health insurance costs, partially offset by lower incentive compensation accruals. Other expenses increased 5% in 2013 primarily due to the impact of business acquisitions and the reversal in 2012 of a legal reserve.

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The following graph for our transportation segments shows our average cost of jet and vehicle fuel per gallon for the years ended May 31:

Fuel expense decreased 4% during 2013 primarily due to lower jet fuel prices and lower aircraft fuel usage. Our fuel surcharges, which are more fully described in the “Quantitative and Qualitative Disclosures About Market Risk” section of this MD&A, have a timing lag and are designed to pass through the price of fuel not included in our base shipping rates to our customers. Based on a static analysis of the impact to operating income of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a negative impact on operating income in 2013.

Our analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx Express and FedEx Ground services. However, this analysis does not consider the negative effects that fuel surcharge levels may have on our business, including reduced demand and shifts by our customers to lower-yielding services. While fluctuations in fuel surcharge rates can be significant from period to period, fuel surcharges represent one of the many individual components of our pricing structure that impact our overall revenue and yield. Additional components include the mix of services sold, the base price and extra service charges we obtain for these services and the level of pricing discounts offered. In order to provide information about the impact of fuel surcharges on the trend in revenue and yield growth, we have included the comparative fuel surcharge rates in effect for 2013, 2012 and 2011 in the accompanying discussions of each of our transportation segments.

In 2012, operating income increased 34% and operating margin increased 140 basis points driven by higher yields across all our transportation segments due to higher fuel surcharges and our yield management programs. Our results also significantly benefited in 2012 from the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust. FedEx Ground segment operating income increased $439 million in 2012 driven by higher yields and strong demand for all our major services. At our FedEx Freight segment, operating income increased $337 million due to higher LTL yield and efficiencies gained from the combination of our LTL operations in 2011.

Salaries and benefits increased 5% in 2012 primarily due to higher incentive compensation costs and the full reinstatement of 401(k) company-matching contributions effective January 1, 2011. Purchased transportation costs increased 12% in 2012 due to volume growth and higher fuel surcharges at FedEx Ground, costs associated with the expansion of our freight forwarding business at FedEx Trade Networks and higher utilization of third-party transportation providers in international locations primarily due to business acquisitions at FedEx Express.

Fuel expense increased 19% during 2012 primarily due to price increases. Based on a static analysis of the impact to operating income of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel surcharges significantly exceeded incremental fuel costs in 2012.

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Other Income and Expense

Interest expense increased $30 million in 2013 primarily due to a reduction in capitalized interest and increased interest expense from 2013 debt issuances. Other expense increased in 2013 driven by foreign currency translation due to global currency volatility. Interest expense decreased $34 million in 2012 due to debt maturities, an increase in capitalized interest related to the timing of progress payments on aircraft purchases and lower financing fees.

Income Taxes

Our effective tax rate was 36.4% in 2013, 35.3% in 2012 and 35.9% in 2011. Our 2012 rate was favorably impacted by the conclusion of the Internal Revenue Service (“IRS”) audit of our 2007-2009 consolidated income tax returns. Our permanent reinvestment strategy with respect to unremitted earnings of our foreign subsidiaries provided a 1.2% benefit to our 2013 effective tax rate. Our total permanently reinvested foreign earnings were $1.3 billion at the end of 2013 and $1.0 billion at the end of 2012.

Our current federal income tax expenses in 2013, 2012 and 2011 were significantly reduced by accelerated depreciation deductions we claimed under provisions of the American Taxpayer Relief Act of 2013 and the Tax Relief and the Small Business Jobs Acts of 2010. Those Acts, designed to stimulate new business investment in the U.S., accelerated our depreciation deductions for qualifying investments, such as our Boeing 777 Freighter (“B777F”) aircraft. These were timing benefits only, in that depreciation accelerated into an earlier year is foregone in later years. Our 2013 current provision for federal income taxes was, therefore, higher than in 2012 and 2011.

The components of the provision for federal income taxes for the years ended May 31 were as follows (in millions):

	2013		2012			2011
Current	$	512	$	(120	)	$	79
Deferred		175		947			485
Total Federal Provision	$	687	$	827		$	564

For 2014, we expect our effective tax rate to be between 36.5% and 37.0%. The actual rate, however, will depend on a number of factors, including the amount and source of operating income. We also expect our current federal income tax expense will increase in 2014 due to lower accelerated depreciation benefits than in prior years.

Additional information on income taxes, including our effective tax rate reconciliation, liabilities for uncertain tax positions and our global tax profile can be found in Note 12 of the accompanying consolidated financial statements.

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Business Acquisitions

During 2013, we expanded the international service offerings of FedEx Express by completing the following business acquisitions:

• Rapidão Cometa Logística e Transporte S.A., a Brazilian transportation and logistics company, for $398 million in cash from operations on July 4, 2012

• TATEX, a French express transportation company, for $55 million in cash from operations on July 3, 2012

• Opek Sp. z o.o., a Polish domestic express package delivery company, for $54 million in cash from operations on June 13, 2012

These acquisitions give us more robust transportation networks within these countries and added capabilities in these important international markets. See Note 3 of the accompanying consolidated financial statements for further discussion of these acquisitions.

In 2012, we completed our acquisition of Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, for $128 million in cash from operations on July 25, 2011. In 2011, we completed the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. for $96 million in cash from operations on February 22, 2011.

The financial results of these acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations and therefore, pro forma financial information has not been presented. Substantially all of the purchase price in each of these acquisitions was allocated to goodwill, which was entirely attributed to our FedEx Express reporting unit.

On June 20, 2013, we signed agreements to acquire the businesses operated by our current service provider Supaswift (Pty) Ltd. in five countries in Southern Africa. The acquisition will be funded with cash from operations and is expected to be completed in the second half of 2014, subject to customary closing conditions. The financial results of the acquired businesses will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2014 results.

Business Realignment, Impairment and Other Charges

During 2013, we announced profit improvement programs primarily through initiatives at FedEx Express and FedEx Services that include the following:

• Cost reductions in selling, general and administrative functions through headcount reductions, streamlining of processes and elimination of less essential work, as well as deriving greater value from strategic sourcing

• Modernization of our aircraft fleet, transformation of the U.S. domestic operations and international profit improvements at FedEx Express

• Improved efficiencies and lower costs of information technology at FedEx Services

During 2013, we conducted a program to offer voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The voluntary buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance calculated based on four weeks of gross base salary for every year of FedEx service up to a maximum payment of two years of pay. This program was completed in the fourth quarter and approximately 3,600 employees have left or will be voluntarily leaving the company by the end of 2014. Eligible employees are scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Of the total population leaving the

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company, approximately 40% of the employees vacated positions on May 31, 2013. An additional 35% will depart throughout 2014 and approximately 25% of this population will remain until May 31, 2014. Costs of the benefits provided under the voluntary program were recognized as special termination benefits in the period that eligible employees accepted their offers.

We incurred costs of $560 million ($353 million, net of tax, or $1.11 per diluted share) during 2013 associated with our business realignment activities. These costs related primarily to severance for employees who accepted voluntary buyouts in the third and fourth quarters of 2013. Payments will be made at the time of departure. Approximately $180 million was paid under this program during 2013. The cost of the buyout program is included in the caption “Business realignment, impairment and other charges” in our consolidated statements of income. Also included in that caption are other external costs directly attributable to our business realignment activities, such as professional fees.

In addition, actions in 2012 at FedEx Express related to fleet modernization resulted in accelerated depreciation of $69 million in 2013 included in the caption “Depreciation and amortization” in our consolidated statements of income as we shortened the lives of certain aircraft.

In May 2013, we made the decision to retire from service two Airbus A310-200 aircraft and four related engines, three Airbus A310-300 aircraft and two related engines, and five Boeing MD10-10 aircraft and 15 related engines. As a consequence of this decision, a noncash impairment charge of $100 million ($63 million, net of tax, or $0.20 per diluted share) was recorded in the fourth quarter. The decision to retire these aircraft, which were temporarily idled and not in revenue service, aligns with the plans of FedEx Express to modernize its aircraft fleet and improve its global network.

In May 2012, we retired from service 24 aircraft and related engines, the majority of which were temporarily idled and not in revenue service. As a consequence of this decision, a noncash impairment charge of $134 million ($84 million, net of tax, or $0.26 per diluted share) was recorded in the fourth quarter of 2012.

See the “Long-lived Assets” section of our “Critical Accounting Estimates” for a discussion of our accounting for aircraft retirement decisions.

Outlook

We anticipate revenue and earnings growth in 2014 driven by the continued strong performance of our FedEx Ground and FedEx Freight businesses and improving performance at FedEx Express. Our expected results for 2014 will be constrained by moderate growth in the global economy and continued challenges from the demand shift trend from our priority international services to our economy international services. In response to these trends, we will be evaluating additional capacity reductions and other actions in 2014. During 2014 we will incur incremental costs to transform our information technology operations at FedEx Services in connection with our profit improvement programs, which will increase the costs allocated to our transportation segments. In May 2013, in conjunction with the retirement of aircraft, FedEx Express shortened the depreciable lives of 76 aircraft and related engines. As a result of this decision and the 2012 decision to shorten the depreciable lives of 54 aircraft, we expect to incur additional year-over-year accelerated depreciation expense of $74 million in 2014. However, lower pension expense in 2014 will positively impact our operating results.

In addition to continued profit improvements in the base businesses at FedEx Ground and FedEx Freight, our profit improvement programs announced in 2013 are targeting annual profitability improvement of $1.6 billion at FedEx Express by the end of 2016 (from the full year 2013 base business). Collectively, these initiatives are expected to increase margins, improve cash flows and increase our competitiveness. However, the amount of benefit ultimately realized will vary depending upon future customer demand, particularly for priority international services. We expect to begin realizing a portion of the benefits of these programs in 2014; however, the majority of the benefits, including those from our voluntary severance program, will not occur until 2015 and 2016.

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Our capital expenditures for 2014 are expected to increase to approximately $4.0 billion for additional aircraft deliveries in 2014 to support our fleet modernization program and continued expansion of the FedEx Ground network. We will continue to evaluate our investments in critical long-term strategic projects to ensure our capital expenditures generate high returns on investments and are balanced with our outlook for global economic conditions. For additional details on key 2014 capital projects, refer to the “Capital Resources” and “Liquidity Outlook” sections of this MD&A.

Our outlook is dependent upon a stable pricing environment for fuel, as volatility in fuel prices impacts our fuel surcharge levels, fuel expense and demand for our services. Historically, our fuel surcharges have largely offset incremental fuel costs; however, volatility in fuel costs may impact earnings because adjustments to our fuel surcharges lag changes in actual fuel prices paid. Therefore, the trailing impact of adjustments to our fuel surcharges can significantly affect our earnings either positively or negatively in the short-term.

As described in Note 18 of the accompanying consolidated financial statements and the “Independent Contractor Model” section of our FedEx Ground segment MD&A, we are involved in a number of lawsuits and other proceedings that challenge the status of FedEx Ground’s owner-operators as independent contractors. FedEx Ground anticipates continuing changes to its relationships with its owner-operators. The nature, timing and amount of any changes are dependent on the outcome of numerous future events. We cannot reasonably estimate the potential impact of any such changes or a meaningful range of potential outcomes, although they could be material. However, we do not believe that any such changes will impair our ability to operate and profitably grow our FedEx Ground business.

See “Risk Factors” for a discussion of these and other potential risks and uncertainties that could materially affect our future performance.

Seasonality of Business

Our businesses are cyclical in nature, as seasonal fluctuations affect volumes, revenues and earnings. Historically, the U.S. express package business experiences an increase in volumes in late November and December. International business, particularly in the Asia-to-U.S. market, peaks in October and November in advance of the U.S. holiday sales season. Our first and third fiscal quarters, because they are summer vacation and post winter-holiday seasons, have historically experienced lower volumes relative to other periods. Normally, the fall is the busiest shipping period for FedEx Ground, while late December, June and July are the slowest periods. For FedEx Freight, the spring and fall are the busiest periods and the latter part of December through February is the slowest period. For FedEx Office, the summer months are normally the slowest periods. Shipment levels, operating costs and earnings for each of our companies can also be adversely affected by inclement weather, particularly the impact of severe winter weather in our third fiscal quarter.

RECENT ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements.

On June 1, 2012, we adopted the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on the presentation of comprehensive income. The new guidance requires companies to report components of comprehensive income by including comprehensive income on the face of the income statement or in a separate statement of comprehensive income. We have adopted this guidance by including a separate statement of comprehensive income (loss) for the three years ending May 31, 2013 and by including expanded accumulated other comprehensive income disclosure requirements in the notes to our consolidated financial statements. In addition, on June 1, 2012, we adopted the FASB’s amendments to the fair value measurements and disclosure requirements, which expanded existing disclosure requirements regarding the fair value of our long-term debt.

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In February 2013, the FASB issued new guidance requiring additional information about reclassification adjustments out of comprehensive income, including changes in comprehensive income balances by component and significant items reclassified out of comprehensive income. This new standard is effective for our fiscal year ending May 31, 2014 and will have no impact on our financial condition or results of operations.

In May 2013, the FASB issued a revised exposure draft outlining proposed changes to the accounting for leases. Under the revised exposure draft, the recognition, measurement and presentation of expenses and cash flows arising from a lease would depend primarily on whether the lessee is expected to consume more than an insignificant portion of the economic benefits embedded in the underlying asset. A right-of-use asset and a liability to make lease payments will be recognized on the balance sheet for all leases (except short-term leases). The enactment of this proposal will have a significant impact on our accounting and financial reporting. The FASB has not yet proposed an effective date of this proposal.

We believe that no other new accounting guidance was adopted or issued during 2013 that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

REPORTABLE SEGMENTS

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation) FedEx Trade Networks (air and ocean freight forwarding and customs brokerage) FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery) FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation) FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing, information technology, communications and back-office functions) FedEx TechConnect (customer service, technical support, billings and collections) FedEx Office (document and business services and package acceptance)

FEDEX SERVICES SEGMENT

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the FedEx Express segment in their natural expense line items. The FedEx Services segment includes: FedEx Services, which provides sales, marketing, information technology, communications and back-office support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses.

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The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments reflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

OTHER INTERSEGMENT TRANSACTIONS

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

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FEDEX EXPRESS SEGMENT

FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight including priority services, which provide time-definite delivery within one, two or three business days worldwide, and deferred or economy services, which provide time-definite delivery within five business days worldwide. The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) for the years ended May 31:

										Percent Change
	2013			2012			2011			2013/2012			2012/2011
Revenues:
Package:
U.S. overnight box	$	6,513		$	6,546		$	6,128			(1	)		7
U.S. overnight envelope		1,705			1,747			1,736			(2	)		1
U.S. deferred		3,020			3,001			2,805			1			7
Total U.S. domestic package revenue		11,238			11,294			10,669			—			6
International priority		6,586			6,849			6,760			(4	)		1
International economy		2,046			1,859			1,468			10			27
Total international export package revenue		8,632			8,708			8,228			(1	)		6
International domestic (1)		1,398			853			653			64			31
Total package revenue		21,268			20,855			19,550			2			7
Freight:
U.S.		2,562			2,498			2,188			3			14
International priority		1,678			1,827			1,722			(8	)		6
International airfreight		276			307			283			(10	)		8
Total freight revenue		4,516			4,632			4,193			(3	)		10
Other  (2)		1,387			1,028			838			35			23
Total revenues		27,171			26,515			24,581			2			8
Operating expenses:
Salaries and employee benefits		10,045			9,657			9,183			4			5
Purchased transportation		2,331			1,828			1,573			28			16
Rentals and landing fees		1,684			1,680			1,672			—			—
Depreciation and amortization		1,350			1,169			1,059			15			10
Fuel		4,130			4,304			3,553			(4	)		21
Maintenance and repairs		1,244			1,332			1,353			(7	)		(2	)
Business realignment, impairment and other charges (3)		243			134			—			NM			NM
Intercompany charges (4)		2,379			2,193			2,043			8			7
Other  (5)		3,210			2,958			2,917			9			1
Total operating expenses		26,616			25,255			23,353			5			8
Operating income	$	555		$	1,260		$	1,228			(56	)		3
Operating margin (6)		2.0	%		4.8	%		5.0	%		(280	)bp		(20	)bp

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	Percent of Revenue
	2013			2012			2011
Operating expenses:
Salaries and employee benefits		37.0	%		36.4	%		37.4	%
Purchased transportation		8.6			6.9			6.4
Rentals and landing fees		6.2			6.3			6.8
Depreciation and amortization		5.0			4.4			4.3
Fuel		15.2			16.2			14.4
Maintenance and repairs		4.6			5.0			5.5
Business realignment, impairment and other charges (3)		0.9			0.5			—
Intercompany charges (4)		8.7			8.3			8.3
Other  (5)		11.8			11.2			11.9
Total operating expenses		98.0			95.2			95.0
Operating margin (6)		2.0	%		4.8	%		5.0	%

⁽¹⁾  International domestic revenues include our international intra-country express operations including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).

⁽²⁾  Includes FedEx Trade Networks and FedEx SupplyChain Systems.

⁽³⁾  2013 includes $143 million of predominantly severance costs associated with our voluntary buyout program and a $100 million impairment charge resulting from the decision to retire 10 aircraft and related engines. 2012 represents impairment charges resulting from the decision to retire 24 aircraft and related engines.

⁽⁴⁾  Includes allocations of $262 million in 2013 for business realignment costs.

⁽⁵⁾  Includes the 2012 reversal of a $66 million legal reserve that was initially recorded in 2011.

⁽⁶⁾  The direct and indirect charges described in notes (3) and (4) above reduced 2013 operating margin by 190 basis points. The charges and credit described in notes (3) and (5) above reduced 2012 operating margin by 20 basis points.

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The following table compares selected statistics (in thousands, except yield amounts) for the years ended May 31:

							Percent Change
	2013		2012		2011		2013/2012			2012/2011
Package Statistics (1)
Average daily package volume (ADV):
U.S. overnight box		1,134		1,146		1,184		(1	)		(3	)
U.S. overnight envelope		574		586		627		(2	)		(7	)
U.S. deferred		835		845		873		(1	)		(3	)
Total U.S. domestic ADV		2,543		2,577		2,684		(1	)		(4	)
International priority		421		421		459		—			(8	)
International economy		155		138		116		12			19
Total international export ADV		576		559		575		3			(3	)
International domestic (2)		785		495		348		59			42
Total ADV		3,904		3,631		3,607		8			1
Revenue per package (yield):
U.S. overnight box	$	22.52	$	22.31	$	20.29		1			10
U.S. overnight envelope		11.66		11.65		10.86		—			7
U.S. deferred		14.18		13.87		12.60		2			10
U.S. domestic composite		17.33		17.12		15.59		1			10
International priority		61.28		63.47		57.68		(3	)		10
International economy		51.77		52.77		49.76		(2	)		6
International export composite		58.72		60.83		56.08		(3	)		8
International domestic (2)		6.99		6.74		7.38		4			(9	)
Composite package yield		21.36		22.44		21.25		(5	)		6
Freight Statistics (1)
Average daily freight pounds:
U.S.		7,612		7,487		7,340		2			2
International priority		3,048		3,303		3,184		(8	)		4
International airfreight		1,066		1,171		1,235		(9	)		(5	)
Total average daily freight pounds		11,726		11,961		11,759		(2	)		2
Revenue per pound (yield):
U.S.	$	1.32	$	1.30	$	1.17		2			11
International priority		2.16		2.16		2.12		—			2
International airfreight		1.01		1.02		0.90		(1	)		13
Composite freight yield		1.51		1.51		1.40		—			8

⁽¹⁾  Package and freight statistics include only the operations of FedEx Express.

⁽²⁾  International domestic statistics include our international intra-country express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).

FedEx Express Segment Revenues

FedEx Express segment revenues increased 2% in 2013 primarily due to the impact of new business acquisitions and growth in our freight-forwarding business at FedEx Trade Networks. Core revenue growth was constrained by global economic conditions as revenue growth from higher international export volume was offset by decreased yields due to shifts in demand from our priority international services to our economy international services, as well as lower rates. In 2013, international domestic revenues increased 64% due to recent acquisitions in Brazil, France and Poland. International export revenues were down in 2013 as revenue per package decreased 3% due to the demand shift to our lower-yielding economy services and lower rates, while volume increased 3% driven by our economy services. A decrease in U.S. domestic package volumes more than offset an increase in U.S. domestic package yield, resulting in slightly lower U.S. domestic package revenues in 2013. Total average daily freight pounds decreased 2% in 2013 due to weakness in economic global conditions.

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FedEx Express segment revenues increased 8% in 2012 primarily due to an increase in U.S. domestic and international export package yields, partially offset by decreases in U.S. domestic and international export package volumes. In 2012, U.S. domestic package yields increased 10% due to higher fuel surcharges and increased rate per pound. International export package yields increased 8% in 2012 due to higher fuel surcharges, increased package weights and increased rate per pound. Continued softness in the global economy resulted in decreased demand for our U.S. domestic and international export package services in 2012. International export revenue growth was negatively impacted by a lower-yielding mix of services, consisting of growth in deferred services and declines in premium services.

Our fuel surcharges are indexed to the spot price for jet fuel. Using this index, the U.S. domestic and outbound fuel surcharge and the international fuel surcharges ranged as follows for the years ended May 31:

	2013			2012			2011
U.S. Domestic and Outbound Fuel Surcharge:
Low		10.00	%		11.50	%		7.00	%
High		14.50			16.50			15.50
Weighted-average		11.84			14.23			9.77
International Fuel Surcharges:
Low		12.00			13.50			7.00
High		20.50			23.00			21.00
Weighted-average		17.02			17.45			12.36

In both January 2013 and 2012, we implemented a 5.9% average list price increase for FedEx Express U.S. domestic, U.S. export and U.S. import services, while we lowered our fuel surcharge index by two percentage points.

FedEx Express Segment Operating Income

FedEx Express segment operating results were negatively impacted by $405 million of costs associated with our business realignment program, both directly and through intercompany allocations. Additionally, results for 2013 were negatively impacted by a $100 million impairment charge as a result of the decision to retire 10 aircraft and related engines from service. FedEx Express incurred $69 million in year-over-year incremental depreciation costs in 2013 due to the decision in 2012 to accelerate the retirement of certain aircraft. Operating income and operating margin also decreased in 2013 due to the demand shift toward lower-yielding international services. Operating comparisons were also impacted by an aircraft impairment charge in 2012 and a legal reserve accrual reversal as discussed below.

Purchased transportation costs increased 28% in 2013 due to recent business acquisitions and costs associated with the expansion of our freight forwarding business at FedEx Trade Networks. Salaries and benefits increased 4% in 2013 due to recent acquisitions and higher pension costs, partially offset by lower incentive compensation accruals. Other operating expenses increased 9% due to the impact of recent business acquisitions and the negative year-over-year comparison of the legal reserve accrual reversal in 2012. Depreciation and amortization expense increased 15% in 2013 as a result of aircraft recently placed into service and accelerated depreciation due to the shortened life of certain aircraft.

FedEx Express aircraft maintenance and repairs costs are largely driven by aircraft utilization and required periodic maintenance events. When newer aircraft are introduced into our operating fleet, less maintenance costs are incurred. As a part of our fleet modernization program, FedEx Express has retired older, less efficient aircraft prior to required periodic maintenance events and has introduced newly manufactured aircraft into the fleet. As a result, a decrease in maintenance and repairs costs was experienced in 2013 and 2012.

Fuel costs decreased 4% in 2013 due to lower jet fuel prices and lower aircraft fuel usage. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a slightly positive impact in 2013. This analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx Express services.

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FedEx Express segment operating income increased 3% in 2012 primarily due to the benefit from the timing lag that exists between when fuel prices change and when indexed fuel surcharges automatically adjust and U.S. domestic and international export package yield improvements. Results of the FedEx Express segment reflect the impact of two one-time items in 2012. FedEx Express segment results for 2012 were negatively impacted by $134 million as a result of the decision to retire from service 18 Airbus A310-200 aircraft and 26 related engines as well as six Boeing MD10-10 aircraft and 17 related engines to better align the U.S. domestic air network capacity of FedEx Express to match current and anticipated shipment volumes. The 2012 operating results at the FedEx Express segment were favorably impacted by the reversal of a legal reserve of $66 million that was initially recorded in 2011. FedEx Express segment results also benefited from a milder winter compared to the negative impact of unusually severe winter weather in 2011.

Salaries and employee benefits increased 5% in 2012 due to higher incentive compensation accruals and the full reinstatement of 401(k) company-matching contributions effective January 1, 2011. Purchased transportation costs increased 16% in 2012 due to costs associated with the expansion of our freight forwarding business at FedEx Trade Networks, business acquisitions in India and Mexico and higher utilization of third-party transportation providers, primarily in Europe. Intercompany charges increased 7% in 2012 due to higher allocated variable incentive compensation expenses.

Fuel costs increased 21% in 2012 due to increases in the average price per gallon of fuel. Fuel usage in 2012 was down slightly.

FedEx Express Segment Outlook

We expect revenues and earnings to increase at FedEx Express during 2014 due to slight growth in our international package and international domestic services. In addition, we expect operating income to improve through ongoing execution of our profit improvement programs including improving yields, adjusting network capacity and reducing structural costs. However, the demand shift from our priority international services to our economy international services will continue to constrain earnings growth in 2014. Base yields on priority international services at FedEx Express continue to weaken based on our customers’ accelerating preference for our lower-yielding services. Given the persistence of this trend, we will continue evaluating further actions to adjust our FedEx Express network capacity and shift lower yielding services into lower cost delivery networks.

Capital expenditures at FedEx Express are expected to increase in 2014 driven by an increase in aircraft investment. We will continue to modernize our aircraft fleet at FedEx Express during 2014 by adding newer aircraft that are more reliable, fuel-efficient and technologically advanced, and retiring older, less-efficient aircraft. Due to the accelerated retirement of certain aircraft and related engines to aid in modernizing our fleet and improving our global network, we expect an additional $74 million in year-over-year depreciation expense in 2014.

In April 2013, FedEx Express was selected as the sole awardee of the recent U.S. Postal Service air cargo solicitation, representing the majority of the United States Postal Service’s (“USPS”) air linehaul traffic. This new seven year agreement begins on October 1, 2013. The agreement provides reduced rates for the USPS versus the prior FedEx Express agreement and offers the opportunity for incremental revenue.

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FEDEX GROUND SEGMENT

FedEx Ground service offerings include day-certain service delivery to businesses in the U.S. and Canada and to nearly 100% of U.S. residences. FedEx SmartPost consolidates high-volume, low-weight, less time-sensitive business-to-consumer packages and utilizes the USPS for final delivery. The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) and selected package statistics (in thousands, except yield amounts) for the years ended May 31:

										Percent Change
	2013			2012			2011			2013/2012			2012/2011
Revenues:
FedEx Ground	$	9,652		$	8,791		$	7,855			10			12
FedEx SmartPost		926			782			630			18			24
Total revenues		10,578			9,573			8,485			10			13
Operating expenses:
Salaries and employee benefits		1,586			1,451			1,282			9			13
Purchased transportation		4,191			3,762			3,431			11			10
Rentals		331			284			263			17			8
Depreciation and amortization		434			389			337			12			15
Fuel		17			14			12			21			17
Maintenance and repairs		190			176			169			8			4
Intercompany charges(1)		1,148			978			897			17			9
Other		893			755			769			18			(2	)
Total operating expenses		8,790			7,809			7,160			13			9
Operating income	$	1,788		$	1,764		$	1,325			1			33
Operating margin(1)		16.9	%		18.4	%		15.6	%		(150	)bp		280	bp
Average daily package volume:
FedEx Ground		4,222			3,907			3,746			8			4
FedEx SmartPost		2,058			1,692			1,432			22			18
Revenue per package (yield):
FedEx Ground	$	8.94		$	8.77		$	8.17			2			7
FedEx SmartPost	$	1.77		$	1.81		$	1.72			(2	)		5
	Percent of Revenue
	2013			2012			2011
Operating expenses:
Salaries and employee benefits		15.0	%		15.2	%		15.1	%
Purchased transportation		39.6			39.3			40.4
Rentals		3.1			3.0			3.1
Depreciation and amortization		4.1			4.1			4.0
Fuel		0.2			0.1			0.1
Maintenance and repairs		1.8			1.8			2.0
Intercompany charges(1)		10.9			10.2			10.6
Other		8.4			7.9			9.1
Total operating expenses		83.1			81.6			84.4
Operating margin(1)		16.9	%		18.4	%		15.6	%

⁽¹⁾  Includes allocations of $105 million in 2013 for business realignment costs which reduced operating margin by 100 basis points.

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FedEx Ground Segment Revenues

FedEx Ground segment revenues increased 10% during 2013 due to volume increases at both FedEx Ground and FedEx SmartPost, as well as yield growth at FedEx Ground.

FedEx Ground average daily package volume increased 8% during 2013 due to market share gains from continued growth in our FedEx Home Delivery service and increases in our commercial business. FedEx Ground yield increased 2% in 2013 primarily due to increased rates and higher residential surcharge revenue, partially offset by lower fuel surcharges and package weights.

FedEx SmartPost average daily volume grew 22% during 2013 primarily as a result of growth in e-commerce. Yields at FedEx SmartPost decreased 2% during 2013 primarily due to higher postage costs, partially offset by increased rates. FedEx SmartPost yield represents the amount charged to customers net of postage paid to the USPS.

During 2012, FedEx Ground segment revenues increased 13% due to yield and volume growth at both FedEx Ground and FedEx SmartPost.

FedEx Ground yields increased 7% during 2012 primarily due to rate increases, higher fuel surcharges and higher extra service revenue. Average daily package volume increased 4% at FedEx Ground in 2012 due to market share gains from continued growth in our FedEx Home Delivery service and an increase in our commercial business.

At FedEx SmartPost, yields increased 5% in 2012 primarily due to higher fuel surcharges and increased rates, partially offset by an unfavorable service mix. Average daily volume increased 18% at FedEx SmartPost in 2012 as a result of growth in e-commerce.

The FedEx Ground fuel surcharge is based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel, as published by the Department of Energy. Our fuel surcharge ranged as follows for the years ended May 31:

	2013			2012			2011
Low		6.50	%		7.50	%		5.50	%
High		8.50			9.50			8.50
Weighted-average		7.60			8.46			6.20

In January 2013 and 2012, FedEx Ground and FedEx Home Delivery implemented a 4.9% average list price increase. The full average rate increase of 5.9% was partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by one percentage point. FedEx SmartPost rates also increased.

FedEx Ground Segment Operating Income

FedEx Ground segment operating income increased 1% during 2013 primarily due to volume growth and higher yields. However, operating margin decreased as the benefit of higher volume and revenue per package was more than offset by intercompany charges of $105 million associated with the business realignment program and a favorable self-insurance true-up in the prior year. Purchased transportation costs increased 11% in 2013 primarily as a result of volume growth and higher rates paid to our independent contractors. Other operating expenses increased 18% primarily due to a favorable self-insurance true-up in the prior year and higher legal expenses in the current year. Salaries and employee benefits expense increased 9% in 2013 primarily due to increased staffing to support volume growth.

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FedEx Ground segment operating income increased 33% and operating margin increased 280 basis points during 2012 primarily due to higher yields and volume growth. FedEx Ground has continued to shorten transit times throughout 2012 by accelerating various lanes throughout the U.S. and Canada, while maintaining consistently high on-time service. Purchased transportation costs increased 10% in 2012 primarily as a result of volume growth and higher fuel surcharges. Salaries and employee benefits increased 13% primarily due to increased staffing to support volume growth and higher incentive compensation accruals. Intercompany charges increased 9% in 2012 primarily due to higher allocated information technology costs. Depreciation expense increased 15% in 2012 due to higher capital spending across the network, including technology and transportation equipment upgrades and an initiative to replace lighting fixtures throughout the network in order to reduce energy costs.

Independent Contractor Model

Although FedEx Ground is involved in numerous lawsuits and other proceedings (such as state tax or other administrative challenges) where the classification of its independent contractors is at issue, a number of recent judicial decisions support our classification, and we believe our relationship with the contractors is generally excellent. For a description of these proceedings, see “Risk Factors” and Note 18 of the accompanying consolidated financial statements.

For additional information on the FedEx Ground Independent Service Provider model, see Part 1, Item 1 under the caption “Independent Contractor Model.”

FedEx Ground Segment Outlook

FedEx Ground segment revenues and operating income are expected to continue to grow in 2014, led by volume growth across all our major services due to market share gains. We also anticipate yield growth in 2014 through yield management programs. We will continue to make investments to grow our highly profitable FedEx Ground network through hub expansion and vehicle and equipment purchases. Earnings growth may be dampened slightly during periods of increased network expansion.

We will continue to vigorously defend various attacks against our independent contractor model and incur ongoing legal costs as a part of this process. While we believe that FedEx Ground’s owner-operators are properly classified as independent contractors, it is reasonably possible that we could incur a material loss in connection with one or more of these matters or be required to make material changes to our contractor model. However, we do not believe that any such changes will impair our ability to operate and profitably grow our FedEx Ground business.

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FEDEX FREIGHT SEGMENT

FedEx Freight service offerings include priority services when speed is critical and economy services when time can be traded for savings. The following tables compare revenues, operating expenses, operating expenses as a percent of revenue, operating income (loss) and operating margin (dollars in millions) and selected statistics for the years ended May 31:

										Percent Change
	2013			2012			2011			2013/2012			2012/2011
Revenues	$	5,401		$	5,282		$	4,911			2			8
Operating expenses:
Salaries and employee benefits		2,342			2,316			2,303			1			1
Purchased transportation		865			851			779			2			9
Rentals		118			114			122			4			(7	)
Depreciation and amortization		217			185			205			17			(10	)
Fuel		598			636			585			(6	)		9
Maintenance and repairs		191			192			182			(1	)		5
Business realignment, impairment and other charges (1)		3			—			89			NM			NM
Intercompany charges (2)		484			433			427			12			1
Other		375			393			394			(5	)		—
Total operating expenses		5,193			5,120			5,086			1			1
Operating income (loss)	$	208		$	162		$	(175	)		28			193
Operating margin (3)		3.9	%		3.1	%		(3.6	)%		80	bp		670	bp
Average daily LTL shipments (in thousands) (4)
Priority		59.3			60.4						(2	)
Economy		26.4			24.5						8
Total average daily LTL shipments		85.7			84.9			86.0			1			(1	)
Weight per LTL shipment (lbs) (4)
Priority		1,237			1,202						3
Economy		990			1,045						(5	)
Composite weight per LTL shipment		1,161			1,156			1,144			—			1
LTL yield (revenue per hundredweight) (4)
Priority	$	17.80		$	18.02						(1	)
Economy		25.90			23.96						8
Composite LTL yield	$	19.94		$	19.57		$	18.24			2			7

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	Percent of Revenue
	2013			2012			2011
Operating expenses:
Salaries and employee benefits		43.4	%		43.9	%		46.9	%
Purchased transportation		16.0			16.1			15.9
Rentals		2.2			2.2			2.5
Depreciation and amortization		4.0			3.5			4.2
Fuel		11.1			12.0			11.9
Maintenance and repairs		3.5			3.6			3.7
Business realignment, impairment and other charges (1)		—			—			1.8
Intercompany charges (2)		9.0			8.2			8.7
Other		6.9			7.4			8.0
Total operating expenses		96.1			96.9			103.6
Operating margin (3)		3.9	%		3.1	%		(3.6	)%

⁽¹⁾  2013 includes severance costs associated with our voluntary buyout program. 2011 includes severance, impairment and other charges associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.

⁽²⁾  Includes allocations of $47 million in 2013 for business realignment costs.

⁽³⁾  The direct and indirect charges disclosed in notes (1) and (2) above reduced 2013 operating margin by 90 basis points.

⁽⁴⁾  FedEx Freight introduced Priority and Economy services during the fourth quarter of 2011; therefore, full-year detail has not been presented for 2011.

FedEx Freight Segment Revenues

FedEx Freight segment revenues increased 2% in 2013 due to higher LTL yield and average daily LTL shipments. LTL yield increased 2% in 2013 due to improvements in FedEx Freight Economy yield resulting from higher rates and lower weight per LTL shipment. Average daily LTL shipments increased 1% in 2013 driven by our FedEx Freight Economy services offering, partially offset by transitional challenges encountered by some customers in the second half of 2013 while migrating FedEx Freight functionality to the FedEx enterprise automated platform.

Revenue per hundredweight is a commonly-used indicator of pricing trends, but this metric can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment, length of haul and the mix of freight. Generally, LTL freight is rated using a standard class system for the LTL industry and classes are assigned based on transportation characteristics including density, risk and handling. Under the class system, low-value freight that is easy to handle, unlikely to damage and dense will receive lower class ratings (and lower yields) than expensive, light, bulky freight which is highly susceptible to damage (and produces higher yields). As a result, changes in revenue per hundredweight do not necessarily indicate actual changes in underlying base rates.

During 2012, FedEx Freight revenues increased 8% due to increased LTL yield and weight per LTL shipment, partially offset by lower average daily LTL shipments. LTL yield increased 7% during 2012 due to higher fuel surcharges and base yield improvement. Average daily LTL shipments decreased 1% in 2012; however, during the second half of 2012, LTL shipment year-over-year comparisons improved sequentially (2% in the third quarter and 4% in the fourth quarter) due to enhanced service levels, strong customer satisfaction from our service offerings and the impact of severe weather in the prior year.

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The indexed LTL fuel surcharge is based on the average of the national U.S. on-highway average price for a gallon of diesel fuel, as published by the Department of Energy. The indexed LTL fuel surcharge ranged as follows for the years ended May 31:

	2013			2012			2011
Low		21.80	%		19.80	%		15.10	%
High		24.40			24.30			20.70
Weighted-average		23.38			22.90			17.00

On June 10, 2013, FedEx Freight announced it will increase U.S. and certain other shipping rates by an average of 4.5% effective on July 1, 2013. In July 2012, FedEx Freight implemented a rate increase of 6.9% for LTL shipments. In June 2011, FedEx Freight increased the fuel surcharge rate to a maximum of 3.6 percentage points above previous levels.

FedEx Freight Segment Operating Income

The FedEx Freight segment operating results for 2013 improved as a result of LTL yield growth and increased average daily LTL shipments, along with ongoing improvement in operational efficiencies in our integrated network. However, operating results for 2013 were negatively impacted by $50 million of costs associated with our business realignment program both directly and through intercompany allocations.

Depreciation and amortization expense increased 17% due to continued investment in replacement transportation equipment. Salaries and employee benefits increased 1% in 2013 primarily due to increases in volume and higher healthcare, workers’ compensation and pension costs, partially offset by operational efficiencies and lower incentive compensation. Purchased transportation costs increased 2% in 2013 due to increased utilization of rail and higher rates, partially offset by a lower cost per mile due to our ability to optimize mode of transportation.

Fuel costs decreased 6% in 2013 due to increased utilization of rail and fuel efficiency improvements. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a minimal impact on operating income in 2013.

In 2012, the FedEx Freight segment operating income increased significantly as a result of higher fuel surcharges, yield growth and ongoing improvements in operational efficiencies due to the combination of our FedEx Freight and FedEx National LTL operations in 2011. Additionally, the FedEx Freight segment’s 2012 results benefited from milder winter weather, while our 2011 results were negatively impacted by unusually severe winter weather.

Purchased transportation costs increased 9% in 2012 due to higher rates and the increased utilization of rail, partially offset by a lower cost per mile due to our ability to optimize mode of transportation while meeting service standards. Fuel costs increased 9% in 2012 due to a higher average price per gallon of diesel fuel, partially offset by the increased utilization of rail. Based on a static analysis of the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a positive impact to operating income in 2012. Depreciation and amortization expense decreased 10% in 2012 primarily due to accelerated depreciation in 2011 associated with the combination of our LTL operations.

FedEx Freight Segment Outlook

We expect modest revenue growth at the FedEx Freight segment in 2014 driven by yield and volume initiatives from our differentiated LTL services.

FedEx Freight operating income and operating margin are expected to increase in 2014 driven by improvements in yields and volume, as well as continued improvement in productivity and efficiency across our integrated network. We will continue to use investments in technology, focused on network and equipment planning and customer automation, to further enhance customer service levels throughout 2014.

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Capital expenditures in 2014 are expected to be comparable to 2013, with the majority of our spending for replacement of vehicles and freight handling equipment.

FINANCIAL CONDITION

LIQUIDITY

Cash and cash equivalents totaled $4.9 billion at May 31, 2013, compared to $2.8 billion at May 31, 2012. The following table provides a summary of our cash flows for the periods ended May 31 (in millions):

	2013			2012			2011
Operating activities:
Net income	$	1,561		$	2,032		$	1,452
Business realignment, impairment and other charges		479			134			29
Other noncash charges and credits		3,183			3,504			2,892
Changes in assets and liabilities		(535	)		(835	)		(332	)
Cash provided by operating activities		4,688			4,835			4,041
Investing activities:
Capital expenditures		(3,375	)		(4,007	)		(3,434	)
Business acquisitions, net of cash acquired		(483	)		(116	)		(96	)
Proceeds from asset dispositions and other		55			74			111
Cash used in investing activities		(3,803	)		(4,049	)		(3,419	)
Financing activities:
Purchase of treasury stock		(246	)		(197	)		—
Principal payments on debt		(417	)		(29	)		(262	)
Proceeds from debt issuance		1,739			—			—
Dividends paid		(177	)		(164	)		(151	)
Other		285			146			126
Cash provided by (used in) financing activities		1,184			(244	)		(287	)
Effect of exchange rate changes on cash		5			(27	)		41
Net increase in cash and cash equivalents	$	2,074		$	515		$	376

Cash Provided by Operating Activities. Cash flows from operating activities decreased $147 million in 2013 primarily due to decreased earnings and higher tax, variable compensation and voluntary buyout payments, partially offset by a decrease in pension contributions. Cash flows from operating activities increased $794 million in 2012 primarily due to increased earnings, partially offset by higher pension contributions. We made contributions of $560 million to our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”) during 2013 and contributions of $722 million to our U.S. Pension Plans during 2012. We made contributions of $480 million to our U.S. Pension Plans during 2011.

Cash Used in Investing Activities. Capital expenditures were 16% lower in 2013 largely due to decreased spending at FedEx Express and 17% higher in 2012 primarily due to increased spending at FedEx Express and FedEx Freight. See “Capital Resources” for a discussion of capital expenditures during 2013 and 2012.

Financing Activities. In April 2013, we issued $750 million of senior unsecured debt under our current shelf registration statement, comprised of $250 million of 2.70% fixed-rate notes due in April 2023 and $500 million of 4.10% fixed rate notes due in April 2043. Interest on these notes is payable semi-annually. We utilized the net proceeds for working capital and general corporate purposes. In July 2012, we issued $1 billion of senior unsecured debt under a then current shelf registration statement, comprised of $500 million of 2.625% fixed-rate notes due in August 2022 and $500 million of 3.875% fixed-rate notes due in August 2042. Interest on these notes is payable semi-annually. We utilized the net proceeds for working capital and general corporate purposes.

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During 2013, we made principal payments of $116 million related to capital lease obligations and repaid our $300 million 9.65% unsecured notes that matured in June 2012 using cash from operations.

During 2013, we repurchased 2.7 million shares of FedEx common stock at an average price of $91 per share for a total of $246 million. In March 2013, our Board of Directors authorized the repurchase of up to 10 million shares of common stock. It is expected that the additional share authorization will primarily be utilized to offset the effects of equity compensation dilution over the next several years. As of May 31, 2013, 10,188,000 shares remained under existing share repurchase authorizations. During 2012, we repurchased 2.8  million FedEx common shares at an average price of $70 per share for a total of $197 million.

CAPITAL RESOURCES

Our operations are capital intensive, characterized by significant investments in aircraft, vehicles, technology, facilities, and package-handling and sort equipment. The amount and timing of capital additions depend on various factors, including pre-existing contractual commitments, anticipated volume growth, domestic and international economic conditions, new or enhanced services, geographical expansion of services and actions of regulatory authorities.

The following table compares capital expenditures by asset category and reportable segment for the years ended May 31 (in millions):

							Percent Change
	2013		2012		2011		2013/2012			2012/2011
Aircraft and related equipment	$	1,190	$	1,875	$	1,988		(37	)		(6	)
Facilities and sort equipment		727		638		555		14			15
Vehicles		734		723		282		2			156
Information and technology investments		452		541		455		(16	)		19
Other equipment		272		230		154		18			49
Total capital expenditures	$	3,375	$	4,007	$	3,434		(16	)		17
FedEx Express segment	$	2,067	$	2,689	$	2,467		(23	)		9
FedEx Ground segment		555		536		426		4			26
FedEx Freight segment		326		340		153		(4	)		122
FedEx Services segment		424		437		387		(3	)		13
Other		3		5		1		NM			NM
Total capital expenditures	$	3,375	$	4,007	$	3,434		(16	)		17

Capital expenditures during 2013 were lower than the prior year primarily due to decreased spending for aircraft and related equipment at FedEx Express. Aircraft and aircraft-related equipment purchases at FedEx Express during 2013 included the delivery of 16 Boeing 757s (“B757”) to be modified for cargo transport and four B777Fs. Capital expenditures during 2012 were higher than the prior year primarily due to increased spending for vehicles at FedEx Express, FedEx Freight and FedEx Ground, although spending for aircraft and related equipment at FedEx Express decreased. Aircraft and aircraft-related equipment purchases at FedEx Express during 2012 included delivery of seven B777Fs and 15 B757s.

LIQUIDITY OUTLOOK

We believe that our cash and cash equivalents, which totaled $4.9 billion in 2013, cash flow from operations and available financing sources will be adequate to meet our liquidity needs, including working capital, capital expenditure requirements and debt payment obligations. Our cash and cash equivalents balance at May 31, 2013 includes $420 million of cash in offshore jurisdictions associated with our permanent reinvestment strategy. We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic debt or working capital obligations.

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We have a shelf registration statement filed with the Securities and Exchange Commission (“SEC”) that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. In March 2013, we entered into an amendment to our credit agreement to, among other things, extend its maturity date from April 26, 2016 to March 1, 2018. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters’ rentals and landing fees) to capital (adjusted debt plus total common stockholders’ investment) that does not exceed 70%. Our leverage ratio of adjusted debt to capital was 51% at May 31, 2013. We believe the leverage ratio covenant is our only significant restrictive covenant in our revolving credit agreement. Our revolving credit agreement contains other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the leverage ratio covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. As of May 31, 2013, no commercial paper was outstanding, and the entire $1 billion under the revolving credit facility was available for future borrowings.

Standard & Poor’s has assigned us a senior unsecured debt credit rating of BBB and a commercial paper rating of A-2 and a ratings outlook of “stable.” Moody’s Investors Service has assigned us a senior unsecured debt credit rating of Baa1 and a commercial paper rating of P-2 and a ratings outlook of “stable.” If our credit ratings drop, our interest expense may increase. If our commercial paper ratings drop below current levels, we may have difficulty utilizing the commercial paper market. If our senior unsecured debt credit ratings drop below investment grade, our access to financing may become limited.

Our capital expenditures are expected to be $4.0 billion in 2014. We anticipate that our cash flow from operations will be sufficient to fund our increased capital expenditures in 2014, which will include spending for aircraft and aircraft-related equipment at FedEx Express, sort facility expansion, primarily at FedEx Ground, and vehicle replacement at all our transportation segments. We expect approximately 50% of capital expenditures in 2014 will be designated for growth initiatives, predominantly at FedEx Ground and 50% dedicated to maintaining our existing operations. Our expected capital expenditures for 2014 include $1.4 billion in investments for delivery of aircraft, as well as progress payments toward future aircraft deliveries at FedEx Express. For 2014, we anticipate making required contributions totaling approximately $650 million to our U.S. Pension Plans. Our U.S. Pension Plans have ample funds to meet expected benefit payments.

We have several aircraft modernization programs underway which are supported by the purchase of B777F, Boeing 767-300 Freighter (“B767F”) and B757 aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements. During 2013, FedEx Express entered into an agreement to purchase 14 additional B757 aircraft, the delivery of which began in 2013 and will continue through 2014. The agreement provides the option to purchase up to 16 additional B757 aircraft, subject to the satisfaction of certain conditions. In addition, FedEx Express entered into agreements to purchase an additional 23 B767F aircraft, the delivery of which will occur between 2014 and 2019. The delivery of two firm B777F aircraft orders were also deferred from 2015 to 2016.

Effective as of June 14, 2013, FedEx Express entered into a supplemental agreement to purchase 13 of the 16 B757 option aircraft noted above. Delivery of the aircraft will occur during 2014 and 2015.

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CONTRACTUAL CASH OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

The following table sets forth a summary of our contractual cash obligations as of May 31, 2013. Certain of these contractual obligations are reflected in our balance sheet, while others are disclosed as future obligations under accounting principles generally accepted in the United States. Except for the current portion of long-term debt, this table does not include amounts already recorded in our balance sheet as current liabilities at May 31, 2013. We have certain contingent liabilities that are not accrued in our balance sheet in accordance with accounting principles generally accepted in the United States. These contingent liabilities are not included in the table below. We have other long-term liabilities reflected in our balance sheet, including deferred income taxes, qualified and nonqualified pension and postretirement healthcare plan liabilities and other self-insurance accruals. The payment obligations associated with these liabilities are not reflected in the table below due to the absence of scheduled maturities. Accordingly, this table is not meant to represent a forecast of our total cash expenditures for any of the periods presented.

	Payments Due by Fiscal Year (Undiscounted) (in millions)
	2014		2015		2016		2017		2018		Thereafter		Total
Operating activities:
Operating leases	$	1,936	$	1,834	$	1,636	$	1,689	$	1,230	$	6,650	$	14,975
Non-capital purchase obligations and other		285		183		123		101		44		109		845
Interest on long-term debt		157		138		138		138		138		2,582		3,291
Contributions to our U.S. Pension Plans		650		—		—		—		—		—		650
Investing activities:
Aircraft and aircraft-related capital commitments		968		1,054		1,140		959		1,382		4,492		9,995
Other capital purchase obligations		249		1		—		—		—		—		250
Financing activities:
Debt		250		—		—		—		—		2,740		2,990
Total	$	4,495	$	3,210	$	3,037	$	2,887	$	2,794	$	16,573	$	32,996

Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above. Such purchase orders often represent authorizations to purchase rather than binding agreements. See Note 17 of the accompanying consolidated financial statements for more information.

Operating Activities

In accordance with accounting principles generally accepted in the United States, future contractual payments under our operating leases (totaling $15 billion on an undiscounted basis) are not recorded in our balance sheet. Credit rating agencies routinely use information concerning minimum lease payments required for our operating leases to calculate our debt capacity. The amounts reflected in the table above for operating leases represent future minimum lease payments under noncancelable operating leases (principally aircraft and facilities) with an initial or remaining term in excess of one year at May 31, 2013. Under the proposed new lease accounting rules, the majority of these leases will be required to be recognized on the balance sheet as a liability with an offsetting right-to-use asset. In the past, we financed a significant portion of our aircraft needs (and certain other equipment needs) using operating leases (a type of “off-balance sheet financing”). At the time that the decision to lease was made, we determined that these operating leases would provide economic benefits favorable to ownership with respect to market values, liquidity or after-tax cash flows.

The amounts reflected for purchase obligations represent noncancelable agreements to purchase goods or services that are not capital-related. Such contracts include those for printing and advertising and promotions contracts.

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Included in the table above within the caption entitled “Non-capital purchase obligations and other” is our estimate of the current portion of the liability ($1 million) for uncertain tax positions. We cannot reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease over time; therefore, the long-term portion of the liability ($46 million) is excluded from the table. See Note 12 of the accompanying consolidated financial statements for further information.

The amounts reflected in the table above for interest on long-term debt represent future interest payments due on our long-term debt, all of which are fixed rate.

Investing Activities

The amounts reflected in the table above for capital purchase obligations represent noncancelable agreements to purchase capital-related equipment. Such contracts include those for certain purchases of aircraft, aircraft modifications, vehicles, facilities, computers and other equipment. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft.

Financing Activities

We have certain financial instruments representing potential commitments, not reflected in the table above, that were incurred in the normal course of business to support our operations, including standby letters of credit and surety bonds. These instruments are required under certain U.S. self-insurance programs and are also used in the normal course of international operations. The underlying liabilities insured by these instruments are reflected in our balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves.

The amounts reflected in the table above for long-term debt represent future scheduled payments on our long-term debt. In 2014, we have scheduled debt payments of $250 million.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a complex, global corporation. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and new or better information.

The estimates discussed below include the financial statement elements that are either the most judgmental or involve the selection or application of alternative accounting policies and are material to our financial statements. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm.

RETIREMENT PLANS

OVERVIEW. We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans.

Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account. Under the Portable Pension Account, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The Portable Pension Account benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index and corporate bond rates. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service). Benefits under this formula were capped on May 31, 2008 for most employees.

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The current rules for pension accounting are complex and can produce tremendous volatility in our results, financial condition and liquidity. Our pension expense is primarily a function of the value of our plan assets and the discount rate used to measure our pension liabilities at a single point in time at the end of our fiscal year (the measurement date). Both of these factors are significantly influenced by the stock and bond markets, which in recent years have experienced substantial volatility.

In addition to expense volatility, we are required to record year-end adjustments to our balance sheet on an annual basis for the net funded status of our pension and postretirement healthcare plans. These adjustments have fluctuated significantly over the past several years and like our pension expense, are a result of the discount rate and value of our plan assets at the measurement date. The funded status of our plans also impacts our liquidity, as current funding laws require increasingly aggressive funding levels for our pension plans. However, the cash funding rules operate under a completely different set of assumptions and standards than those used for financial reporting purposes, so our actual cash funding requirements can differ materially from our reported funded status. Temporary funding relief was passed in July 2012 that will improve our funded status for those purposes over the next several years.

Our retirement plans cost is included in the “Salaries and Employee Benefits” caption in our consolidated income statements. A summary of our retirement plans costs over the past three years is as follows (in millions):

	2013		2012		2011
U.S. domestic and international pension plans	$	679	$	524	$	543
U.S. domestic and international defined contribution plans		354		338		257
U.S. domestic and international postretirement healthcare plans		78		70		60
	$	1,111	$	932	$	860

Total retirement plans cost increased $179 million in 2013 driven by lower discount rates used to measure our benefit obligations at our May 31, 2012 measurement date. Total retirement plans cost increased $72 million in 2012 primarily due to higher expenses for our 401(k) plans due to the full restoration of company matching contributions on January 1, 2011.

Amounts recognized in our balance sheet reflect a snapshot of the state of our long-term pension liabilities at the plan measurement date and the effect of year-end accounting on plan assets. Cumulative unrecognized actuarial losses were $7.0 billion through May 31, 2013, compared to $8.9 billion through May 31, 2012. These unrecognized losses reflect changes in the discount rates and differences between expected and actual asset returns, which are being amortized over future periods. These unrecognized losses may be recovered in future periods through actuarial gains. However, unless they are below a corridor amount, these unrecognized actuarial losses are required to be amortized and recognized in future periods. Our pension expense includes amortization of these actuarial losses of $506 million in 2013, $302 million in 2012 and $276 million in 2011.

PENSION COST. The accounting for pension and postretirement healthcare plans includes numerous assumptions, including the discount rate and expected long-term investment returns on plan assets. These assumptions most significantly impact our U.S. Pension Plans.

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Following is a discussion of the key estimates we consider in determining our pension cost:

DISCOUNT RATE. This is the interest rate used to discount the estimated future benefit payments that have been accrued to date (the projected benefit obligation, or “PBO”) to their net present value and to determine the succeeding year’s pension expense. The discount rate is determined each year at the plan measurement date. A decrease in the discount rate increases pension expense. The discount rate affects the PBO and pension expense based on the measurement dates, as described below.

Measurement Date	Discount Rate	Amounts Determined by Measurement Date and Discount Rate
5/31/2013	4.79%	2013 PBO and 2014 expense
5/31/2012	4.44	2012 PBO and 2013 expense
5/31/2011	5.76	2011 PBO and 2012 expense
5/31/2010	6.37	2010 PBO and 2011 expense

We determine the discount rate with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better). In developing this theoretical portfolio, we select bonds that match cash flows to benefit payments, limit our concentration by industry and issuer, and apply screening criteria to ensure bonds with a call feature have a low probability of being called. To the extent scheduled bond proceeds exceed the estimated benefit payments in a given period, the calculation assumes those excess proceeds are reinvested at one-year forward rates.

The discount rate assumption is highly sensitive, as the following table illustrates for our largest pension plan:

	Sensitivity (in millions)
	Effect on 2014 Pension Expense		Effect on 2013 Pension Expense
One-basis-point change in discount rate	$	2.1	$	2.3

At our May 31, 2013 measurement date, a 50-basis-point increase in the discount rate would have decreased our 2013 PBO by approximately $1.4 billion and a 50-basis-point decrease in the discount rate would have increased our 2013 PBO by approximately $1.5 billion. From 2010 to 2013, the discount rate used to value our liabilities has declined by over 150 basis points, which increased the valuation of our liabilities by over $3.8 billion.

PLAN ASSETS. The estimated average rate of return on plan assets is a long-term, forward-looking assumption that also materially affects our pension cost. It is required to be the expected future long-term rate of earnings on plan assets. Our pension plan assets are invested primarily in publicly tradeable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. As part of our strategy to manage pension costs and funded status volatility, we have transitioned to a liability-driven investment strategy to better align plan assets with liabilities.

Establishing the expected future rate of investment return on our pension assets is a judgmental matter, which we review on an annual basis and revise as appropriate. Management considers the following factors in determining this assumption:

• the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

• the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and

• the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

We have assumed an 8.0% expected long-term rate of return on our U.S. Pension Plan assets for 2013, 2012 and 2011. The actual returns during each of the last three fiscal years have exceeded that long-term assumption. The actual historical return on our U.S. Pension Plan assets, calculated on a compound geometric basis, was 6.9%, net of investment manager fees, for the 15-year period ended May 31, 2013 and 7.4%, net of investment manager fees, for the 15-year period ended May 31, 2012. For 2014, we plan to lower our expected return on plan assets assumption for long-term returns on plan assets to 7.75% as we continue to refine our asset

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and liability management strategy. In lowering this assumption we considered our historical returns, our investment strategy for our plan assets, including the impacts of the long duration of our plan liability and the relatively low annual draw on plan assets on that investment strategy. A one-basis-point change in our expected return on plan assets impacts our pension expense by $1.9 million.

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We use a calculated-value method to determine the value of plan assets, which helps mitigate short-term volatility in market performance (both increases and decreases) by amortizing certain actuarial gains or losses over a period no longer than four years. Another method used in practice applies the market value of plan assets at the measurement date. For purposes of valuing plan assets for determining 2014 pension expense, the calculated value method resulted in the same value as the market value.

FUNDED STATUS. Following is information concerning the funded status of our pension plans as of May 31 (in millions):

	2013			2012
Funded Status of Plans:
Projected benefit obligation (PBO)	$	22,600		$	22,187
Fair value of plan assets		19,433			17,334
Funded status of the plans	$	(3,167	)	$	(4,853	)
Cash Amounts:
Cash contributions during the year	$	615		$	780
Benefit payments during the year	$	589		$	502

Our retirement plans costs are expected to decrease approximately $190 million in 2014 due to significant increases in the value of our plan assets in 2013 and an increase in our discount rates at our May 31, 2013 measurement date.

FUNDING. The funding requirements for our U.S. Pension Plans are governed by the Pension Protection Act of 2006, which has aggressive funding requirements in order to avoid benefit payment restrictions that become effective if the funded status determined under IRS rules falls below 80% at the beginning of a plan year. All of our U.S. Pension Plans have funded status levels in excess of 80% and our plans remain adequately funded to provide benefits to our employees as they come due. Additionally, current benefit payments are nominal compared to our total plan assets (benefit payments for our U.S. Pension Plans for 2013 were approximately $572 million or 3% of plan assets).

During 2013, we made $560 million in required contributions to our U.S. Pension Plans. Over the past several years, we have made voluntary contributions to our U.S. Pension Plans in excess of the minimum required contributions. Amounts contributed in excess of the minimum required can result in a credit balance for funding purposes that can be used to reduce minimum contribution requirements in future years. Our current credit balance exceeds $2 billion at May 31, 2013. For 2014, we anticipate making required contributions to our U.S. Pension Plans totaling approximately $650 million.

See Note 13 of the accompanying consolidated financial statements for further information about our retirement plans.

SELF-INSURANCE ACCRUALS

We are self-insured up to certain limits for costs associated with workers’ compensation claims, vehicle accidents and general business liabilities, and benefits paid under employee healthcare and long-term disability programs. Our reserves are established for estimates of loss on reported claims, including incurred-but-not-reported claims.

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Self-insurance accruals reflected in our balance sheet were $1.7 billion at May 31, 2013, and $1.6 billion at May 31, 2012. Approximately 41% of these accruals were classified as current liabilities.

Our self-insurance accruals are primarily based on the actuarially estimated, undiscounted cost of claims incurred as of the balance sheet date. These estimates include consideration of factors such as severity of claims, frequency of claims and future healthcare costs. Cost trends on material accruals are updated each quarter. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense. Historically, it has been infrequent that incurred claims exceeded our self-insured limits.

We believe the use of actuarial methods to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals. However, the use of any estimation technique in this area is inherently sensitive given the magnitude of claims involved and the length of time until the ultimate cost is known. We believe our recorded obligations for these expenses are consistently measured on a conservative basis. Nevertheless, changes in healthcare costs, accident frequency and severity, insurance retention levels and other factors can materially affect the estimates for these liabilities.

LONG-LIVED ASSETS

PROPERTY AND EQUIPMENT. Our key businesses are capital intensive, with approximately 55% of our total assets invested in our transportation and information systems infrastructures. We capitalize only those costs that meet the definition of capital assets under accounting standards. Accordingly, repair and maintenance costs that do not extend the useful life of an asset or are not part of the cost of acquiring the asset are expensed as incurred.

The depreciation or amortization of our capital assets over their estimated useful lives, and the determination of any salvage values, requires management to make judgments about future events. Because we utilize many of our capital assets over relatively long periods (the majority of aircraft costs are depreciated over 15 to 30 years), we periodically evaluate whether adjustments to our estimated service lives or salvage values are necessary to ensure these estimates properly match the economic use of the asset. This evaluation may result in changes in the estimated lives and residual values used to depreciate our aircraft and other equipment. For our aircraft, we typically assign no residual value due to the utilization of these assets in cargo configuration, which results in little to no value at the end of their useful life. These estimates affect the amount of depreciation expense recognized in a period and, ultimately, the gain or loss on the disposal of the asset. Changes in the estimated lives of assets will result in an increase or decrease in the amount of depreciation recognized in future periods and could have a material impact on our results of operations. Historically, gains and losses on disposals of operating equipment have not been material. However, such amounts may differ materially in the future due to changes in business levels, technological obsolescence, accident frequency, regulatory changes and other factors beyond our control.

In May 2013, FedEx Express made the decision to accelerate the retirement of 76 aircraft and related engines to aid in our fleet modernization and improve our global network. In May 2012, we shortened the depreciable lives for 54 aircraft and related engines to accelerate the retirement of these aircraft, resulting in a depreciation expense increase of $69 million in 2013. As a result of these accelerated retirements, we expect an additional $74 million in year-over-year accelerated depreciation expense in 2014.

Because of the lengthy lead times for aircraft manufacture and modifications, we must anticipate volume levels and plan our fleet requirements years in advance, and make commitments for aircraft based on those projections. Furthermore, the timing and availability of certain used aircraft types (particularly those with better fuel efficiency) may create limited opportunities to acquire these aircraft at favorable prices in advance of our capacity needs. These activities create risks that asset capacity may exceed demand and that an impairment of our assets may occur. Aircraft purchases (primarily aircraft in passenger configuration) that have not been placed in service totaled $129 million at May 31, 2013 and $127 million at May 31, 2012. We plan to modify these assets in the future and place them into operations.

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The accounting test for whether an asset held for use is impaired involves first comparing the carrying value of the asset with its estimated future undiscounted cash flows. If the cash flows do not exceed the carrying value, the asset must be adjusted to its current fair value. We operate integrated transportation networks and, accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level for our analysis of impairment. Further, decisions about capital investments are evaluated based on the impact to the overall network rather than the return on an individual asset. We make decisions to remove certain long-lived assets from service based on projections of reduced capacity needs or lower operating costs of newer aircraft types, and those decisions may result in an impairment charge. Assets held for disposal must be adjusted to their estimated fair values less costs to sell when the decision is made to dispose of the asset and certain other criteria are met. The fair value determinations for such aircraft may require management estimates, as there may not be active markets for some of these aircraft. Such estimates are subject to revision from period to period.

In the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels. Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment on a quarterly basis. Factors which could cause impairment include, but are not limited to, adverse changes in our global economic outlook and the impact of our outlook on our current and projected volume levels, including lower capacity needs during our peak shipping seasons; the introduction of new fleet types or decisions to permanently retire an aircraft fleet from operations; or changes to planned service expansion activities. We currently have one aircraft temporarily idled. This aircraft has been idled for 15 months and is expected to return to revenue service.

In May 2013, we made the decision to retire from service two Airbus A310-200 aircraft and four related engines, three Airbus A310-300 aircraft and two related engines and five Boeing MD10-10 aircraft and 15 related engines, to align with the plans of FedEx Express to modernize its aircraft fleet and improve its global network. As a consequence of this decision, a noncash impairment charge of $100 million ($63 million, net of tax, or $0.20 per diluted share) was recorded in the fourth quarter. All of these aircraft were temporarily idled and not in revenue service.

In 2012, we incurred a noncash impairment charge of $134 million ($84 million, net of tax, or $0.26 per diluted share). This charge related to our May 2012 decision to permanently retire 24 aircraft and 43 related engines to better align the U.S. domestic air network capacity of FedEx Express to match current and anticipated shipment volumes. The majority of these aircraft were temporarily idled and not in revenue service.

LEASES. We utilize operating leases to finance certain of our aircraft, facilities and equipment. Such arrangements typically shift the risk of loss on the residual value of the assets at the end of the lease period to the lessor. As disclosed in “Contractual Cash Obligations” and Note 7 of the accompanying consolidated financial statements, at May 31, 2013 we had approximately $15 billion (on an undiscounted basis) of future commitments for payments under operating leases. The weighted-average remaining lease term of all operating leases outstanding at May 31, 2013 was approximately six years. The future commitments for operating leases are not reflected as a liability in our balance sheet under current U.S. accounting rules.

The determination of whether a lease is accounted for as a capital lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life. In addition, our evaluation includes ensuring we properly account for build-to-suit lease arrangements and making judgments about whether various forms of lessee involvement during the construction period make the lessee an agent for the owner-lessor or, in substance, the owner of the asset during the construction period. We believe we have well-defined and controlled processes for making these evaluations, including obtaining third-party appraisals for material transactions to assist us in making these evaluations.

Under a proposed revision to the accounting standards for leases, we would be required to record an asset and a liability for our outstanding operating leases similar to the current accounting for capital leases. Notably, the amount we record in the future would be the net present value of our future lease commitments at the date of adoption. This proposed guidance has not been issued and has been subjected to numerous revisions since the proposal was issued, most recently in May 2013. While we are not required to quantify the effects of the proposed rule changes until these rules are finalized, we believe that a majority of the operating lease

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obligations reflected in the contractual cash obligations table would be required to be reflected in our balance sheet were the proposed rules to be adopted. Furthermore, our existing financing agreements and the rating agencies that evaluate our creditworthiness already take our operating leases into account.

GOODWILL. As of May 31, 2013, we had $2.8 billion of recorded goodwill from our acquisitions, representing the excess of the purchase price over the fair value of the net assets we have acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity.

In our evaluation of goodwill impairment, we perform a qualitative assessment which requires management judgment and the use of estimates to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to a two-step process to test goodwill for impairment, including comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value is estimated using standard valuation methodologies (principally the income or market approach) incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Estimates used by management can significantly affect the outcome of the impairment test. Changes in forecasted operating results and other assumptions could materially affect these estimates. We perform our annual impairment tests in the fourth quarter unless circumstances indicate the need to accelerate the timing of the tests.

Our reporting units with significant recorded goodwill include our FedEx Express, FedEx Freight and FedEx Office (reported in the FedEx Services segment) reporting units. We evaluated these reporting units during the fourth quarters of 2013 and 2012. The estimated fair value of each of these reporting units exceeded their carrying values in 2013 and 2012, and we do not believe that any of these reporting units were at risk as of May 31, 2013.

CONTINGENCIES

We are subject to various loss contingencies, including tax proceedings and litigation, in connection with our operations. Contingent liabilities are difficult to measure, as their measurement is subject to multiple factors that are not easily predicted or projected. Further, additional complexity in measuring these liabilities arises due to the various jurisdictions in which these matters occur, which makes our ability to predict their outcome highly uncertain. Moreover, different accounting rules must be employed to account for these items based on the nature of the contingency. Accordingly, significant management judgment is required to assess these matters and to make determinations about the measurement of a liability, if any. Our material pending loss contingencies are described in Note 18 of the accompanying consolidated financial statements. In the opinion of management, the aggregate liability, if any, of individual matters or groups of matters not specifically described in Note 18 is not expected to be material to our financial position, results of operations or cash flows. The following describes our methods and associated processes for evaluating these matters.

TAX CONTINGENCIES. We are subject to income and operating tax rules of the U.S., its states and municipalities, and of the foreign jurisdictions in which we operate. Significant judgment is required in determining income tax provisions, as well as deferred tax asset and liability balances and related deferred tax valuation allowances, if necessary, due to the complexity of these rules and their interaction with one another. We account for income taxes by recording both current taxes payable and deferred tax assets and liabilities. Our provision for income taxes is based on domestic and international statutory income tax rates in the jurisdictions in which we operate, applied to taxable income, reduced by applicable tax credits.

Tax contingencies arise from uncertainty in the application of tax rules throughout the many jurisdictions in which we operate and are impacted by several factors, including tax audits, appeals, litigation, changes in tax laws and other rules and their interpretations, and changes in our business. We regularly assess the potential impact of these factors for the current and prior years to determine the adequacy of our tax provisions. We continually evaluate the likelihood and amount of potential adjustments and adjust our tax positions, including the current and deferred tax liabilities, in the period in which the facts that give rise to a revision become known. In addition, management considers the advice of third parties in making conclusions regarding tax consequences.

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We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

We account for operating taxes based on multi-state, local and foreign taxing jurisdiction rules in those areas in which we operate. Provisions for operating taxes are estimated based upon these rules, asset acquisitions and disposals, historical spend and other variables. These provisions are consistently evaluated for reasonableness against compliance and risk factors.

We measure and record operating tax contingency accruals in accordance with accounting guidance for contingencies. As discussed below, this guidance requires an accrual of estimated loss from a contingency, such as a tax or other legal proceeding or claim, when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated.

OTHER CONTINGENCIES. Because of the complex environment in which we operate, we are subject to other legal proceedings and claims, including those relating to general commercial matters, employment-related claims and FedEx Ground’s owner-operators. Accounting guidance for contingencies requires an accrual of estimated loss from a contingency, such as a tax or other legal proceeding or claim, when it is probable (i.e., the future event or events are likely to occur) that a loss has been incurred and the amount of the loss can be reasonably estimated. This guidance also requires disclosure of a loss contingency matter when, in management’s judgment, a material loss is reasonably possible or probable.

During the preparation of our financial statements, we evaluate our contingencies to determine whether it is probable, reasonably possible or remote that a liability has been incurred. A loss is recognized for all contingencies deemed probable and estimable, regardless of amount. For unresolved contingencies with potentially material exposure that are deemed reasonably possible, we evaluate whether a potential loss or range of loss can be reasonably estimated.

Our evaluation of these matters is the result of a comprehensive process designed to ensure that accounting recognition of a loss or disclosure of these contingencies is made in a timely manner and involves our legal and accounting personnel, as well as external counsel where applicable. The process includes regular communications during each quarter and scheduled meetings shortly before the completion of our financial statements to evaluate any new legal proceedings and the status of any existing matters.

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In determining whether a loss should be accrued or a loss contingency disclosed, we evaluate, among other factors:

• the current status of each matter within the scope and context of the entire lawsuit (i.e., the lengthy and complex nature of class-action matters);

• the procedural status of each lawsuit;

• any opportunities to dispose of the lawsuit on its merits before trial (i.e., motion to dismiss or for summary judgment);

• the amount of time remaining before the trial date;

• the status of discovery;

• the status of settlement, arbitration or mediation proceedings, and;

• our judgment regarding the likelihood of success prior to or at trial.

In reaching our conclusions with respect to accrual of a loss or loss contingency disclosure, we take a holistic view of each matter based on these factors and the information available prior to the issuance of our financial statements. Uncertainty with respect to an individual factor or combination of these factors may impact our decisions related to accrual or disclosure of a loss contingency, including a conclusion that we are unable to establish an estimate of possible loss or a meaningful range of possible loss. We update our disclosures to reflect our most current understanding of the contingencies at the time we issue our financial statements. However, events may arise that were not anticipated and the outcome of a contingency may result in a loss to us that differs materially from our previously estimated liability or range of possible loss.

Despite the inherent complexity in the accounting and disclosure of contingencies, we believe that our processes are robust and thorough and provide a consistent framework for management in evaluating the potential outcome of contingencies for proper accounting recognition and disclosure.

RISK FACTORS

Our financial and operating results are subject to many risks and uncertainties, as described below.

We are directly affected by the state of the economy. While macro-economic risks apply to most companies, we are particularly vulnerable. The transportation industry is highly cyclical and especially susceptible to trends in economic activity. Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods — key macro-economic measurements. When individuals and companies purchase and produce fewer goods, we transport fewer goods, and as companies expand the number of distribution centers and move manufacturing closer to consumer markets, we transport goods shorter distances. In addition, we have a relatively high fixed-cost structure, which is difficult to quickly adjust to match shifting volume levels. Moreover, as we continue to grow our international business, we are increasingly affected by the health of the global economy and the typically more volatile economies of emerging markets. In 2013, slower than expected economic growth resulted in a continued customer preference for slower, less costly shipping services, which had a negative impact on our profitability.

Our businesses depend on our strong reputation and the value of the FedEx brand. The FedEx brand name symbolizes high-quality service, reliability and speed. FedEx is one of the most widely recognized, trusted and respected brands in the world, and the FedEx brand is one of our most important and valuable assets. In addition, we have a strong reputation among customers and the general public for high standards of social and environmental responsibility and corporate governance and ethics. The FedEx brand name and our corporate reputation are powerful sales and marketing tools, and we devote significant resources to promoting and protecting them. Adverse publicity (whether or not justified) relating to activities by our employees, contractors or agents, such as customer service mishaps or noncompliance with anti-corruption laws, could tarnish our reputation and reduce the value of our brand. With the increase in the use of social media outlets such as YouTube and Twitter, adverse publicity can be disseminated quickly and broadly, making it increasingly difficult for us to defend against. Damage to our reputation and loss of brand equity could reduce demand for our services and thus have an adverse effect on our financial condition, liquidity and results of operations, as well as require additional resources to rebuild our reputation and restore the value of our brand.

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We rely heavily on information and technology to operate our transportation and business networks, and any disruption to our technology infrastructure or the Internet could harm our operations and our reputation among customers. Our ability to attract and retain customers and to compete effectively depends in part upon the sophistication and reliability of our technology network, including our ability to provide features of service that are important to our customers. External and internal risks, such as malware, code anomalies, “Acts of God,” attempts to penetrate our networks, transitional challenges in migrating operating company functionality to our FedEx enterprise automation platform, data leakage and human error, pose a direct threat to our products, services and data. Any disruption to the Internet or our complex, global technology infrastructure, including those impacting our computer systems and customer Web sites, could adversely impact our customer service, volumes, and revenues and result in increased costs. These types of adverse impacts could also occur in the event the confidentiality, integrity, or availability of company and customer information was compromised due to a data loss by FedEx or a trusted third party. While we have invested and continue to invest in technology security initiatives, information technology risk management and disaster recovery plans, these measures cannot fully insulate us from technology disruptions or data loss and the resulting adverse effect on our operations and financial results.

Our transportation businesses are impacted by the price and availability of fuel. We must purchase large quantities of fuel to operate our aircraft and vehicles, and the price and availability of fuel can be unpredictable and beyond our control. To date, we have been mostly successful in mitigating over time the expense impact of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel. If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could adversely impact our operating results. Even if we are able to offset the cost of fuel with our surcharges, high fuel surcharges could move our customers away from our higher-yielding express services to our lower-yielding deferred or ground services or even reduce customer demand for our services altogether. In addition, disruptions in the supply of fuel could have a negative impact on our ability to operate our transportation networks.

Our businesses are capital intensive, and we must make capital decisions based upon projected volume levels. We make significant investments in aircraft, vehicles, technology, package handling facilities, sort equipment, copy equipment and other assets to support our transportation and business networks. We also make significant investments to rebrand, integrate and grow the companies that we acquire. The amount and timing of capital investments depend on various factors, including our anticipated volume growth. We must make commitments to purchase or modify aircraft years before the aircraft are actually needed. We must predict volume levels and fleet requirements and make commitments for aircraft based on those projections. Missing our projections could result in too much or too little capacity relative to our shipping volumes. Overcapacity could lead to asset dispositions or write-downs and undercapacity could negatively impact service levels. For example, in the fourth quarter of 2013, we made a decision to retire from service certain aircraft and excess aircraft engines and thus recorded a noncash impairment charge of $100 million.

We face intense competition. The transportation and business services markets are both highly competitive and sensitive to price and service, especially in periods of little or no macro-economic growth. Some of our competitors have more financial resources than we do, or they are controlled or subsidized by foreign governments, which enables them to raise capital more easily. We believe we compete effectively with these companies — for example, by providing more reliable service at compensatory prices. However, an irrational pricing environment can limit our ability not only to maintain or increase our prices (including our fuel surcharges in response to rising fuel costs), but also to maintain or grow our market share. In addition, high volume package shippers could develop in-house ground delivery capabilities, which would in turn reduce our revenues and market share. While we believe we compete effectively through our current service offerings, if our current competitors or potential future competitors offer a broader range of services or more effectively bundle their services or our current customers become competitors, it could impede our ability to maintain or grow our market share.

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If we do not effectively operate, integrate, leverage and grow acquired businesses, our financial results and reputation may suffer. Our strategy for long-term growth, productivity and profitability depends in part on our ability to make prudent strategic acquisitions and to realize the benefits we expect when we make those acquisitions. In furtherance of this strategy, in 2013, we made strategic acquisitions in Poland, France and Brazil. While we expect our past and future acquisitions to enhance our value proposition to customers and improve our long-term profitability, there can be no assurance that we will realize our expectations within the time frame we have established, if at all, or that we can continue to support the value we allocate to these acquired businesses, including their goodwill or other intangible assets.

Labor organizations attempt to organize groups of our employees from time to time, and potential changes in labor laws could make it easier for them to do so. If we are unable to continue to maintain good relationships with our employees and prevent labor organizations from organizing groups of our employees, our operating costs could significantly increase and our operational flexibility could be significantly reduced. Despite continual organizing attempts by labor unions, other than the pilots of FedEx Express, all of our U.S. employees have thus far chosen not to unionize. The U.S. Congress has, in the past, considered adopting changes in labor laws, however, that would make it easier for unions to organize units of our employees. For example, there is always a possibility that Congress could remove most FedEx Express employees from the purview of the Railway Labor Act of 1926, as amended (the “RLA”). For additional discussion of the RLA, see Part I, Item 1 of this Annual Report on Form 10-K under the caption “Regulation.” Such legislation could expose our customers to the type of service disruptions that the RLA was designed to prevent — local work stoppages in key areas that interrupt the timely flow of shipments of time-sensitive, high-value goods throughout our global network. Such disruptions could threaten our ability to provide competitively priced shipping options and ready access to global markets. There is also the possibility that Congress could pass other labor legislation that could adversely affect our companies, such as FedEx Ground and FedEx Freight, whose employees are governed by the National Labor Relations Act of 1935, as amended (the “NLRA”). In addition, federal and state governmental agencies, such as the National Labor Relations Board, have and may continue to take actions that could make it easier for our employees to organize under the RLA or NLRA. Finally, changes to federal or state laws governing employee classification could impact the status of FedEx Ground’s owner-operators as independent contractors.

FedEx Ground relies on owner-operators to conduct its linehaul and pickup-and-delivery operations, and the status of these owner-operators as independent contractors, rather than employees, is being challenged. FedEx Ground’s use of independent contractors is well suited to the needs of the ground delivery business and its customers, as evidenced by the strong growth of this business segment. We are involved in numerous lawsuits and state tax and other administrative proceedings that claim that the company’s owner-operators or their drivers should be treated as our employees, rather than independent contractors. We incur certain costs, including legal fees, in defending the status of FedEx Ground’s owner-operators as independent contractors. We believe that FedEx Ground’s owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company’s independent contractors. However, adverse determinations in these matters could, among other things, entitle certain of our owner-operators and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground’s owner-operators. Changes to state laws governing the definition of independent contractors could impact the status of FedEx Ground’s owner-operators. If FedEx Ground is compelled to convert its independent contractors to employees, labor organizations could more easily organize these individuals, our operating costs could increase materially and we could incur significant capital outlays.

Failure to execute on our business realignment program will cause our future financial results to suffer. In 2013, we announced profit improvement programs primarily through initiatives at FedEx Express and FedEx Services that include cost reductions, modernization of our aircraft fleet, transformation of the U.S. domestic operations and international profit improvements at FedEx Express, and improved efficiencies and lower costs of information technology at FedEx Services. To this end, during 2013, we conducted a program to offer voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. Additionally, we announced in May 2013 our decision to retire from service 10 aircraft and related engines, as well as to shorten the depreciable lives of an additional 76 aircraft and related engines, in an effort to modernize our aircraft fleet and improve our global network. We will continue to work towards the plan of annual profitability improvement of $1.6 billion by the end of 2016, but if we are not able to reach this goal in the face of challenging economic conditions, our future financial results may suffer.

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The transportation infrastructure continues to be a target of terrorist activities. Because transportation assets continue to be a target of terrorist activities, governments around the world are adopting or are considering adopting stricter security requirements that will increase operating costs and potentially slow service for businesses, including those in the transportation industry. For example, the U.S. Transportation Security Administration continues to require FedEx Express to comply with a Full All-Cargo Aircraft Operator Standard Security Plan, which contains evolving and strict security requirements. These requirements are not static, but change periodically as the result of regulatory and legislative requirements, imposing additional security costs and creating a level of uncertainty for our operations. Thus, it is reasonably possible that these rules or other future security requirements could impose material costs on us. Moreover, a terrorist attack directed at FedEx or other aspects of the transportation infrastructure could disrupt our operations and adversely impact demand for our services.

The regulatory environment for global aviation or other transportation rights may impact our operations. Our extensive air network is critical to our success. Our right to serve foreign points is subject to the approval of the Department of Transportation and generally requires a bilateral agreement between the United States and foreign governments. In addition, we must obtain the permission of foreign governments to provide specific flights and services. Our operations outside of the United States, such as FedEx Express’s growing international domestic operations, are also subject to current and potential regulations, including certain postal regulations and licensing requirements, that restrict, make difficult and sometimes prohibit, the ability of foreign-owned companies such as FedEx Express to compete effectively in parts of the international domestic transportation and logistics market. Regulatory actions affecting global aviation or transportation rights or a failure to obtain or maintain aviation or other transportation rights in important international markets could impair our ability to operate our networks.

We may be affected by global climate change or by legal, regulatory or market responses to such change. Concern over climate change, including the impact of global warming, has led to significant U.S. and international legislative and regulatory efforts to limit greenhouse gas (“GHG”) emissions, including our aircraft and diesel engine emissions. For example, during 2009, the European Commission approved the extension of the European Union Emissions Trading Scheme (“ETS”) for GHG emissions, to the airline industry. Under this decision, all FedEx Express flights to and from any airport in any member state of the European Union are now covered by the ETS requirements, and each year we are required to submit emission allowances in an amount equal to the carbon dioxide emissions from such flights. Because the European Union ETS is being contested by many countries on a number of fronts, and the effective date for parts of the ETS has been delayed until next year, the future impact on us is unclear. In addition, the U.S. Congress has, in the past, considered bills that would regulate GHG emissions, and some form of federal climate change legislation is possible in the future. Increased regulation regarding GHG emissions, especially aircraft or diesel engine emissions, could impose substantial costs on us, especially at FedEx Express. These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating or replacing our aircraft or vehicles prematurely. Until the timing, scope and extent of such regulation becomes known, we cannot predict its effect on our cost structure or our operating results. It is reasonably possible, however, that it could impose material costs on us. Moreover, even without such regulation, increased awareness and any adverse publicity in the global marketplace about the GHGs emitted by companies in the airline and transportation industries could harm our reputation and reduce customer demand for our services, especially our air express services. Finally, given the broad and global scope of our operations and our susceptibility to global macro-economic trends, we are particularly vulnerable to the physical risks of climate change that could affect all of humankind, such as shifts in weather patterns and world ecosystems.

A localized disaster in a key geography could adversely impact our business. While we operate several integrated networks with assets distributed throughout the world, there are concentrations of key assets within our networks that are exposed to localized risks from natural or manmade disasters such as tornados, floods, earthquakes or terrorist attacks. The loss of a key location such as our Memphis super hub or one of our information technology centers could cause a significant disruption to our operations and cause us to incur significant costs to reestablish or relocate these functions. Moreover, resulting economic dislocations, including supply chain and fuel disruptions, could adversely impact demand for our services.

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Our business may be adversely impacted by disruptions or modifications in service by the USPS. The USPS is a significant customer and vendor of FedEx, and thus, disruptions or modifications in services by the USPS as a consequence of the USPS’s current financial difficulties or any resulting structural changes to its operations, network, service offerings or pricing could have an adverse effect on our operations and financial results.

We are also subject to other risks and uncertainties that affect many other businesses, including:

• increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits;

• the increasing costs of compliance with federal and state governmental agency mandates and defending against inappropriate or unjustified enforcement or other actions by such agencies;

• the impact of any international conflicts on the United States and global economies in general, the transportation industry or us in particular, and what effects these events will have on our costs or the demand for our services;

• any impacts on our businesses resulting from new domestic or international government laws and regulation;

• changes in foreign currency exchange rates, especially in the Chinese yuan, euro, Brazilian real, Canadian dollar and the British pound, which can affect our sales levels and foreign currency sales prices;

• market acceptance of our new service and growth initiatives;

• any liability resulting from and the costs of defending against class-action litigation, such as wage-and-hour and discrimination and retaliation claims, and any other legal or governmental proceedings;

• the outcome of future negotiations to reach new collective bargaining agreements — including with the union that represents the pilots of FedEx Express (the current pilot contract became amendable in March 2013, and the parties are currently in negotiations);

• the impact of technology developments on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information technology redundancy and complexity throughout the organization;

• widespread outbreak of an illness or any other communicable disease, or any other public health crisis; and

• availability of financing on terms acceptable to us and our ability to maintain our current credit ratings, especially given the capital intensity of our operations.

FORWARD-LOOKING STATEMENTS

Certain statements in this report, including (but not limited to) those contained in “Outlook” (including segment outlooks), “Liquidity,” “Capital Resources,” “Liquidity Outlook,” “Contractual Cash Obligations” and “Critical Accounting Estimates,” and the “Retirement Plans” and “Contingencies” notes to the consolidated financial statements, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations, cash flows, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends” or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things, the risk factors identified above and the other risks and uncertainties you can find in our press releases and other SEC filings.

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As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

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MANAGEMENT’S REPORT ON INTERNAL

CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and a properly staffed, professional internal audit department. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting and actions are taken to correct all identified deficiencies. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and our staff of highly qualified financial and legal professionals.

Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of May 31, 2013, the end of our fiscal year. Management based its assessment on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

Based on this assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2013.

The effectiveness of our internal control over financial reporting as of May 31, 2013, has been audited by Ernst & Young LLP, the independent registered public accounting firm who also audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K. Ernst & Young LLP’s report on the Company’s internal control over financial reporting is included in this Annual Report on Form 10-K.

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REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

FedEx Corporation

We have audited FedEx Corporation’s internal control over financial reporting as of May 31, 2013, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). FedEx Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, FedEx Corporation maintained, in all material respects, effective internal control over financial reporting as of May 31, 2013, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of FedEx Corporation as of May 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ investment, and cash flows for each of the three years in the period ended May 31, 2013 of FedEx Corporation and our report dated July 15, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 15, 2013

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REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

FedEx Corporation

We have audited the accompanying consolidated balance sheets of FedEx Corporation as of May 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ investment, and cash flows for each of the three years in the period ended May 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of FedEx Corporation at May 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2013, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), FedEx Corporation’s internal control over financial reporting as of May 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 15, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 15, 2013

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FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS)

	May 31,
	2013		2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	4,917	$	2,843
Receivables, less allowances of $176 and $178		5,044		4,704
Spare parts, supplies and fuel, less allowances of $205 and $184		457		440
Deferred income taxes		533		533
Prepaid expenses and other		323		536
Total current assets		11,274		9,056
PROPERTY AND EQUIPMENT, AT COST
Aircraft and related equipment		14,716		14,360
Package handling and ground support equipment		6,452		5,912
Computer and electronic equipment		4,958		4,646
Vehicles		4,080		3,654
Facilities and other		7,903		7,592
		38,109		36,164
Less accumulated depreciation and amortization		19,625		18,916
Net property and equipment		18,484		17,248
OTHER LONG-TERM ASSETS
Goodwill		2,755		2,387
Other assets		1,054		1,212
Total other long-term assets		3,809		3,599
	$	33,567	$	29,903

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE DATA)

	May 31,
	2013			2012
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	251		$	417
Accrued salaries and employee benefits		1,688			1,635
Accounts payable		1,879			1,613
Accrued expenses		1,932			1,709
Total current liabilities		5,750			5,374
LONG-TERM DEBT, LESS CURRENT PORTION		2,739			1,250
OTHER LONG-TERM LIABILITIES
Deferred income taxes		1,652			836
Pension, postretirement healthcare and other benefit obligations		3,916			5,582
Self-insurance accruals		987			963
Deferred lease obligations		778			784
Deferred gains, principally related to aircraft transactions		227			251
Other liabilities		120			136
Total other long-term liabilities		7,680			8,552
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS’ INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of May 31, 2013 and 317 million shares issued as of May 31, 2012		32			32
Additional paid-in capital		2,668			2,595
Retained earnings		18,519			17,134
Accumulated other comprehensive loss		(3,820	)		(4,953	)
Treasury stock, at cost		(1	)		(81	)
Total common stockholders’ investment		17,398			14,727
	$	33,567		$	29,903

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

	Years ended May 31,
	2013			2012			2011
REVENUES	$	44,287		$	42,680		$	39,304
OPERATING EXPENSES:
Salaries and employee benefits		16,570			16,099			15,276
Purchased transportation		7,272			6,335			5,674
Rentals and landing fees		2,521			2,487			2,462
Depreciation and amortization		2,386			2,113			1,973
Fuel		4,746			4,956			4,151
Maintenance and repairs		1,909			1,980			1,979
Business realignment, impairment and other charges		660			134			89
Other		5,672			5,390			5,322
		41,736			39,494			36,926
OPERATING INCOME		2,551			3,186			2,378
OTHER INCOME (EXPENSE):
Interest expense		(82	)		(52	)		(86	)
Interest income		21			13			9
Other, net		(35	)		(6	)		(36	)
		(96	)		(45	)		(113	)
INCOME BEFORE INCOME TAXES		2,455			3,141			2,265
PROVISION FOR INCOME TAXES		894			1,109			813
NET INCOME	$	1,561		$	2,032		$	1,452
BASIC EARNINGS PER COMMON SHARE	$	4.95		$	6.44		$	4.61
DILUTED EARNINGS PER COMMON SHARE	$	4.91		$	6.41		$	4.57

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN MILLIONS)

	Years Ended May 31,
	2013		2012			2011
NET INCOME	$	1,561	$	2,032		$	1,452
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustments, net of tax benefit of $12 and $26 in 2013 and 2012 and tax expense of $27 in 2011		41		(95	)		125
Amortization of unrealized pension actuarial gains/losses and other, net of tax expense of $677 in 2013 and tax benefit of $1,369 and $141 in 2012 and 2011		1,092		(2,308	)		(235	)
		1,133		(2,403	)		(110	)
COMPREHENSIVE INCOME (LOSS)	$	2,694	$	(371	)	$	1,342

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

	Years ended May 31,
	2013			2012			2011
OPERATING ACTIVITIES
Net income	$	1,561		$	2,032		$	1,452
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		2,386			2,113			1,973
Provision for uncollectible accounts		167			160			152
Deferred income taxes and other noncash items		521			1,126			669
Business realignment, impairment and other charges		479			134			29
Stock-based compensation		109			105			98
Changes in assets and liabilities:
Receivables		(451	)		(254	)		(400	)
Other current assets		257			(231	)		(114	)
Pension assets and liabilities, net		(335	)		(453	)		(169	)
Accounts payable and other liabilities		10			144			370
Other, net		(16	)		(41	)		(19	)
Cash provided by operating activities		4,688			4,835			4,041
INVESTING ACTIVITIES
Capital expenditures		(3,375	)		(4,007	)		(3,434	)
Business acquisitions, net of cash acquired		(483	)		(116	)		(96	)
Proceeds from asset dispositions and other		55			74			111
Cash used in investing activities		(3,803	)		(4,049	)		(3,419	)
FINANCING ACTIVITIES
Principal payments on debt		(417	)		(29	)		(262	)
Proceeds from debt issuances		1,739			—			—
Proceeds from stock issuances		280			128			108
Excess tax benefit on the exercise of stock options		23			18			23
Dividends paid		(177	)		(164	)		(151	)
Purchase of treasury stock		(246	)		(197	)		—
Other, net		(18	)		—			(5	)
Cash provided by (used in) financing activities		1,184			(244	)		(287	)
Effect of exchange rate changes on cash		5			(27	)		41
Net increase in cash and cash equivalents		2,074			515			376
Cash and cash equivalents at beginning of period		2,843			2,328			1,952
Cash and cash equivalents at end of period	$	4,917		$	2,843		$	2,328

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ INVESTMENT

(IN MILLIONS, EXCEPT SHARE DATA)

	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance at May 31, 2010	$	31	$	2,261	$	13,966		$	(2,440	)	$	(7	)	$	13,811
Net income		—		—		1,452			—			—			1,452
Other comprehensive loss, net of tax of $114		—		—		—			(110	)		—			(110	)
Purchase of treasury stock		—		—		—			—			(5	)		(5	)
Cash dividends declared ($0.48 per share)		—		—		(152	)		—			—			(152	)
Employee incentive plans and other (2,229,051 shares issued)		1		223		—			—			—			224
Balance at May 31, 2011		32		2,484		15,266			(2,550	)		(12	)		15,220
Net income		—		—		2,032			—			—			2,032
Other comprehensive loss, net of tax of $1,395		—		—		—			(2,403	)		—			(2,403	)
Purchase of treasury stock		—		—		—			—			(197	)		(197	)
Cash dividends declared ($0.52 per share)		—		—		(164	)		—			—			(164	)
Employee incentive plans and other (2,359,659 shares issued)		—		111		—			—			128			239
Balance at May 31, 2012		32		2,595		17,134			(4,953	)		(81	)		14,727
Net income		—		—		1,561			—			—			1,561
Other comprehensive gain, net of tax of $665		—		—		—			1,133			—			1,133
Purchase of treasury stock		—		—		—			—			(246	)		(246	)
Cash dividends declared ($0.56 per share)		—		—		(176	)		—			—			(176	)
Employee incentive plans and other (4,172,976 shares issued)		—		73		—			—			326			399
Balance at May 31, 2013	$	32	$	2,668	$	18,519		$	(3,820	)	$	(1	)	$	17,398

The accompanying notes are an integral part of these consolidated financial statements.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world’s largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading North American provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight services. These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing, information technology, communications and back-office support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”).

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2013 or ended May 31 of the year referenced.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation. We are not the primary beneficiary of, nor do we have a controlling financial interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity.

REVENUE RECOGNITION. We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Transportation services are provided with the use of employees and independent contractors. FedEx is the principal to the transaction for most of these services and revenue from these transactions is recognized on a gross basis. Costs associated with independent contractor settlements are recognized as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income. For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date. Estimates for future billing adjustments to revenue and accounts receivable are recognized at the time of shipment for money-back service guarantees and billing corrections. Delivery costs are accrued as incurred.

Our contract logistics, global trade services and certain transportation businesses, such as FedEx SmartPost, engage in some transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Certain of our revenue-producing transactions are subject to taxes, such as sales tax, assessed by governmental authorities. We present these revenues net of tax.

CREDIT RISK. We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic factors on the composition of accounts receivable. Historically, credit losses have been within management’s expectations.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $424 million in 2013, $421 million in 2012 and $375 million in 2011.

CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

SPARE PARTS, SUPPLIES AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. Additionally, allowances for obsolescence are provided for spare parts currently identified as excess or obsolete. These allowances are based on management estimates, which are subject to change. The majority of our supplies and our fuel are reported at weighted average cost.

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software. Gains and losses on sales of property used in operations are classified within operating expenses.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset’s service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

	Range	Net Book Value at May 31,
		2013		2012
Wide-body aircraft and related equipment	15 to 30 years	$	7,191	$	7,161
Narrow-body and feeder aircraft and related equipment	5 to 18 years		2,284		1,881
Package handling and ground support equipment	3 to 30 years		2,311		2,101
Vehicles	3 to 15 years		1,748		1,411
Computer and electronic equipment	2 to 10 years		993		930
Facilities and other	2 to 40 years		3,957		3,764

Substantially all property and equipment have no material residual values. The majority of aircraft costs are depreciated on a straight-line basis over 15 to 30 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment. This evaluation may result in changes in the estimated lives and residual values as it did in 2013 and 2012 with certain aircraft. In May 2013, FedEx Express made the decision to accelerate the retirement of 76 aircraft and related engines to aid in our fleet modernization and improve our global network. In May 2012, we shortened the depreciable lives for 54 aircraft and related engines to accelerate the retirement of these aircraft, resulting in a depreciation expense increase of $69 million in 2013. As a result of these accelerated retirements, we expect an additional $74 million in year-over-year depreciation expense in 2014.

Depreciation expense, excluding gains and losses on sales of property and equipment used in operations, was $2.3 billion in 2013, $2.1 billion in 2012 and $1.9 billion in 2011. Depreciation and amortization expense includes amortization of assets under capital lease.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $45 million in 2013, $85 million in 2012 and $71 million in 2011.

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level, for our analysis of impairment.

In the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels. Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment on a quarterly basis. Factors which could cause impairment include, but are not limited to, adverse changes in our global economic outlook and the impact of our outlook on our current and projected volume levels, including lower capacity needs during our peak shipping seasons; the introduction of new fleet types or decisions to permanently retire an aircraft fleet from operations; or changes to planned service expansion activities. We currently have one aircraft temporarily idled. This aircraft has been idled for 15 months and is expected to return to revenue service.

In May 2013, we made the decision to retire from service two Airbus A310-200 aircraft and four related engines, three Airbus A310-300 aircraft and two related engines and five Boeing MD10-10 aircraft and 15 related engines to align with the plans of FedEx Express to modernize its aircraft fleet and improve its global network. As a consequence of this decision, a noncash impairment charge of $100 million ($63 million, net of tax, or $0.20 per diluted share) was recorded in the FedEx Express segment in the fourth quarter. All of these aircraft were temporarily idled and not in revenue service.

In May 2012, we made the decision to retire from service 18 Airbus A310-200 aircraft and 26 related engines, as well as six Boeing MD10-10 aircraft and 17 related engines. As a consequence of this decision, a noncash impairment charge of $134 million ($84 million, net of tax, or $0.26 per diluted share) was recorded in the FedEx Express segment in the fourth quarter. The decision to retire these aircraft, the majority of which were temporarily idled and not in revenue service, better aligns the U.S. domestic air network capacity of FedEx Express to match current and anticipated shipment volumes.

The combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. These actions resulted in total program costs of $133 million recorded during 2011, which includes $89 million of impairment and other charges (recorded in the “Business realignment, impairment and other charges” caption on the consolidated income statements), and $44 million of other program costs (primarily recorded in the “Depreciation and amortization” caption on the consolidated income statements).

GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity. Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we would proceed to a two-step process to test goodwill for impairment including comparing the fair value of each reporting unit with its carrying value

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter.

PENSION AND POSTRETIREMENT HEALTHCARE PLANS. Our defined benefit plans are measured using actuarial techniques that reflect management’s assumptions for discount rate, expected long-term investment returns on plan assets, salary increases, expected retirement, mortality, employee turnover and future increases in healthcare costs. We determine the discount rate (which is required to be the rate at which the projected benefit obligation could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. A calculated-value method is employed for purposes of determining the asset values for our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”). Our expected rate of return is a judgmental matter which is reviewed on an annual basis and revised as appropriate.

The accounting guidance related to employers’ accounting for defined benefit pension and other postretirement plans requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in other comprehensive income (“OCI”) of unrecognized gains or losses and prior service costs or credits. Additionally, the guidance requires the measurement date for plan assets and liabilities to coincide with the plan sponsor’s year end.

At May 31, 2013, we recorded an increase to equity through OCI of $861 million (net of tax) based primarily on year-end adjustments related to an increase in the value of our plan assets and an increase in the discount rate used to measure the liabilities at May 31, 2013. At May 31, 2012, we recorded a decrease to equity through OCI of $2.4 billion (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liabilities at May 31, 2012.

INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SELF-INSURANCE ACCRUALS. We are self-insured for costs associated with workers’ compensation claims, vehicle accidents and general business liabilities, and benefits paid under employee healthcare and long-term disability programs. Accruals are primarily based on the actuarially estimated, undiscounted cost of claims, which includes incurred-but-not-reported claims. Current workers’ compensation claims, vehicle and general liability, employee healthcare claims and long-term disability are included in accrued expenses. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense.

LEASES. We lease certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of our leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in “Other assets” in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset’s useful life or the lease term.

DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized ratably over the life of the lease as a reduction of rent expense. Substantially all of these deferred gains are related to aircraft transactions.

FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive income within common stockholders’ investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in the caption “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS. The pilots of FedEx Express, which represent a small number of FedEx Express’s total employees, are employed under a collective bargaining agreement. The contract became amendable in March 2013, and the parties are currently in negotiations. In addition to our pilots at FedEx Express, certain FedEx non-U.S. employees are unionized.

STOCK-BASED COMPENSATION. We recognize compensation expense for stock-based awards under the provisions of the accounting guidance related to share-based payments. This guidance requires recognition of compensation expense for stock-based awards using a fair value method. We issue new shares or repurchase shares on the open market to cover employee share option exercises and restricted stock grants. Accordingly, we plan to repurchase approximately 3.7 million shares in 2014.

TREASURY SHARES. During 2013, we repurchased 2.7 million shares of FedEx common stock at an average price of $91 per share for a total of $246 million. In March 2013, our Board of Directors authorized the repurchase of up to 10 million shares of common stock. It is expected that the additional share authorization will primarily be utilized to offset the effects of equity compensation dilution over the next several years. As of May 31, 2013, 10,188,000 shares remained under existing share repurchase authorizations.

DIVIDENDS DECLARED PER COMMON SHARE. On June 3, 2013, our Board of Directors declared a quarterly dividend of $0.15 per share of common stock. The dividend was paid on July 1, 2013 to stockholders of record as of the close of business on June 17, 2013. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

BUSINESS REALIGNMENT COSTS. During 2013, we announced profit improvement programs including reducing our selling, general and administrative cost functions through a voluntary employee separation program.

During 2013, we conducted a program to offer voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The voluntary buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance calculated based on four weeks of gross base salary for every year of FedEx service up to a maximum payment of two years of pay. This program was completed in the fourth quarter and approximately 3,600 employees have left or will be voluntarily leaving the company by the end of 2014. Eligible employees are scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Of the total population leaving the company, approximately 40% of the employees vacated positions on May 31, 2013. An additional 35% will depart throughout 2014 and approximately 25% of this population will remain until May 31, 2014. Costs of the benefits provided under the voluntary program were recognized as special termination benefits in the period that eligible employees accepted their offers.

We incurred costs of $560 million ($353 million, net of tax, or $1.11 per diluted share) during 2013 associated with our business realignment activities. These costs related primarily to severance for employees who accepted voluntary buyouts in the third and fourth quarters of 2013. Payments will be made at the time of departure. Approximately $180 million was paid under this program during 2013. The cost of the buyout program is included in the caption “Business realignment, impairment and other charges” in our consolidated statements of income. Also included in that caption are other external costs directly attributable to our business realignment activities, such as professional fees.

USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: self-insurance accruals; retirement plan obligations; long-term incentive accruals; tax liabilities; accounts receivable allowances; obsolescence of spare parts; contingent liabilities; loss contingencies, such as litigation and other claims; and impairment assessments on long-lived assets (including goodwill).

NOTE 2: RECENT ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements.

On June 1, 2012, we adopted the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on the presentation of comprehensive income. The new guidance requires companies to report components of comprehensive income by including comprehensive income on the face of the income statement or in a separate statement of comprehensive income. We have adopted this guidance by including a separate statement of comprehensive income (loss) for the three years ending May 31, 2013 and by including expanded accumulated other comprehensive income disclosure requirements in the notes to our consolidated financial statements. In addition on June 1, 2012, we adopted the FASB’s amendments to the fair value measurements and disclosure requirements, which expanded existing disclosure requirements regarding the fair value of our long-term debt.

In February 2013, the FASB issued new guidance requiring additional information about reclassification adjustments out of comprehensive income, including changes in comprehensive income balances by component and significant items reclassified out of comprehensive income. This new standard is effective for our fiscal year ending May 31, 2014 and will have no impact on our financial condition or results of operations.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In May 2013, the FASB issued a revised exposure draft outlining proposed changes to the accounting for leases. Under the revised exposure draft, the recognition, measurement and presentation of expenses and cash flows arising from a lease would depend primarily on whether the lessee is expected to consume more than an insignificant portion of the economic benefits embedded in the underlying asset. A right-of-use asset and a liability to make lease payments will be recognized on the balance sheet for all leases (except short-term leases). The enactment of this proposal will have a significant impact on our accounting and financial reporting. The FASB has not yet proposed an effective date of this proposal.

We believe that no other new accounting guidance was adopted or issued during 2013 that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

NOTE 3: BUSINESS COMBINATIONS

During 2013, we expanded the international service offerings of FedEx Express by completing the following business acquisitions:

• Rapidão Cometa Logística e Transporte S.A., a Brazilian transportation and logistics company, for $398 million in cash from operations on July 4, 2012

• TATEX, a French express transportation company, for $55 million in cash from operations on July 3, 2012

• Opek Sp. z o.o., a Polish domestic express package delivery company, for $54 million in cash from operations on June 13, 2012

These acquisitions give us more robust transportation networks within these countries and added capabilities in these important international markets.

The financial results of these acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations and therefore, pro forma financial information has not been presented.

The estimated fair values of the assets and liabilities related to these acquisitions have been recorded in the FedEx Express segment and are included in the accompanying consolidated balance sheet based on an allocation of the purchase prices (summarized in the table below in millions).

Current assets	$	145
Property and equipment		91
Goodwill		351
Intangible assets		60
Other non-current assets		70
Current liabilities		(174	)
Long-term liabilities		(36	)
Total purchase price	$	507

The goodwill of $351 million is primarily attributable to expected benefits from synergies of the combinations with the existing FedEx Express business and other acquired entities. The portion of the purchase price allocated to goodwill is not deductible for U.S. income tax purposes. The intangible assets acquired consist primarily of customer-related intangible assets, which will be amortized on an accelerated basis over their average estimated useful lives of nine years, with the majority of the amortization recognized during the first five years.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On June 20, 2013, we signed agreements to acquire the businesses operated by our current service provider Supaswift (Pty) Ltd. in five countries in Southern Africa. The acquisition will be funded with cash from operations and is expected to be completed in the second half of 2014, subject to customary closing conditions. The financial results of the acquired businesses will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2014 results.

In 2012, we completed our acquisition of Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, for $128 million in cash from operations on July 25, 2011. In 2011, FedEx Express completed the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. for $96 million in cash from operations on February 22, 2011. The financial results of these acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations or financial condition and therefore, pro forma financial information has not been presented. Substantially all of the purchase price was allocated to goodwill, which was entirely attributed to our FedEx Express reporting unit.

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL. The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions):

	FedEx Express Segment			FedEx Ground Segment		FedEx Freight Segment			FedEx Services Segment			Total
Goodwill at May 31, 2011	$	1,272		$	90	$	735		$	1,539		$	3,636
Accumulated impairment charges		—			—		(133	)		(1,177	)		(1,310	)
Balance as of May 31, 2011		1,272			90		602			362			2,326
Goodwill acquired(1)		104			—		—			—			104
Purchase adjustments and other(2)		(32	)		—		—			(11	)		(43	)
Balance as of May 31, 2012		1,344			90		602			351			2,387
Goodwill acquired(3)		351			—		—			—			351
Purchase adjustments and other(2)		20			—		—			(3	)		17
Balance as of May 31, 2013	$	1,715		$	90	$	602		$	348		$	2,755
Accumulated goodwill impairment charges as of May 31, 2013	$	—		$	—	$	(133	)	$	(1,177	)	$	(1,310	)

⁽¹⁾  Goodwill acquired in 2012 relates to the acquisition of the Mexican domestic express package delivery company, Multipack. See Note 3 for related disclosures.

⁽²⁾  Primarily currency translation adjustments.

⁽³⁾  Goodwill acquired in 2013 relates to the acquisitions of transportation companies in Poland, France and Brazil. See Note 3 for related disclosures.

Our reporting units with significant recorded goodwill include our FedEx Express, FedEx Freight and FedEx Office (reported in the FedEx Services segment) reporting units. We evaluated these reporting units during the fourth quarter of 2013. The estimated fair value of each of these reporting units exceeded their carrying values in 2013 and 2012, and we do not believe that any of these reporting units were at risk as of May 31, 2013.

OTHER INTANGIBLE ASSETS. The net book value of our other intangible assets was $72 million at May 31, 2013 and $34 million at May 31, 2012. Amortization expense for intangible assets was $27 million in 2013, $18 million in 2012 and $32 million in 2011. Estimated amortization expense is expected to be immaterial in 2014 and beyond.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5: SELECTED CURRENT LIABILITIES

The components of selected current liability captions were as follows (in millions):

	May 31,
	2013		2012
Accrued Salaries and Employee Benefits
Salaries	$	489	$	280
Employee benefits, including variable compensation		615		803
Compensated absences		584		552
	$	1,688	$	1,635
Accrued Expenses
Self-insurance accruals	$	796	$	678
Taxes other than income taxes		368		386
Other		768		645
	$	1,932	$	1,709

NOTE 6: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

The components of long-term debt (net of discounts), along with maturity dates for the years subsequent to May 31, 2013, are as follows (in millions):

		May 31,
		2013		2012
Senior unsecured debt:
Interest Rate %	Maturity
9.65	2013	$	—	$	300
7.38	2014		250		250
8.00	2019		750		750
2.625	2023		499		—
2.70	2023		249		—
3.875	2043		493		—
4.10	2043		499		—
7.60	2098		239		239
Total senior unsecured debt			2,979		1,539
Capital lease obligations			11		128
			2,990		1,667
Less current portion			251		417
		$	2,739	$	1,250

Interest on our fixed-rate notes is paid semi-annually. Long-term debt, exclusive of capital leases, had estimated fair values of $3.2 billion at May 31, 2013 and $2.0 billion at May 31, 2012. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We have a shelf registration statement filed with the Securities and Exchange Commission that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

In April 2013, we issued $750 million of senior unsecured debt under our current shelf registration statement, comprised of $250 million of 2.70% fixed-rate notes due in April 2023 and $500 million of 4.10% fixed-rate notes due in April 2043. We utilized the net proceeds for working capital and general corporate purposes. In July 2012, we issued $1 billion of senior unsecured debt under a then current shelf registration statement, comprised of $500 million of 2.625% fixed-rate notes due in August 2022 and $500 million of 3.875% fixed-rate notes due in August 2042. We utilized the net proceeds for working capital and general corporate purposes.

During 2013, we made principal payments of $116 million related to capital lease obligations and repaid our $300 million 9.65% unsecured notes that matured in June 2012 using cash from operations.

A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. On March 1, 2013, we entered into an amendment to our credit agreement to, among other things, extend its maturity date from April 26, 2016 to March 1, 2018. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters’ rentals and landing fees) to capital (adjusted debt plus total common stockholders’ investment) that does not exceed 70%. Our leverage ratio of adjusted debt to capital was 51% at May 31, 2013. We believe the leverage ratio covenant is our only significant restrictive covenant in our revolving credit agreement. Our revolving credit agreement contains other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the leverage ratio covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. As of May 31, 2013, no commercial paper was outstanding, and the entire $1 billion under the revolving credit facility was available for future borrowings.

We issue other financial instruments in the normal course of business to support our operations, including standby letters of credit and surety bonds. We had a total of $538 million in letters of credit outstanding at May 31, 2013, with $128 million unused under our primary $500 million letter of credit facility, and $539 million in outstanding surety bonds placed by third-party insurance providers. These instruments are required under certain U.S. self-insurance programs and are also used in the normal course of international operations. The underlying liabilities insured by these instruments are reflected in our balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves.

NOTE 7: LEASES

We utilize certain aircraft, land, facilities, retail locations and equipment under capital and operating leases that expire at various dates through 2046. We leased 10% of our total aircraft fleet under operating leases as of May 31, 2013 and 10% of our total aircraft fleet under capital and operating leases as of May 31, 2012. A portion of our supplemental aircraft are leased by us under agreements that provide for cancellation upon 30 days’ notice. Our leased facilities include national, regional and metropolitan sorting facilities, retail facilities and administrative buildings.

Rent expense under operating leases for the years ended May 31 was as follows (in millions):

	2013		2012		2011
Minimum rentals	$	2,061	$	2,018	$	2,025
Contingent rentals(1)		192		210		193
	$	2,253	$	2,228	$	2,218

⁽¹⁾ Contingent rentals are based on equipment usage.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of one year at May 31, 2013 is as follows (in millions):

	Operating Leases
	Aircraft and Related Equipment		Facilities and Other		Total Operating Leases
2014	$	462	$	1,474	$	1,936
2015		448		1,386		1,834
2016		453		1,183		1,636
2017		391		1,298		1,689
2018		326		904		1,230
Thereafter		824		5,826		6,650
Total	$	2,904	$	12,071	$	14,975

Property and equipment recorded under capital leases and future minimum lease payments under capital leases were immaterial at May 31, 2013. The weighted-average remaining lease term of all operating leases outstanding at May 31, 2013 was approximately six years. While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

FedEx Express makes payments under certain leveraged operating leases that are sufficient to pay principal and interest on certain pass-through certificates. The pass-through certificates are not direct obligations of, or guaranteed by, FedEx or FedEx Express.

We are the lessee in a series of operating leases covering a portion of our leased aircraft. The lessors are trusts established specifically to purchase, finance and lease aircraft to us. These leasing entities meet the criteria for variable interest entities. We are not the primary beneficiary of the leasing entities, as the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates us to absorb decreases in value or entitles us to participate in increases in the value of the aircraft. As such, we are not required to consolidate the entity as the primary beneficiary. Our maximum exposure under these leases is included in the summary of future minimum lease payments shown above.

NOTE 8: PREFERRED STOCK

Our Certificate of Incorporation authorizes the Board of Directors, at its discretion, to issue up to 4,000,000 shares of preferred stock. The stock is issuable in series, which may vary as to certain rights and preferences, and has no par value. As of May 31, 2013, none of these shares had been issued.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table provides changes in accumulated other comprehensive income (loss), net of tax, reported in our financial statements (in millions):

	Foreign currency translation adjustment			Retirement plans adjustments			Accumulated other comprehensive income (loss)
Balance at May 31, 2010	$	31		$	(2,471	)	$	(2,440	)
Other comprehensive gain (loss)		125			(235	)		(110	)
Balance at May 31, 2011		156			(2,706	)		(2,550	)
Other comprehensive gain (loss)		(95	)		(2,308	)		(2,403	)
Balance at May 31, 2012		61			(5,014	)		(4,953	)
Other comprehensive gain (loss)		41			1,092			1,133
Balance at May 31, 2013	$	102		$	(3,922	)	$	(3,820	)

NOTE 10: STOCK-BASED COMPENSATION

Our total stock-based compensation expense for the years ended May 31 was as follows (in millions):

	2013		2012		2011
Stock-based compensation expense	$	109	$	105	$	98

We have two types of equity-based compensation: stock options and restricted stock.

STOCK OPTIONS. Under the provisions of our incentive stock plans, key employees and non-employee directors may be granted options to purchase shares of our common stock at a price not less than its fair market value on the date of grant. Vesting requirements are determined at the discretion of the Compensation Committee of our Board of Directors. Option-vesting periods range from one to four years, with 83% of our options vesting ratably over four years. Compensation expense associated with these awards is recognized on a straight-line basis over the requisite service period of the award.

RESTRICTED STOCK. Under the terms of our incentive stock plans, restricted shares of our common stock are awarded to key employees. All restrictions on the shares expire ratably over a four-year period. Shares are valued at the market price on the date of award. The terms of our restricted stock provide for continued vesting subsequent to the employee’s retirement. Compensation expense associated with these awards is recognized on a straight-line basis over the shorter of the remaining service or vesting period.

VALUATION AND ASSUMPTIONS. We use the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards is based on the stock price of the award on the grant date. We record stock-based compensation expense in the “Salaries and employee benefits” caption in the accompanying consolidated statements of income.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, a risk-free interest rate, and dividend yield. Following is a table of the weighted-average Black-Scholes value of our stock option grants, the intrinsic value of options exercised (in millions), and the key weighted-average assumptions used in the valuation calculations for the options granted during the years ended May 31, and then a discussion of our methodology for developing each of the assumptions used in the valuation model:

	2013			2012			2011
Weighted-average Black-Scholes value	$	29.20		$	29.92		$	28.12
Intrinsic value of options exercised	$	107		$	67		$	80
Black-Scholes Assumptions:
Expected lives		6.1 years			6.0 years			5.9 years
Expected volatility		35	%		34	%		34	%
Risk-free interest rate		0.94	%		1.79	%		2.36	%
Dividend yield		0.609	%		0.563	%		0.558	%

The expected life represents an estimate of the period of time options are expected to remain outstanding, and we examine actual stock option exercises to determine the expected life of the options. Options granted have a maximum term of 10 years. Expected volatilities are based on the actual changes in the market value of our stock and are calculated using daily market value changes from the date of grant over a past period equal to the expected life of the options. The risk-free interest rate is the U.S. Treasury Strip rate posted at the date of grant having a term equal to the expected life of the option. The expected dividend yield is the annual rate of dividends per share over the exercise price of the option.

The following table summarizes information about stock option activity for the year ended May 31, 2013:

	Stock Options
	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (in millions)(1)
Outstanding at June 1, 2012		21,031,538		$	84.39
Granted		2,547,290			88.08
Exercised		(3,979,359	)		70.41
Forfeited		(464,035	)		91.44
Outstanding at May 31, 2013		19,135,434		$	87.62		5.5 years	$	229
Exercisable		12,447,517		$	90.23		4.2 years	$	137
Expected to vest		6,288,642		$	82.77		8.1 years	$	87
Available for future grants		6,482,410

⁽¹⁾  Only presented for options with market value at May 31, 2013 in excess of the exercise price of the option.

The options granted during the year ended May 31, 2013 are primarily related to our principal annual stock option grant in June 2012.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes information about vested and unvested restricted stock for the year ended May 31, 2013:

	Restricted Stock
	Shares			Weighted- Average Grant Date Fair Value
Unvested at June 1, 2012		589,872		$	76.79
Granted		220,391			85.45
Vested		(253,423	)		75.46
Forfeited		(27,506	)		80.13
Unvested at May 31, 2013		529,334		$	80.86

During the year ended May 31, 2012, there were 214,435 shares of restricted stock granted with a weighted-average fair value of $88.95. During the year ended May 31, 2011, there were 235,998 shares of restricted stock granted with a weighted-average fair value of $78.74.

The following table summarizes information about stock option vesting during the years ended May 31:

	Stock Options
	Vested during the year		Fair value (in millions)
2013		2,824,757	$	81
2012		2,807,809		70
2011		2,721,602		67

As of May 31, 2013, there was $133 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately two years.

Total shares outstanding or available for grant related to equity compensation at May 31, 2013 represented 8% of the total outstanding common and equity compensation shares and equity compensation shares available for grant.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11: COMPUTATION OF EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except per share amounts):

	2013		2012		2011
Basic earnings per common share:
Net earnings allocable to common shares(1)	$	1,558	$	2,029	$	1,449
Weighted-average common shares		315		315		315
Basic earnings per common share	$	4.95	$	6.44	$	4.61
Diluted earnings per common share:
Net earnings allocable to common shares(1)	$	1,558	$	2,029	$	1,449
Weighted-average common shares		315		315		315
Dilutive effect of share-based awards		2		2		2
Weighted-average diluted shares		317		317		317
Diluted earnings per common share	$	4.91	$	6.41	$	4.57
Anti-dilutive options excluded from diluted earnings per common share		11.1		12.6		9.3

⁽¹⁾  Net earnings available to participating securities were immaterial in all periods presented.

NOTE 12: INCOME TAXES

The components of the provision for income taxes for the years ended May 31 were as follows (in millions):

	2013			2012			2011
Current provision (benefit)
Domestic:
Federal	$	512		$	(120	)	$	79
State and local		86			80			48
Foreign		170			181			198
		768			141			325
Deferred provision (benefit)
Domestic:
Federal		175			947			485
State and local		(7	)		21			12
Foreign		(42	)		—			(9	)
		126			968			488
	$	894		$	1,109		$	813

Our current federal income tax expenses in 2013, 2012 and 2011 were significantly reduced by accelerated depreciation deductions we claimed under provisions of the American Taxpayer Relief Act of 2013 and the Tax Relief and the Small Business Jobs Acts of 2010. Those Acts, designed to stimulate new business investment in the U.S., accelerated our depreciation deductions for new qualifying investments, such as our Boeing 777 Freighter (“B777F”) aircraft. These were timing benefits only, in that depreciation accelerated into an earlier year is foregone in later years. Our 2013 current provision for federal income taxes was, therefore, higher than in 2012 and 2011.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pre-tax (loss) earnings of foreign operations for 2013, 2012 and 2011 were $(55) million, $358 million and $472 million, respectively. These amounts represent only a portion of total results associated with international shipments and accordingly, do not represent our international or domestic results of operations.

A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended May 31 was as follows:

	2013			2012			2011
Statutory U.S. income tax rate		35.0	%		35.0	%		35.0	%
Increase (decrease) resulting from:
State and local income taxes, net of federal benefit		2.1			2.1			1.7
Other, net		(0.7	)		(1.8	)		(0.8	)
Effective tax rate		36.4	%		35.3	%		35.9	%

Our 2012 rate was favorably impacted by the conclusion of the IRS audit of our 2007-2009 consolidated income tax returns.

The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions):

	2013					2012
	Deferred Tax Assets			Deferred Tax Liabilities		Deferred Tax Assets			Deferred Tax Liabilities
Property, equipment, leases and intangibles	$	157		$	3,676	$	248		$	3,436
Employee benefits		1,771			11		2,300			11
Self-insurance accruals		533			—		495			—
Other		251			238		338			271
Net operating loss/credit carryforwards		298			—		179			—
Valuation allowances		(204	)		—		(145	)		—
	$	2,806		$	3,925	$	3,415		$	3,718

The net deferred tax liabilities as of May 31 have been classified in the balance sheets as follows (in millions):

	2013			2012
Current deferred tax asset	$	533		$	533
Noncurrent deferred tax liability		(1,652	)		(836	)
	$	(1,119	)	$	(303	)

We have $940 million of net operating loss carryovers in various foreign jurisdictions and $500 million of state operating loss carryovers. The valuation allowances primarily represent amounts reserved for operating loss and tax credit carryforwards, which expire over varying periods starting in 2014. As a result of this and other factors, we believe that a substantial portion of these deferred tax assets may not be realized.

Permanently reinvested earnings of our foreign subsidiaries amounted to $1.3 billion at the end of 2013 and $1 billion at the end of 2012. We have not recognized deferred taxes for U.S. federal income tax purposes on those earnings. In 2013, our permanent reinvestment strategy with respect to unremitted earnings of our foreign subsidiaries provided a 1.2% benefit to our effective tax rate. Were the earnings to be distributed, in the form of dividends or otherwise, these earnings could be subject to U.S. federal income tax and non-U.S. withholding taxes. Unrecognized foreign tax credits potentially could be available to reduce a portion of any

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

U.S. tax liability. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to uncertainties related to the timing and source of any potential distribution of such funds, along with other important factors such as the amount of associated foreign tax credits. Cash in offshore jurisdictions associated with our permanent reinvestment strategy totaled $420 million at the end of 2013 and $410 million at the end of 2012.

In 2013, more than 85% of our total enterprise-wide income was earned in U.S. companies of FedEx that are taxable in the United States. As a U.S. airline, our FedEx Express unit is required by Federal Aviation Administration and other rules to conduct its air operations, domestic and international, through a U.S. company. However, we serve more than 220 countries and territories around the world, and are required to establish legal entities in many of them. Most of our entities in those countries are operating entities, engaged in picking up and delivering packages and performing other transportation services. In the meantime, we are continually expanding our global network to meet our customers’ needs, which requires increasing investment outside the U.S. We typically use cash generated overseas to fund these investments and have a foreign holding company which manages our investments in several foreign operating companies, including new acquisitions made in 2013 in Poland, France and Brazil.

We are subject to taxation in the U.S. and various U.S. state, local and foreign jurisdictions. We are currently under examination by the IRS for the 2010 and 2011 tax years. It is reasonably possible that certain income tax return proceedings will be completed during the next 12 months and could result in a change in our balance of unrecognized tax benefits. The expected impact of any changes would not be material to our consolidated financial statements.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	2013			2012			2011
Balance at beginning of year	$	51		$	69		$	82
Increases for tax positions taken in the current year		1			2			2
Increases for tax positions taken in prior years		3			4			6
Decreases for tax positions taken in prior years		(3	)		(35	)		(10	)
Settlements		(9	)		(3	)		(11	)
Increases due to acquisitions		4			15			—
Decrease from lapse of statute of limitations		(2	)		—			—
Changes due to currency translation		2			(1	)		—
Balance at end of year	$	47		$	51		$	69

Our liabilities recorded for uncertain tax positions include $42 million at May 31, 2013 and $47 million at May 31, 2012 associated with positions that if favorably resolved would provide a benefit to our effective tax rate. We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The balance of accrued interest and penalties was $29 million on both May 31, 2013 and May 31, 2012. Total interest and penalties included in our consolidated statements of income are immaterial.

It is difficult to predict the ultimate outcome or the timing of resolution for tax positions. Changes may result from the conclusion of ongoing audits, appeals or litigation in state, local, federal and foreign tax jurisdictions, or from the resolution of various proceedings between the U.S. and foreign tax authorities. Our liability for uncertain tax positions includes no matters that are individually or collectively material to us. It is reasonably possible that the amount of the benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months, but an estimate of the range of the reasonably possible changes cannot be made. However, we do not expect that the resolution of any of our uncertain tax positions will be material.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 13: RETIREMENT PLANS

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages. These assumptions most significantly impact our U.S. Pension Plans.

The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in accumulated other comprehensive income (“AOCI”) of unrecognized gains or losses and prior service costs or credits. The funded status is measured as the difference between the fair value of the plan’s assets and the projected benefit obligation (“PBO”) of the plan. We recorded an increase to equity of $861 million (net of tax) at May 31, 2013, and a decrease to equity of $2.4 billion (net of tax) at May 31, 2012, attributable to our plans.

A summary of our retirement plans costs over the past three years is as follows (in millions):

	2013		2012		2011
U.S. domestic and international pension plans	$	679	$	524	$	543
U.S. domestic and international defined contribution plans		354		338		257
U.S. domestic and international postretirement healthcare plans		78		70		60
	$	1,111	$	932	$	860

Total retirement plans costs in 2013 were higher than 2012 due to the negative impact of a significantly lower discount rate at our May 31, 2012 measurement date. Total retirement plans cost increased in 2012 primarily due to higher expenses for our 401(k) plans due to the full restoration of company matching contributions on January 1, 2011.

PENSION PLANS. Our largest pension plan covers certain U.S. employees age 21 and over, with at least one year of service. Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account. Under the Portable Pension Account, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The Portable Pension Account benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index and corporate bond rates. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service). Benefits under this formula were capped on May 31, 2008 for most employees. We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. The international defined benefit pension plans provide benefits primarily based on final earnings and years of service and are funded in compliance with local laws and practices.

POSTRETIREMENT HEALTHCARE PLANS. Certain of our subsidiaries offer medical, dental and vision coverage to eligible U.S. retirees and their eligible dependents. U.S. employees covered by the principal plan become eligible for these benefits at age 55 and older, if they have permanent, continuous service of at least 10 years after attainment of age 45 if hired prior to January 1, 1988, or at least 20 years after attainment of age 35 if hired on or after January 1, 1988. Postretirement healthcare benefits are capped at 150% of the 1993 per capita projected employer cost, which has been reached and, therefore, these benefits are not subject to additional future inflation.

PENSION PLAN ASSUMPTIONS. Our pension cost is materially affected by the discount rate used to measure pension obligations, the level of plan assets available to fund those obligations and the expected long-term rate of return on plan assets.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We use a measurement date of May 31 for our pension and postretirement healthcare plans. Management reviews the assumptions used to measure pension costs on an annual basis. Economic and market conditions at the measurement date impact these assumptions from year to year. Actuarial gains or losses are generated for changes in assumptions and to the extent that actual results differ from those assumed. These actuarial gains and losses are amortized over the remaining average service lives of our active employees if they exceed a corridor amount in the aggregate. Additional information about our pension plans can be found in the Critical Accounting Estimates section of Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) in this Annual Report on Form 10-K (“Annual Report”).

Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation (“APBO”), are as follows:

	Pension Plans									Postretirement Healthcare Plans
	2013			2012			2011			2013			2012			2011
Discount rate used to determine benefit obligation		4.79	%		4.44	%		5.76	%		4.91	%		4.55	%		5.67	%
Discount rate used to determine net periodic benefit cost		4.44			5.76			6.37			4.55			5.67			6.11
Rate of increase in future compensation levels used to determine benefit obligation		4.54			4.62			4.58			—			—			—
Rate of increase in future compensation levels used to determine net periodic benefit cost		4.62			4.58			4.63			—			—			—
Expected long-term rate of return on assets		8.00			8.00			8.00			—			—			—

The estimated average rate of return on plan assets is the expected future long-term rate of earnings on plan assets and is a forward-looking assumption that materially affects our pension cost. Establishing the expected future rate of investment return on our pension assets is a judgmental matter. We review the expected long-term rate of return on an annual basis and revise it as appropriate. Management considers the following factors in determining this assumption:

• the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;

• the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and

• the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

Our expected long-term rate of return on plan assets was 8% for 2013, 2012 and 2011. Our actual return in each of the past three years exceeded that amount for our principal U.S. domestic pension plan. For the 15-year period ended May 31, 2013, our actual returns were 6.9%. For 2014, we plan to lower our expected return on plan assets assumption for long-term returns on plan assets to 7.75% as we continue to refine our asset and liability management strategy. In lowering this assumption we considered our historical returns, our investment strategy for our plan assets, including the impacts of the long duration of our plan liability and the relatively low annual draw on plan assets on that investment strategy.

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We use a calculated-value method to determine the value of plan assets, which helps mitigate short-term volatility in market performance (both increases and decreases) by amortizing certain actuarial gains or losses over a period no longer than four years. Another method used in practice applies the market value of plan assets at the measurement date. For purposes of valuing plan assets for determining 2014 pension expense, the calculated value method resulted in the same value as the market value, as it did in 2013. For determining 2012 pension expense, we used the calculated value method which resulted in a portion of the asset gain in 2011 being deferred to future years because our actual returns on plan assets significantly exceeded our assumptions.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The investment strategy for pension plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, to earn a long-term investment return that meets our pension plan obligations. Our pension plan assets are invested primarily in publicly tradeable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. Our largest holding classes are U.S. Large Cap Equities, which is indexed to the S&P 500 Index, Corporate Fixed Income Securities and Government Fixed Income Securities. Accordingly, we do not have any significant concentrations of risk. Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices. As part of our strategy to manage pension costs and funded status volatility, we have transitioned to a liability-driven investment strategy to better align plan assets with liabilities. Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk. In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio.

Following is a description of the valuation methodologies used for investments measured at fair value:

• Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. The Level 2 investments include commingled funds valued using the net asset value.

• Domestic and international equities. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. The Level 2 investments are commingled funds valued using the net asset value.

• Private equity. The valuation of these Level 3 investments requires significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. Investments are valued based upon recommendations of our investment managers incorporating factors such as contributions and distributions, market transactions, market comparables and performance multiples.

• Fixed income. We determine the fair value of these Level 2 corporate bonds, U.S. and non-U.S. government securities and other fixed income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair values of investments by level and asset category and the weighted-average asset allocations for our domestic pension plans at the measurement date are presented in the following table (in millions):

	Plan Assets at Measurement Date
	2013
Asset Class	Fair Value			Actual %			Target Range %	Quoted Prices in Active Markets Level 1			Other Observable Inputs Level  2		Unobservable Inputs Level 3
Cash and cash equivalents	$	456			2	%	0 - 5%	$	15		$	441
Equities							35 - 55
U.S. large cap equity		5,264			28				37			5,227
U.S. SMID cap equity		1,741			9				1,741
International equities		2,271			12				1,904			367
Private equities		332			2								$	332
Fixed income securities							45 - 65
Corporate		4,972			26							4,972
Government		3,888			20							3,888
Mortgage backed and other		200			1							200
Other		(77	)		—				(83	)		6
	$	19,047			100	%		$	3,614		$	15,101	$	332
	2012
Asset Class	Fair Value			Actual %			Target     Range %	Quoted Prices in Active Markets Level 1			Other Observable Inputs Level 2		Unobservable Inputs Level 3
Cash and cash equivalents	$	618			4	%	0 - 3%	$	8		$	610
Equities							45 - 55
U.S. large cap equity		4,248			25				9			4,239
U.S. SMID cap equity		1,368			8				1,368
International equities		1,657			10				1,395			262
Private equities		402			2								$	402
Fixed income securities							45 - 55
Corporate		4,565			27							4,565
Government		4,175			24							4,175
Mortgage backed and other		59			—							59
Other		(79	)		—				(85	)		6
	$	17,013			100	%		$	2,695		$	13,916	$	402

The change in fair value of Level 3 assets that use significant unobservable inputs is shown in the table below (in millions):

	2013			2012
Balance at beginning of year	$	402		$	403
Actual return on plan assets:
Assets held during current year		(29	)		3
Assets sold during the year		55			38
Purchases, sales and settlements		(96	)		(42	)
Balance at end of the year	$	332		$	402

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a reconciliation of the changes in the pension and postretirement healthcare plans’ benefit obligations and fair value of assets over the two-year period ended May 31, 2013 and a statement of the funded status as of May 31, 2013 and 2012 (in millions):

	Pension Plans						Postretirement Healthcare Plans
	2013			2012			2013			2012
Accumulated Benefit Obligation (“ABO”)	$	21,958		$	21,556
Changes in Projected Benefit Obligation (“PBO”) and Accumulated Postretirement Benefit Obligation (“APBO”)
PBO/APBO at the beginning of year	$	22,187		$	17,372		$	790		$	648
Service cost		692			593			42			35
Interest cost		968			976			36			36
Actuarial loss (gain)		(652	)		3,789			(17	)		98
Benefits paid		(589	)		(502	)		(54	)		(51	)
Other		(6	)		(41	)		31			24
PBO/APBO at the end of year	$	22,600		$	22,187		$	828		$	790
Change in Plan Assets
Fair value of plan assets at the beginning of year	$	17,334		$	15,841		$	—		$	—
Actual return on plan assets		2,081			1,235			—			—
Company contributions		615			780			27			27
Benefits paid		(589	)		(502	)		(54	)		(51	)
Other		(8	)		(20	)		27			24
Fair value of plan assets at the end of year	$	19,433		$	17,334		$	—		$	—
Funded Status of the Plans	$	(3,167	)	$	(4,853	)	$	(828	)	$	(790	)
Amount Recognized in the Balance Sheet at May 31:
Current pension, postretirement healthcare and other benefit obligations	$	(48	)	$	(35	)	$	(39	)	$	(33	)
Noncurrent pension, postretirement healthcare and other benefit obligations		(3,119	)		(4,818	)		(789	)		(757	)
Net amount recognized	$	(3,167	)	$	(4,853	)	$	(828	)	$	(790	)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost:
Net actuarial loss (gain)	$	6,993		$	8,866		$	(4	)	$	13
Prior service (credit) cost and other		(781	)		(897	)		2			2
Total	$	6,212		$	7,969		$	(2	)	$	15
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost expected to be amortized in next year’s Net Periodic Benefit Cost:
Net actuarial loss (gain)	$	378		$	516		$	—		$	—
Prior service credit and other		(114	)		(114	)		—			—
Total	$	264		$	402		$	—		$	—

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our pension plans included the following components at May 31, 2013 and 2012 (in millions):

	PBO		Fair Value of Plan Assets		Funded Status
2013
Qualified	$	21,532	$	19,047	$	(2,485	)
Nonqualified		322		—		(322	)
International Plans		746		386		(360	)
Total	$	22,600	$	19,433	$	(3,167	)
2012
Qualified	$	21,192	$	17,013	$	(4,179	)
Nonqualified		355		—		(355	)
International Plans		640		321		(319	)
Total	$	22,187	$	17,334	$	(4,853	)

The table above provides the PBO, fair value of plan assets and funded status of our pension plans on an aggregated basis. The following table presents our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. These plans are comprised of our unfunded nonqualified plans, certain international plans and our U.S. Pension Plans. At May 31, 2013 and 2012, the fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets were as follows (in millions):

	PBO Exceeds the Fair Value of Plan Assets
	2013			2012
Pension Benefits
Fair value of plan assets	$	19,433		$	17,334
PBO		(22,600	)		(22,187	)
Net funded status	$	(3,167	)	$	(4,853	)
	ABO Exceeds the Fair Value of Plan Assets
	2013			2012
Pension Benefits
ABO(1)	$	(21,930	)	$	(21,555	)
Fair value of plan assets		19,404			17,333
PBO		(22,570	)		(22,185	)
Net funded status	$	(3,166	)	$	(4,852	)

⁽¹⁾  ABO not used in determination of funded status.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contributions to our U.S. Pension Plans for the years ended May 31 were as follows (in millions):

	2013		2012
Required	$	560	$	496
Voluntary		—		226
	$	560	$	722

For 2014, we anticipate making required contributions to our U.S. Pension Plans totaling approximately $650 million.

Net periodic benefit cost for the three years ended May 31 were as follows (in millions):

	Pension Plans									Postretirement Healthcare Plans
	2013			2012			2011			2013		2012			2011
Service cost	$	692		$	593		$	521		$	42	$	35		$	31
Interest cost		968			976			900			36		36			34
Expected return on plan assets		(1,383	)		(1,240	)		(1,062	)		—		—			—
Recognized actuarial losses (gains) and other		402			195			184			—		(1	)		(5	)
Net periodic benefit cost	$	679		$	524		$	543		$	78	$	70		$	60

Pension costs in 2013 were higher than 2012 due to the negative impact of a significantly lower discount rate at our May 31, 2012 measurement date.

Amounts recognized in OCI for all plans were as follows (in millions):

	2013												2012
	Pension Plans						Postretirement Healthcare Plans						Pension Plans						Postretirement Healthcare Plans
	Gross Amount			Net of Tax Amount			Gross Amount			Net of Tax Amount			Gross Amount			Net of Tax Amount			Gross Amount		Net of Tax Amount
Net (gain) loss and other arising during period	$	(1,350	)	$	(840	)	$	(17	)	$	(21	)	$	3,777		$	2,371		$	97	$	61
Amortizations:
Prior services credit		114			66			—			—			113			71			—		—
Actuarial (losses) gains and other		(516	)		(297	)		—			—			(311	)		(195	)		1		—
Total recognized in OCI	$	(1,752	)	$	(1,071	)	$	(17	)	$	(21	)	$	3,579		$	2,247		$	98	$	61

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):

	Pension Plans		Postretirement Healthcare Plans
2014	$	821	$	39
2015		956		42
2016		896		44
2017		961		45
2018		1,049		47
2019-2023		6,974		274

These estimates are based on assumptions about future events. Actual benefit payments may vary significantly from these estimates.

Future medical benefit claims costs are estimated to increase at an annual rate of 7.7% during 2014, decreasing to an annual growth rate of 4.5% in 2029 and thereafter. Future dental benefit costs are estimated to increase at an annual rate of 6.9% during 2014, decreasing to an annual growth rate of 4.5% in 2029 and thereafter. A 1% change in these annual trend rates would not have a significant impact on the APBO at May 31, 2013 or 2013 benefit expense because the level of these benefits is capped.

NOTE 14: BUSINESS SEGMENT INFORMATION

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation)
	FedEx Trade Networks (air and ocean freight forwarding and customs brokerage)
	FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing, information technology, communications and back-office functions)
	FedEx TechConnect (customer service, technical support, billings and collections)
	FedEx Office (document and business services and package acceptance)

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the FedEx Express segment in their natural expense line items. The FedEx Services segment includes: FedEx Services, which provides sales, marketing, information technology, communications and back-office support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments in MD&A reflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

Other Intersegment Transactions

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a reconciliation of reportable segment revenues, depreciation and amortization, operating income (loss) and segment assets to consolidated financial statement totals for the years ended or as of May 31 (in millions):

	FedEx Express   Segment(1)		FedEx Ground   Segment(2)		FedEx Freight   Segment(3)			FedEx Services   Segment		Other and Eliminations			Consolidated Total
Revenues
2013	$	27,171	$	10,578	$	5,401		$	1,580	$	(443	)	$	44,287
2012		26,515		9,573		5,282			1,671		(361	)		42,680
2011		24,581		8,485		4,911			1,684		(357	)		39,304
Depreciation and amortization
2013	$	1,350	$	434	$	217		$	384	$	1		$	2,386
2012		1,169		389		185			369		1			2,113
2011		1,059		337		205			371		1			1,973
Operating income (loss)
2013	$	555	$	1,788	$	208		$	—	$	—		$	2,551
2012		1,260		1,764		162			—		—			3,186
2011		1,228		1,325		(175	)		—		—			2,378
Segment assets(4)
2013	$	18,935	$	7,353	$	2,953		$	4,879	$	(553	)	$	33,567
2012		17,981		6,154		2,807			4,546		(1,585	)		29,903
2011		16,463		5,048		2,664			4,278		(1,068	)		27,385

⁽¹⁾  FedEx Express segment 2013 operating expenses include $405 million of direct and allocated business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines. FedEx Express segment 2012 operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines and a reversal of a $66 million legal reserve which was initially recorded in 2011.

⁽²⁾  FedEx Ground segment 2013 operating expenses include $105 million of allocated business realignment costs.

⁽³⁾  FedEx Freight segment 2013 operating expenses include $50 million in direct and allocated business realignment costs. FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.

⁽⁴⁾  Segment assets include intercompany receivables.

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):

	FedEx Express   Segment		FedEx Ground   Segment		FedEx Freight   Segment		FedEx Services   Segment		Other		Consolidated Total
2013	$	2,067	$	555	$	326	$	424	$	3	$	3,375
2012		2,689		536		340		437		5		4,007
2011		2,467		426		153		387		1		3,434

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):

REVENUE BY SERVICE TYPE

	2013			2012			2011
FedEx Express segment:
Package:
U.S. overnight box	$	6,513		$	6,546		$	6,128
U.S. overnight envelope		1,705			1,747			1,736
U.S. deferred		3,020			3,001			2,805
Total U.S. domestic package revenue		11,238			11,294			10,669
International priority		6,586			6,849			6,760
International economy		2,046			1,859			1,468
Total international export package revenue		8,632			8,708			8,228
International domestic(1)		1,398			853			653
Total package revenue		21,268			20,855			19,550
Freight:
U.S.		2,562			2,498			2,188
International priority		1,678			1,827			1,722
International airfreight		276			307			283
Total freight revenue		4,516			4,632			4,193
Other		1,387			1,028			838
Total FedEx Express segment		27,171			26,515			24,581
FedEx Ground segment:
FedEx Ground		9,652			8,791			7,855
FedEx SmartPost		926			782			630
Total FedEx Ground segment		10,578			9,573			8,485
FedEx Freight segment		5,401			5,282			4,911
FedEx Services segment		1,580			1,671			1,684
Other and eliminations(2)		(443	)		(361	)		(357	)
	$	44,287		$	42,680		$	39,304
GEOGRAPHICAL INFORMATION(3)
Revenues:
U.S.	$	31,550		$	29,837		$	27,461
International:
FedEx Express segment		12,357			12,370			11,437
FedEx Ground segment		234			216			177
FedEx Freight segment		112			101			84
FedEx Services segment		34			156			145
Total international revenue		12,737			12,843			11,843
	$	44,287		$	42,680		$	39,304
Noncurrent assets:
U.S.	$	19,637		$	18,874		$	17,235
International		2,656			1,973			1,865
	$	22,293		$	20,847		$	19,100

⁽¹⁾  International domestic revenues include our international intra-country domestic express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).

⁽²⁾  Includes FedEx Trade Networks and FedEx SupplyChain Systems.

⁽³⁾  International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 15: SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest expense and income taxes for the years ended May 31 was as follows (in millions):

	2013			2012			2011
Cash payments for:
Interest (net of capitalized interest)	$	80		$	52		$	93
Income taxes	$	687		$	403		$	493
Income tax refunds received		(219	)		(146	)		(106	)
Cash tax payments, net	$	468		$	257		$	387

NOTE 16: GUARANTEES AND INDEMNIFICATIONS

In conjunction with certain transactions, primarily the lease, sale or purchase of operating assets or services in the ordinary course of business, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax and software infringement), the terms of which range in duration, and often they are not limited and have no specified maximum obligation. As a result, the overall maximum potential amount of the obligation under such guarantees and indemnifications cannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no amounts have been recognized in our financial statements for the underlying fair value of these obligations.

Special facility revenue bonds have been issued by certain municipalities primarily to finance the acquisition and construction of various airport facilities and equipment. These facilities were leased to us and are accounted for as operating leases. FedEx Express has unconditionally guaranteed $551 million in principal of these bonds (with total future principal and interest payments of approximately $708 million as of May 31, 2013) through these leases.

NOTE 17: COMMITMENTS

Annual purchase commitments under various contracts as of May 31, 2013 were as follows (in millions):

	Aircraft and Aircraft Related		Facilities and Other(1)		Total
2014	$	968	$	1,183	$	2,151
2015		1,054		184		1,238
2016		1,140		123		1,263
2017		959		101		1,060
2018		1,382		44		1,426
Thereafter		4,492		109		4,601
Total	$	9,995	$	1,744	$	11,739

⁽¹⁾  Primarily vehicles, facilities, advertising contracts and in 2014, approximately $650 million of quarterly contributions to our U.S. Pension Plans.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of May 31, 2013, our obligation to purchase four Boeing 767-300 Freighter (“B767F”) aircraft and nine B777F aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We have several aircraft modernization programs underway which are supported by the purchase of B777F, B767F and Boeing 757 (“B757”) aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements. During 2013, FedEx Express entered into an agreement to purchase 14 additional B757 aircraft, the delivery of which began in 2013 and will continue through 2014. The agreement provides the option to purchase up to 16 additional B757 aircraft, subject to the satisfaction of certain conditions. In addition, FedEx Express entered into agreements to purchase an additional 23 B767F aircraft, the delivery of which will occur between 2014 and 2019. The delivery of two firm B777F aircraft orders were also deferred from 2015 to 2016.

We had $414 million in deposits and progress payments as of May 31, 2013 on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our consolidated balance sheets. In addition to our commitment to purchase B777Fs and B767Fs, our aircraft purchase commitments include the B757 aircraft in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of May 31, 2013, with the year of expected delivery:

	B757		B767F		B777F		Total
2014		13		4		2		19
2015		—		12		—		12
2016		—		10		2		12
2017		—		10		—		10
2018		—		10		2		12
Thereafter		—		4		14		18
Total		13		50		20		83

Effective as of June 14, 2013, we entered into a supplemental agreement to purchase 13 of the 16 B757 option aircraft noted above. Delivery of the aircraft will occur during 2014 and 2015. This aircraft transaction is not included in the table above, as it occurred subsequent to May 31, 2013.

NOTE 18: CONTINGENCIES

Wage-and-Hour. We are a defendant in a number of lawsuits containing various class-action allegations of wage-and-hour violations. The plaintiffs in these lawsuits allege, among other things, that they were forced to work “off the clock,” were not paid overtime or were not provided work breaks or other benefits. The complaints generally seek unspecified monetary damages, injunctive relief, or both. We do not believe that a material loss is reasonably possible with respect to any of these matters.

Independent Contractor — Lawsuits and State Administrative Proceedings. FedEx Ground is involved in numerous class-action lawsuits (including 31 that have been certified as class actions), individual lawsuits and state tax and other administrative proceedings that claim that the company’s owner-operators should be treated as employees, rather than independent contractors.

Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court for the Northern District of Indiana. The multidistrict litigation court granted class certification in 28 cases and denied it in 14 cases. On December 13, 2010, the court entered an opinion and order addressing all outstanding motions for summary judgment on the status of the owner-operators (i.e., independent contractor vs. employee). In sum, the court has now ruled on our summary judgment motions and entered judgment in favor of FedEx Ground on all claims in 20 of the 28 multidistrict litigation cases that had been certified as class actions, finding that the owner-operators in those cases were contractors as a matter of the law of 20 states. The plaintiffs filed notices of appeal in all of these 20 cases. The Seventh Circuit heard the appeal in the Kansas case in January 2012 and, in July 2012, issued an opinion that did not make a determination with respect to the correctness of the district court’s decision and, instead, certified two questions to the Kansas Supreme Court related to the classification of the plaintiffs as independent contractors under the Kansas Wage Payment Act. The other 19 cases that are before the Seventh Circuit remain stayed pending a decision of the Kansas Supreme Court.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The multidistrict litigation court remanded the other eight certified class actions back to the district courts where they were originally filed because its summary judgment ruling did not completely dispose of all of the claims in those lawsuits. Three of those cases are now on appeal with the Court of Appeals for the Ninth Circuit. The other five remain pending in their respective district courts.

While the granting of summary judgment in favor of FedEx Ground by the multidistrict litigation court in 20 of the 28 cases that had been certified as class actions remains subject to appeal, we believe that it significantly improves the likelihood that our independent contractor model will be upheld. Adverse determinations in matters related to FedEx Ground’s independent contractors, however, could, among other things, entitle certain of our owner-operators and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground’s owner-operators in certain jurisdictions. We believe that FedEx Ground’s owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company’s independent contractors. While it is reasonably possible that potential loss in some of these lawsuits or such changes to the independent contractor status of FedEx Ground’s owner-operators could be material, we cannot yet determine the amount or reasonable range of potential loss. A number of factors contribute to this. The number of plaintiffs in these lawsuits continues to change, with some being dismissed and others being added and, as to new plaintiffs, discovery is still ongoing. In addition, the parties have conducted only very limited discovery into damages, which could vary considerably from plaintiff to plaintiff. Further, the range of potential loss could be impacted considerably by future rulings on the merits of certain claims and FedEx Ground’s various defenses, and on evidentiary issues. In any event, we do not believe that a material loss is probable in these matters.

In addition, we are defending contractor-model cases that are not or are no longer part of the multidistrict litigation, three of which have been certified as class actions. These cases are in varying stages of litigation, and we do not expect to incur a material loss in any of these matters.

Other Matters. In August 2010, a third-party consultant who works with shipping customers to negotiate lower rates filed a lawsuit in federal district court in California against FedEx and United Parcel Service, Inc. (“UPS”) alleging violations of U.S. antitrust law. This matter was dismissed in May 2011, but the court granted the plaintiff permission to file an amended complaint, which FedEx received in June 2011. In November 2011, the court granted our motion to dismiss this complaint, but again allowed the plaintiff to file an amended complaint. The plaintiff filed a new complaint in December 2011, and the matter remains pending before the court. In February 2011, shortly after the initial lawsuit was filed, we received a demand for the production of information and documents in connection with a civil investigation by the U.S. Department of Justice (“DOJ”) into the policies and practices of FedEx and UPS for dealing with third-party consultants who work with shipping customers to negotiate lower rates. In November 2012, the DOJ served a civil investigative demand on the third-party consultant seeking all pleadings, depositions and documents produced in the lawsuit. We are cooperating with the investigation, do not believe that we have engaged in any anti-competitive activities and will vigorously defend ourselves in any action that may result from the investigation. While the litigation proceedings and the DOJ investigation move forward, and the amount of loss, if any, is dependent on a number of factors that are not yet fully developed or resolved, we do not believe that a material loss is reasonably possible.

We have received requests for information from the DOJ in the Northern District of California in connection with a criminal investigation relating to the transportation of packages for online pharmacies that may have shipped pharmaceuticals in violation of federal law. We responded to grand jury subpoenas issued in June 2008 and August 2009 and to additional requests for information pursuant to those subpoenas, and we continue to respond and cooperate with the investigation. We believe that our employees have acted in good faith at all times. We do not believe that we have engaged in any illegal activities and will vigorously defend ourselves in any action that may result from the investigation. The DOJ may pursue a criminal indictment and, if we are convicted, remedies could include fines, penalties, financial forfeiture and compliance conditions. We cannot estimate the amount or range of loss, if any, as such analysis would depend on facts and law that are not yet fully developed or resolved.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of their business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

NOTE 19: RELATED PARTY TRANSACTIONS

Our Chairman, President and Chief Executive Officer, Frederick W. Smith, currently holds an approximate 10% ownership interest in the National Football League Washington Redskins professional football team (“Redskins”) and is a member of its board of directors. FedEx has a multi-year naming rights agreement with the Redskins granting us certain marketing rights, including the right to name the Redskins’ stadium “FedExField.”

NOTE 20: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)

(in millions, except per share amounts)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2013(1)
Revenues	$	10,792	$	11,107	$	10,953	$	11,435
Operating income		742		718		589		502
Net income		459		438		361		303
Basic earnings per common share(2)		1.46		1.39		1.14		0.96
Diluted earnings per common share(2)		1.45		1.39		1.13		0.95
2012(3)
Revenues	$	10,521	$	10,587	$	10,564	$	11,008
Operating income		737		780		813		856
Net income		464		497		521		550
Basic earnings per common share(2)		1.46		1.57		1.66		1.74
Diluted earnings per common share(2)		1.46		1.57		1.65		1.73

⁽¹⁾  The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.

⁽²⁾  The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

⁽³⁾  The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 21: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

We are required to present condensed consolidating financial information in order for the subsidiary guarantors (other than FedEx Express) of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are wholly owned by FedEx, guarantee $2.75 billion of our debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the “Guarantor Subsidiaries” and “Non-guarantor Subsidiaries” columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries are presented in the following tables (in millions):

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2013

	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	3,892	$	405	$	717	$	(97	)	$	4,917
Receivables, less allowances		—		3,989		1,084		(29	)		5,044
Spare parts, supplies, fuel, prepaid expenses and other, less allowances		45		681		54		—			780
Deferred income taxes		—		518		15		—			533
Total current assets		3,937		5,593		1,870		(126	)		11,274
PROPERTY AND EQUIPMENT, AT COST		27		35,915		2,167		—			38,109
Less accumulated depreciation and amortization		21		18,469		1,135		—			19,625
Net property and equipment		6		17,446		1,032		—			18,484
INTERCOMPANY RECEIVABLE		—		439		1,203		(1,642	)		—
GOODWILL		—		1,552		1,203		—			2,755
INVESTMENT IN SUBSIDIARIES		18,739		3,347		—		(22,086	)		—
OTHER ASSETS		2,187		822		191		(2,146	)		1,054
	$	24,869	$	29,199	$	5,499	$	(26,000	)	$	33,567
LIABILITIES AND STOCKHOLDERS’ INVESTMENT CURRENT LIABILITIES
Current portion of long-term debt	$	250	$	1	$	—	$	—		$	251
Accrued salaries and employee benefits		82		1,402		204		—			1,688
Accounts payable		4		1,392		609		(126	)		1,879
Accrued expenses		355		1,366		211		—			1,932
Total current liabilities		691		4,161		1,024		(126	)		5,750
LONG-TERM DEBT, LESS CURRENT PORTION		2,489		250		—		—			2,739
INTERCOMPANY PAYABLE		1,642		—		—		(1,642	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		3,798		—		(2,146	)		1,652
Other liabilities		2,649		3,133		246		—			6,028
Total other long-term liabilities		2,649		6,931		246		(2,146	)		7,680
STOCKHOLDERS’ INVESTMENT		17,398		17,857		4,229		(22,086	)		17,398
	$	24,869	$	29,199	$	5,499	$	(26,000	)	$	33,567

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

May 31, 2012

	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,906	$	417	$	636	$	(116	)	$	2,843
Receivables, less allowances		3		3,793		943		(35	)		4,704
Spare parts, supplies, fuel, prepaid expenses and other, less allowances		261		671		44		—			976
Deferred income taxes		—		514		19		—			533
Total current assets		2,170		5,395		1,642		(151	)		9,056
PROPERTY AND EQUIPMENT, AT COST		29		34,301		1,834		—			36,164
Less accumulated depreciation and amortization		20		17,822		1,074		—			18,916
Net property and equipment		9		16,479		760		—			17,248
INTERCOMPANY RECEIVABLE		—		323		1,524		(1,847	)		—
GOODWILL		—		1,553		834		—			2,387
INVESTMENT IN SUBSIDIARIES		17,163		2,978		—		(20,141	)		—
OTHER ASSETS		2,845		1,099		86		(2,818	)		1,212
	$	22,187	$	27,827	$	4,846	$	(24,957	)	$	29,903
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Current portion of long-term debt	$	—	$	417	$	—	$	—		$	417
Accrued salaries and employee benefits		83		1,365		187		—			1,635
Accounts payable		6		1,276		482		(151	)		1,613
Accrued expenses		184		1,406		119		—			1,709
Total current liabilities		273		4,464		788		(151	)		5,374
LONG-TERM DEBT, LESS CURRENT PORTION		1,000		250		—		—			1,250
INTERCOMPANY PAYABLE		1,847		—		—		(1,847	)		—
OTHER LONG-TERM LIABILITIES
Deferred income taxes		—		3,649		5		(2,818	)		836
Other liabilities		4,340		3,193		183		—			7,716
Total other long-term liabilities		4,340		6,842		188		(2,818	)		8,552
STOCKHOLDERS’ INVESTMENT		14,727		16,271		3,870		(20,141	)		14,727
	$	22,187	$	27,827	$	4,846	$	(24,957	)	$	29,903

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FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Year Ended May 31, 2013

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	37,073		$	7,543		$	(329	)	$	44,287
OPERATING EXPENSES:
Salaries and employee benefits		103			14,375			2,092			—			16,570
Purchased transportation		—			4,839			2,574			(141	)		7,272
Rentals and landing fees		5			2,198			324			(6	)		2,521
Depreciation and amortization		1			2,200			185			—			2,386
Fuel		—			4,650			96			—			4,746
Maintenance and repairs		1			1,791			117			—			1,909
Business realignment, impairment and other charges		21			639			—			—			660
Intercompany charges, net		(227	)		(329	)		556			—			—
Other		96			4,565			1,193			(182	)		5,672
		—			34,928			7,137			(329	)		41,736
OPERATING INCOME		—			2,145			406			—			2,551
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,561			253			—			(1,814	)		—
Interest, net		(108	)		42			5			—			(61	)
Intercompany charges, net		113			(131	)		18			—			—
Other, net		(5	)		(20	)		(10	)		—			(35	)
INCOME BEFORE INCOME TAXES		1,561			2,289			419			(1,814	)		2,455
Provision for income taxes		—			710			184			—			894
NET INCOME	$	1,561		$	1,579		$	235		$	(1,814	)	$	1,561
COMPREHENSIVE INCOME	$	2,622		$	1,618		$	268		$	(1,814	)	$	2,694

- 126 -

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended May 31, 2012

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries		Eliminations			Consolidated
REVENUES	$	—		$	36,412		$	6,569	$	(301	)	$	42,680
OPERATING EXPENSES:
Salaries and employee benefits		114			14,153			1,832		—			16,099
Purchased transportation		—			4,509			1,944		(118	)		6,335
Rentals and landing fees		5			2,221			267		(6	)		2,487
Depreciation and amortization		1			1,962			150		—			2,113
Fuel		—			4,877			79		—			4,956
Maintenance and repairs		1			1,882			97		—			1,980
Impairment and other charges		—			134			—		—			134
Intercompany charges, net		(218	)		(323	)		541		—			—
Other		97			4,482			988		(177	)		5,390
		—			33,897			5,898		(301	)		39,494
OPERATING INCOME		—			2,515			671		—			3,186
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		2,032			395			—		(2,427	)		—
Interest, net		(75	)		31			5		—			(39	)
Intercompany charges, net		80			(102	)		22		—			—
Other, net		(5	)		(10	)		9		—			(6	)
INCOME BEFORE INCOME TAXES		2,032			2,829			707		(2,427	)		3,141
Provision for income taxes		—			875			234		—			1,109
NET INCOME	$	2,032		$	1,954		$	473	$	(2,427	)	$	2,032
COMPREHENSIVE (LOSS) INCOME	$	(120	)	$	1,796		$	380	$	(2,427	)	$	(371	)

- 127 -

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Year Ended May 31, 2011

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
REVENUES	$	—		$	33,124		$	6,498		$	(318	)	$	39,304
OPERATING EXPENSES:
Salaries and employee benefits		109			13,206			1,961			—			15,276
Purchased transportation		—			4,034			1,745			(105	)		5,674
Rentals and landing fees		4			2,209			253			(4	)		2,462
Depreciation and amortization		1			1,784			188			—			1,973
Fuel		—			4,003			148			—			4,151
Maintenance and repairs		1			1,862			116			—			1,979
Impairment and other charges		—			28			61			—			89
Intercompany charges, net		(222	)		(317	)		539			—			—
Other		107			4,392			1,032			(209	)		5,322
		—			31,201			6,043			(318	)		36,926
OPERATING INCOME		—			1,923			455			—			2,378
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries		1,452			200			—			(1,652	)		—
Interest, net		(88	)		13			(2	)		—			(77	)
Intercompany charges, net		104			(135	)		31			—			—
Other, net		(16	)		(14	)		(6	)		—			(36	)
INCOME BEFORE INCOME TAXES		1,452			1,987			478			(1,652	)		2,265
Provision for income taxes		—			677			136			—			813
NET INCOME	$	1,452		$	1,310		$	342		$	(1,652	)	$	1,452
COMPREHENSIVE INCOME	$	1,240		$	1,329		$	425		$	(1,652	)	$	1,342

- 128 -

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended May 31, 2013

				Guarantor			Non- guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES	$	247		$	3,936		$	486		$	19		$	4,688
INVESTING ACTIVITIES
Capital expenditures		(3	)		(3,029	)		(343	)		—			(3,375	)
Business acquisitions, net of cash acquired		—			—			(483	)		—			(483	)
Proceeds from asset dispositions and other		—			49			6			—			55
CASH USED IN INVESTING ACTIVITIES		(3	)		(2,980	)		(820	)		—			(3,803	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		141			(58	)		(83	)		—			—
Payment on loan between subsidiaries		—			(385	)		385			—			—
Intercompany dividends		—			21			(21	)		—			—
Principal payments on debt		—			(417	)		—			—			(417	)
Proceeds from debt issuances		1,739			—			—			—			1,739
Proceeds from stock issuances		280			—			—			—			280
Excess tax benefit on the exercise of stock options		23			—			—			—			23
Dividends paid		(177	)		—			—			—			(177	)
Purchase of treasury stock		(246	)		—			—			—			(246	)
Other, net		(18	)		(119	)		119			—			(18	)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,742			(958	)		400			—			1,184
Effect of exchange rate changes on cash		—			(10	)		15			—			5
Net increase (decrease) in cash and cash equivalents		1,986			(12	)		81			19			2,074
Cash and cash equivalents at beginning of period		1,906			417			636			(116	)		2,843
Cash and cash equivalents at end of period	$	3,892		$	405		$	717		$	(97	)	$	4,917

- 129 -

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended May 31, 2012

				Guarantor			Non- guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(88	)	$	4,383		$	570		$	(30	)	$	4,835
INVESTING ACTIVITIES
Capital expenditures		(5	)		(3,792	)		(210	)		—			(4,007	)
Business acquisition, net of cash acquired		—			—			(116	)		—			(116	)
Proceeds from asset dispositions and other		—			74			—			—			74
CASH USED IN INVESTING ACTIVITIES		(5	)		(3,718	)		(326	)		—			(4,049	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		625			(550	)		(75	)		—			—
Intercompany dividends		—			76			(76	)		—			—
Principal payments on debt		—			(29	)		—			—			(29	)
Proceeds from stock issuances		128			—			—			—			128
Excess tax benefit on the exercise of stock options		18			—			—			—			18
Dividends paid		(164	)		—			—			—			(164	)
Purchase of treasury stock		(197	)								—			(197	)
Other, net		—			(19	)		19			—			—
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		410			(522	)		(132	)		—			(244	)
Effect of exchange rate changes on cash		—			(5	)		(22	)		—			(27	)
Net increase (decrease) in cash and cash equivalents		317			138			90			(30	)		515
Cash and cash equivalents at beginning of period		1,589			279			546			(86	)		2,328
Cash and cash equivalents at end of period	$	1,906		$	417		$	636		$	(116	)	$	2,843

- 130 -

FEDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Year Ended May 31, 2011

				Guarantor			Non- guarantor
	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	25		$	3,978		$	65		$	(27	)	$	4,041
INVESTING ACTIVITIES
Capital expenditures		(1	)		(3,263	)		(170	)		—			(3,434	)
Business acquisition, net of cash acquired		—			(96	)		—			—			(96	)
Proceeds from asset dispositions and other		—			110			1			—			111
CASH USED IN INVESTING ACTIVITIES		(1	)		(3,249	)		(169	)		—			(3,419	)
FINANCING ACTIVITIES
Net transfers from (to) Parent		530			(994	)		464			—			—
Payment on loan between subsidiaries		—			235			(235	)		—			—
Intercompany dividends		—			61			(61	)		—			—
Principal payments on debt		(250	)		(12	)		—			—			(262	)
Proceeds from stock issuances		108			—			—			—			108
Excess tax benefit on the exercise of stock options		23			—			—			—			23
Dividends paid		(151	)		—			—			—			(151	)
Other, net		(5	)		(9	)		9			—			(5	)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		255			(719	)		177			—			(287	)
Effect of exchange rate changes on cash		—			11			30			—			41
Net increase (decrease) in cash and cash equivalents		279			21			103			(27	)		376
Cash and cash equivalents at beginning of period		1,310			258			443			(59	)		1,952
Cash and cash equivalents at end of period	$	1,589		$	279		$	546		$	(86	)	$	2,328

- 131 -

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES. While we currently have market risk sensitive instruments related to interest rates, we have no significant exposure to changing interest rates on our long-term debt because the interest rates are fixed on all of our long-term debt. As disclosed in Note 6 to the accompanying consolidated financial statements, we had outstanding fixed-rate, long-term debt (exclusive of capital leases) with estimated fair values of $3.2 billion at May 31, 2013 and $2.0 billion at May 31, 2012. Market risk for fixed-rate, long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to $77 million as of May 31, 2013 and $30 million as of May 31, 2012. The underlying fair values of our long-term debt were estimated based on quoted market prices or on the current rates offered for debt with similar terms and maturities.

We have interest rate risk with respect to our pension and postretirement benefit obligations. Changes in interest rates impact our liabilities associated with these benefit plans as well as the amount of pension and postretirement benefit expense recognized. Declines in the value of plan assets could diminish the funded status of our pension plans and potentially increase our requirement to make contributions to the plans. Substantial investment losses on plan assets will also increase pension and postretirement benefit expense in the years following the losses.

FOREIGN CURRENCY. While we are a global provider of transportation, e-commerce and business services, the substantial majority of our transactions are denominated in U.S. dollars. The principal foreign currency exchange rate risks to which we are exposed are in the Chinese yuan, euro, Brazilian real, Canadian dollar and the British pound. Historically, our exposure to foreign currency fluctuations is more significant with respect to our revenues than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft and fuel expenses. During 2013 and 2012, foreign currency fluctuations had a slightly positive impact on operating income. However, favorable foreign currency fluctuations also may have had an offsetting impact on the price we obtained or the demand for our services, which is not quantifiable. At May 31, 2013, the result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which our transactions are denominated would result in a decrease in operating income of $132 million for 2014. This theoretical calculation required under SEC guidelines assumes that each exchange rate would change in the same direction relative to the U.S. dollar, which is not consistent with our actual experience in foreign currency transactions. In addition to the direct effects of changes in exchange rates, fluctuations in exchange rates also affect the volume of sales or the foreign currency sales price as competitors’ services become more or less attractive. The sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices.

COMMODITY. While we have market risk for changes in the price of jet and vehicle fuel, this risk is largely mitigated by our fuel surcharges because our fuel surcharges are closely linked to market prices for fuel. Therefore, a hypothetical 10% change in the price of fuel would not be expected to materially affect our earnings over the long term.

However, our fuel surcharges have a timing lag (approximately six to eight weeks for FedEx Express and FedEx Ground) before they are adjusted for changes in fuel prices. Our fuel surcharge index also allows fuel prices to fluctuate approximately 2% for FedEx Express and approximately 4% for FedEx Ground before an adjustment to the fuel surcharge occurs. Accordingly, our operating income in a specific period may be significantly affected should the spot price of fuel suddenly change by a substantial amount or change by amounts that do not result in an adjustment in our fuel surcharges.

OTHER. We do not purchase or hold any derivative financial instruments for trading purposes.

- 132 -

SELECTED FINANCIAL DATA

The following table sets forth (in millions, except per share amounts and other operating data) certain selected consolidated financial and operating data for FedEx as of and for the five years ended May 31, 2013. This information should be read in conjunction with the Consolidated Financial Statements, MD&A and other financial data appearing elsewhere in this Annual Report.

	2013(1)		2012(2)		2011(3)		2010(4)		2009(5)
Operating Results
Revenues	$	44,287	$	42,680	$	39,304	$	34,734	$	35,497
Operating income		2,551		3,186		2,378		1,998		747
Income before income taxes		2,455		3,141		2,265		1,894		677
Net income		1,561		2,032		1,452		1,184		98
Per Share Data
Earnings per share:
Basic	$	4.95	$	6.44	$	4.61	$	3.78	$	0.31
Diluted	$	4.91	$	6.41	$	4.57	$	3.76	$	0.31
Average shares of common stock outstanding		315		315		315		312		311
Average common and common equivalent shares outstanding		317		317		317		314		312
Cash dividends declared	$	0.56	$	0.52	$	0.48	$	0.44	$	0.44
Financial Position
Property and equipment, net	$	18,484	$	17,248	$	15,543	$	14,385	$	13,417
Total assets		33,567		29,903		27,385		24,902		24,244
Long-term debt, less current portion		2,739		1,250		1,667		1,668		1,930
Common stockholders’ investment		17,398		14,727		15,220		13,811		13,626
Other Operating Data
FedEx Express aircraft fleet		647		660		688		667		654

⁽¹⁾  Results for 2013 include $560 million ($353 million, net of tax, or $1.11 per diluted share) of business realignment costs and a $100 million ($63 million, net of tax, or $0.20 per diluted share) impairment charge resulting from the decision to retire 10 aircraft and related engines at FedEx Express. See Note 1 to the accompanying consolidated financial statements. Additionally, common stockholders’ investment includes an other comprehensive income increase of $861 million, net of tax, for the funded status of our retirement plans at May 31, 2013.

⁽²⁾  Results for 2012 include a $134 million ($84 million, net of tax or $0.26 per diluted share) impairment charge resulting from the decision to retire 24 aircraft and related engines at FedEx Express and the reversal of a $66 million legal reserve initially recorded in 2011. See Note 1 to the accompanying consolidated financial statements. Additionally, common stockholders’ investment includes an other comprehensive income charge of $2.4 billion, net of tax, for the funded status of our retirement plans at May 31, 2012.

⁽³⁾  Results for 2011 include charges of approximately $199 million ($104 million, net of tax and applicable variable incentive compensation impacts, or $0.33 per diluted share) for the combination of our FedEx Freight and FedEx National LTL operations and a $66 million reserve associated with a legal matter at FedEx Express. See Note 1 to the accompanying consolidated financial statements. Additionally, common stockholders’ investment includes an other comprehensive income charge of $350 million, net of tax, for the funded status of our retirement plans at May 31, 2011.

⁽⁴⁾  Common stockholders’ investment includes an other comprehensive income charge of $1.0 billion, net of tax, for the funded status of our retirement plans at May 31, 2010.

⁽⁵⁾  Results for 2009 include a charge of $1.2 billion ($1.1 billion, net of tax, or $3.45 per diluted share) primarily for impairment charges associated with goodwill and aircraft. Additionally, common stockholders’ investment includes an other comprehensive income charge of $1.2 billion, net of tax, for the funded status of our retirement plans at May 31, 2009.

- 133 -

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

FedEx Corporation

We have audited the consolidated financial statements of FedEx Corporation as of May 31, 2013 and 2012, and for each of the three years in the period ended May 31, 2013, and have issued our report thereon dated July 15, 2013 (included elsewhere in this Annual Report on Form 10-K). Our audits also included the financial statement schedule listed in Item 15(a) in this Annual Report on Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 15, 2013

- 134 -

SCHEDULE II

FEDEX CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED MAY 31, 2013, 2012, AND 2011

(IN MILLIONS)

			ADDITIONS
DESCRIPTION	BALANCE AT BEGINNING OF YEAR		CHARGED TO EXPENSES		CHARGED TO OTHER ACCOUNTS			DEDUCTIONS			BALANCE AT END OF YEAR
Accounts Receivable Reserves:
Allowance for Doubtful Accounts
2013	$	94	$	167	$	—		$	167	(a)	$	94
2012		97		160		—			163	(a)		94
2011		93		152		—			148	(a)		97
Allowance for Revenue Adjustments
2013	$	84	$	—	$	573	(b)	$	575	(c)	$	82
2012		85		—		570	(b)		571	(c)		84
2011		73		—		532	(b)		520	(c)		85
Inventory Valuation Allowance:
2013	$	184	$	24	$	—		$	3		$	205
2012		169		15		—			—			184
2011		170		13		—			14			169

(a) Uncollectible accounts written off, net of recoveries.

(b) Principally charged against revenue.

(c) Service failures, rebills and other.

- 135 -

FEDEX CORPORATION

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(UNAUDITED)

(IN MILLIONS, EXCEPT RATIOS)

	Year Ended May 31,
	2013		2012		2011		2010		2009
Earnings:
Income before income taxes	$	2,455	$	3,141	$	2,265	$	1,894	$	677
Add back:
Interest expense, net of capitalized interest		82		52		86		79		85
Amortization of debt issuance costs		5		5		16		14		5
Portion of rent expense representative of interest factor		864		797		852		806		795
Earnings as adjusted	$	3,406	$	3,995	$	3,219	$	2,793	$	1,562
Fixed Charges:
Interest expense, net of capitalized interest	$	82	$	52	$	86	$	79	$	85
Capitalized interest		45		85		71		80		71
Amortization of debt issuance costs		5		5		16		14		5
Portion of rent expense representative of interest factor		864		797		852		806		795
	$	996	$	939	$	1,025	$	979	$	956
Ratio of Earnings to Fixed Charges		3.4		4.3		3.1		2.9		1.6

- 136 -

EXHIBIT INDEX

Exhibit     Number	Description of Exhibit
	Certificate of Incorporation and Bylaws
3.1	Third Amended and Restated Certificate of Incorporation of FedEx. (Filed as Exhibit 3.1 to FedEx’s Current Report on Form 8-K dated September 26, 2011 and filed September 28, 2011, and incorporated herein by reference.)
3.2	Amended and Restated Bylaws of FedEx. (Filed as Exhibit 3.3 to FedEx’s Current Report on Form 8-K dated September 26, 2011 and filed September 28, 2011, and incorporated herein by reference.)
	Facility Lease Agreements
10.1	Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Memphis-Shelby County Airport Authority (the “Authority”) and FedEx Express. (Filed as Exhibit 10.1 to FedEx’s FY07 Annual Report on Form 10-K, and incorporated herein by reference.)
10.2	First Amendment dated December 29, 2009 (but effective as of September 1, 2008) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Authority and FedEx Express. (Filed as Exhibit 10.1 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.3	Second Amendment dated March 30, 2010 (but effective as of June 1, 2009) and Third Amendment dated April 27, 2010 (but effective as of July 1, 2009), each amending the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Authority and FedEx Express. (Filed as Exhibit 10.3 to FedEx’s FY10 Annual Report on Form 10-K, and incorporated herein by reference.)
10.4	Fourth Amendment dated December 22, 2011 (but effective as of December 15, 2011) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Authority and FedEx Express. (Filed as Exhibit 10.4 to FedEx’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.5	Fifth Amendment dated December 19, 2012 (but effective as of January 1, 2013) to the Composite Lease Agreement dated May 21, 2007 (but effective as of January 1, 2007) between the Authority and FedEx Express. (Filed as Exhibit 10.5 to FedEx’s FY13 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.6	Special Facility Lease Agreement dated as of August 1, 1979 between the Authority and FedEx Express. (Filed as Exhibit 10.15 to FedEx Express’s FY90 Annual Report on Form 10-K, and incorporated herein by reference.)
10.7	First Special Facility Supplemental Lease Agreement dated as of May 1, 1982 between the Authority and FedEx Express. (Filed as Exhibit 10.25 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
10.8	Second Special Facility Supplemental Lease Agreement dated as of November 1, 1982 between the Authority and FedEx Express. (Filed as Exhibit 10.26 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)

E-1

Exhibit     Number	Description of Exhibit
10.9	Third Special Facility Supplemental Lease Agreement dated as of December 1, 1984 between the Authority and FedEx Express. (Filed as Exhibit 10.25 to FedEx Express’s FY95 Annual Report on Form 10-K, and incorporated herein by reference.)
10.10	Fourth Special Facility Supplemental Lease Agreement dated as of July 1, 1992 between the Authority and FedEx Express. (Filed as Exhibit 10.20 to FedEx Express’s FY92 Annual Report on Form 10-K, and incorporated herein by reference.)
10.11	Fifth Special Facility Supplemental Lease Agreement dated as of July 1, 1997 between the Authority and FedEx Express. (Filed as Exhibit 10.35 to FedEx Express’s FY97 Annual Report on Form 10-K, and incorporated herein by reference.)
10.12	Sixth Special Facility Supplemental Lease Agreement dated as of December 1, 2001 between the Authority and FedEx Express. (Filed as Exhibit 10.28 to FedEx’s FY02 Annual Report on Form 10-K, and incorporated herein by reference.)
10.13	Seventh Special Facility Supplemental Lease Agreement dated as of June 1, 2002 between the Authority and FedEx Express. (Filed as Exhibit 10.3 to FedEx’s FY03 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.14	Special Facility Lease Agreement dated as of July 1, 1993 between the Authority and FedEx Express. (Filed as Exhibit 10.29 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
10.15	Special Facility Ground Lease Agreement dated as of July 1, 1993 between the Authority and FedEx Express. (Filed as Exhibit 10.30 to FedEx Express’s FY93 Annual Report on Form 10-K, and incorporated herein by reference.)
10.16	First Amendment dated December 29, 2009 (but effective as of September 1, 2008) to the Special Facility Ground Lease Agreement dated as of July 1, 1993 between the Authority and FedEx Express. (Filed as Exhibit 10.2 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	Aircraft-Related Agreements
10.17	Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY07 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.18	Supplemental Agreement No. 1 dated as of June 16, 2008 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. (Filed as Exhibit 10.13 to FedEx’s FY08 Annual Report on Form 10-K, and incorporated herein by reference.)
10.19	Supplemental Agreement No. 2 dated as of July 14, 2008 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. (Filed as Exhibit 10.3 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-2

Exhibit     Number	Description of Exhibit
10.20	Supplemental Agreement No. 3 dated as of December 15, 2008 (and related side letters) to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.4 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.21	Supplemental Agreement No. 4 dated as of January 9, 2009 (and related side letters) to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY09 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.22	Side letters dated May 29, 2009 and May 19, 2009, amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.17 to FedEx’s FY09 Annual Report on Form 10-K, and incorporated herein by reference.)
10.23	Supplemental Agreement No. 5 dated as of January 11, 2010 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.24	Supplemental Agreement No. 6 dated as of March 17, 2010, Supplemental Agreement No. 7 dated as of March 17, 2010, and Supplemental Agreement No. 8 (and related side letters) dated as of April 30, 2010, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.22 to FedEx’s FY10 Annual Report on Form 10-K, and incorporated herein by reference).
10.25	Supplemental Agreement No. 9 dated as of June 18, 2010, Supplemental Agreement No. 10 dated as of June 18, 2010, Supplemental Agreement No. 11 (and related side letter) dated as of August 19, 2010, and Supplemental Agreement No. 13 (and related side letter) dated as of August 27, 2010, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY11 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.26	Supplemental Agreement No. 12 (and related side letter) dated as of September 3, 2010, Supplemental Agreement No. 14 (and related side letter) dated as of October 25, 2010, and Supplemental Agreement No. 15 (and related side letter) dated as of October 29, 2010, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY11 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-3

Exhibit     Number	Description of Exhibit
10.27	Supplemental Agreement No. 16 (and related side letters) dated as of January 31, 2011, and Supplemental Agreement No. 17 dated as of February 14, 2011, each amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY11 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.28	Supplemental Agreement No. 18 (and related side letter) dated as of March 30, 2011 to the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.26 to FedEx’s FY11 Annual Report on Form 10-K, and incorporated herein by reference.)
10.29	Supplemental Agreement No. 19 (and related side letter) dated as of October 27, 2011, amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY12 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.30	Supplemental Agreement No. 20 (and related side letters) dated as of December 14, 2011, amending the Boeing 777 Freighter Purchase Agreement dated as of November 7, 2006 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.31	Boeing 767-3S2 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.32	Supplemental Agreement No. 1 (and related side letters) dated as of June 29, 2012, amending the Boeing 767-3S2 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY13 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.33	Supplemental Agreement No. 21 dated as of June 29, 2012, amending the Boeing 777 Freighter Purchase Agreement dated November 7, 2006 between The Boeing Company and Federal Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY13 First Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-4

Exhibit     Number	Description of Exhibit
10.34	Supplemental Agreement No. 2 dated as of October 8, 2012, amending the Boeing 767-3S2 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY13 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.35	Supplemental Agreement No. 3 (and related side letters) dated as of December 11, 2012, amending the Boeing 767-3S2 Freighter Purchase Agreement dated as of December 14, 2011 between The Boeing Company and Federal Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY13 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.36	Supplemental Agreement No. 22 (and related side letters) dated as of December 11, 2012, amending the Boeing 777 Freighter Purchase Agreement dated November 7, 2006 between The Boeing Company and Federal Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY13 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	U.S. Postal Service Agreements
10.37	Transportation Agreement dated July 31, 2006 between the United States Postal Service (the “USPS”) and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY07 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.38	Amendment dated November 30, 2006 to the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY07 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.39	Letter Agreement dated March 8, 2007 and Letter Agreement dated May 14, 2007, each amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.15 to FedEx’s FY07 Annual Report on Form 10-K, and incorporated herein by reference.)
10.40	Amendment dated June 20, 2007 and Amendment dated July 31, 2007, each amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY08 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.41	Amendment dated December 4, 2007 to the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY08 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-5

Exhibit     Number	Description of Exhibit
10.42	Letter Agreement dated October 23, 2008 and Amendment dated October 23, 2008, each amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.43	Letter Agreement dated March 4, 2009, amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. (Filed as Exhibit 10.24 to FedEx’s FY09 Annual Report on Form 10-K, and incorporated herein by reference.)
10.44	Letter Agreement dated September 29, 2009, amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.1 to FedEx’s FY10 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.45	Amendment dated December 8, 2009 to the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.4 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.46	Letter Agreement dated August 30, 2010, amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.2 to FedEx’s FY11 First Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.47	Amendment dated November 22, 2010 to the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY11 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.48	Letter Agreement dated September 9, 2011, amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY12 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.49	Amendment dated December 5, 2011 to the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY12 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.50	Amendment dated December 3, 2012 to the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.3 to FedEx’s FY13 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)

E-6

Exhibit     Number	Description of Exhibit
10.51	Letter Agreement dated January 25, 2013, amending the Transportation Agreement dated July 31, 2006 between the USPS and FedEx Express. Confidential treatment has been granted for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (Filed as Exhibit 10.4 to FedEx’s FY13 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
*10.52	Transportation Agreement dated April 23, 2013 between the USPS and FedEx Express. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
*10.53	Amendment dated May 28, 2013, amending the Transportation Agreement dated April 23, 2013 between the USPS and FedEx Express. Confidential treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
	Financing Agreement
10.54	Five-Year Credit Agreement dated as of April 26, 2011, among FedEx, JPMorgan Chase Bank, N.A., individually and as administrative agent, and certain lenders. (Filed as Exhibit 99.1 to FedEx’s Current Report on Form 8-K dated April 26, 2011 and filed April 29, 2011, and incorporated herein by reference.)
10.55	First Amendment dated March 1, 2013 amending the Five-Year Credit Agreement dated April 26, 2011, among FedEx, JPMorgan Chase Bank, N.A., individually and as administrative agent, and certain lenders. (Filed as Exhibit 10.6 to FedEx’s FY13 Third Quarter Report on Form 10-Q, and incorporated herein by reference.) FedEx is not filing any other instruments evidencing any indebtedness because the total amount of securities authorized under any single such instrument does not exceed 10% of the total assets of FedEx and its subsidiaries on a consolidated basis. Copies of such instruments will be furnished to the Securities and Exchange Commission upon request.
	Management Contracts/Compensatory Plans or Arrangements
10.56	Amendment to 1993 Stock Incentive Plan. (Filed as Exhibit 10.63 to FedEx Express’s FY94 Annual Report on Form 10-K, and incorporated herein by reference.)
10.57	1995 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1995 Stock Incentive Plan. (The 1995 Stock Incentive Plan was filed as Exhibit A to FedEx Express’s FY95 Definitive Proxy Statement, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 99.2 to FedEx Express’s Registration Statement No. 333-03443 on Form S-8, and is incorporated herein by reference.)
10.58	Amendment to 1993 and 1995 Stock Incentive Plans. (Filed as Exhibit 10.79 to FedEx Express’s FY97 Annual Report on Form 10-K, and incorporated herein by reference.)
10.59	1997 Stock Incentive Plan, as amended, and Form of Stock Option Agreement pursuant to 1997 Stock Incentive Plan. (The 1997 Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement on Form S-8, Registration No. 333-71065, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-71065 on Form S-8, and is incorporated herein by reference.)

E-7

Exhibit     Number	Description of Exhibit
10.60	Amendment to 1997 Stock Incentive Plan. (Filed as Exhibit A to FedEx’s FY98 Definitive Proxy Statement, and incorporated herein by reference.)
10.61	1999 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 1999 Stock Incentive Plan. (The 1999 Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-34934 on Form S-8, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-34934 on Form S-8, and is incorporated herein by reference.)
10.62	2002 Stock Incentive Plan and Form of Stock Option Agreement pursuant to 2002 Stock Incentive Plan. (The 2002 Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-100572 on Form S-8, and is incorporated herein by reference, and the form of stock option agreement was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-100572 on Form S-8, and is incorporated herein by reference.)
10.63	2001 Restricted Stock Plan and Form of Restricted Stock Agreement pursuant to 2001 Restricted Stock Plan. (Filed as Exhibit 10.60 to FedEx’s FY01 Annual Report on Form 10-K, and incorporated herein by reference.)
10.64	Amendment to 2001 Restricted Stock Plan. (Filed as Exhibit 10.67 to FedEx’s FY02 Annual Report on Form 10-K, and incorporated herein by reference.)
10.65	Amendment to 1995, 1997, 1999 and 2002 Stock Incentive Plans and 2001 Restricted Stock Plan. (Filed as Exhibit 10.3 to FedEx’s FY04 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.66	FedEx Corporation Incentive Stock Plan, as amended; Amendment to FedEx Corporation Incentive Stock Plan, as amended, and 1997, 1999 and 2002 Stock Incentive Plans; Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation Incentive Stock Plan, as amended; and Form of Restricted Stock Agreement pursuant to FedEx Corporation Incentive Stock Plan, as amended. (The FedEx Corporation Incentive Stock Plan, as amended, was filed as Exhibit 4.1 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference; the Amendment to FedEx Corporation Incentive Stock Plan, as amended, and 1997, 1999 and 2002 Stock Incentive Plans was filed as Exhibit 4.2 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference; the Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation Incentive Stock Plan, as amended, was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference; and the Form of Restricted Stock Agreement pursuant to FedEx Corporation Incentive Stock Plan, as amended, was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-156333 on Form S-8, and is incorporated herein by reference.)
10.67	FedEx Corporation Incentive Stock Plan 2005 Inland Revenue Approved Sub-Plan for the United Kingdom and Form of Share Option Agreement pursuant to the FedEx Corporation Incentive Stock Plan 2005 Inland Revenue Approved Sub-Plan for the United Kingdom. (The United Kingdom Sub-Plan was filed as Exhibit 4.2 to FedEx’s Registration Statement No. 333-130619 on Form S-8, and is incorporated herein by reference, and the form of share option agreement pursuant to the UK Sub-Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-130619 on Form S-8, and is incorporated herein by reference.)

E-8

Exhibit     Number	Description of Exhibit
10.68	Amendments to 1993, 1995, 1997, 1999 and 2002 Stock Incentive Plans, as amended, 2001 Restricted Stock Plan, as amended, and FedEx Corporation Incentive Stock Plan, as amended. (Filed as Exhibit 10.48 to FedEx’s FY10 Annual Report on Form 10-K, and incorporated herein by reference.)
10.69	Amendments to 1993, 1995, 1997, 1999 and 2002 Stock Incentive Plans, 2001 Restricted Stock Plan and FedEx Corporation Incentive Stock Plan. (Filed as Exhibit 10.2 to FedEx’s FY11 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.70	FedEx Corporation 2010 Omnibus Stock Incentive Plan; Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan; and Form of Terms and Conditions of restricted stock grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan. (The FedEx Corporation 2010 Omnibus Stock Incentive Plan was filed as Exhibit 4.3 to FedEx’s Registration Statement No. 333-171232 on Form S-8, and is incorporated herein by reference; the Form of Terms and Conditions of stock option grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan was filed as Exhibit 4.4 to FedEx’s Registration Statement No. 333-171232 on Form S-8, and is incorporated herein by reference; and the Form of Terms and Conditions of restricted stock grant pursuant to FedEx Corporation 2010 Omnibus Stock Incentive Plan was filed as Exhibit 4.5 to FedEx’s Registration Statement No. 333-171232 on Form S-8, and is incorporated herein by reference.)
10.71	Amended and Restated FedEx Corporation Retirement Parity Pension Plan. (Filed as Exhibit 10.35 to FedEx’s FY08 Annual Report on Form 10-K, and incorporated herein by reference.)
10.72	FedEx Express Supplemental Long Term Disability Plan and Amendment to the Plan. (Filed as Exhibit 10.56 to FedEx’s FY11 Annual Report on Form 10-K, and incorporated herein by reference.)
*10.73	Compensation Arrangements with Named Executive Officers.
10.74	Compensation Arrangements with Outside Directors. (Filed as Exhibit 10.1 to FedEx’s FY13 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.75	FedEx’s Amended and Restated Retirement Plan for Outside Directors. (Filed as Exhibit 10.2 to FedEx’s FY09 Second Quarter Report on Form 10-Q, and incorporated herein by reference.)
10.76	Form of revised Management Retention Agreement, dated March 18, 2010, entered into between FedEx and each of Frederick W. Smith, David J. Bronczek, Robert B. Carter, T. Michael Glenn, Alan B. Graf, Jr., William J. Logue, David F. Rebholz and Christine P. Richards. (Filed as Exhibit 10.5 to FedEx’s FY10 Third Quarter Report on Form 10-Q, and incorporated herein by reference.)
	Other Exhibits
*12	Statement re Computation of Ratio of Earnings to Fixed Charges (presented on page 136 of this Annual Report on Form 10-K).
*21	Subsidiaries of Registrant.
*23	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.

E-9

Exhibit     Number	Description of Exhibit
*24	Powers of Attorney.
*31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*101.1	Interactive Data Files.

* Filed herewith.

E-10

EX-10.52

EXHIBIT 10.52

ORDER / SOLICITATION / OFFER / AWARD

OFFEROR TO COMPLETE BLOCKS 13, 14, 16, 22, 23 and 26 1. REQUISITION NO.                          PAGE 1 OF  4

2. CONTRACT/ORDER NO.
ACN-13-FX 3. AWARD/
EFFECTIVE DATE 04/23/2013 4. MASTER/AGENCY CONTRACT NO. 5. SOLICITATION NO.
SA- 12- A- 0024 6. SOLICITATION
ISSUE DATE
01/08/2013

7. For Solicitation Information Call a. NAME Gregory Bayne b. TELEPHONE NO.
(202) 268-3428 c. FAX NO. (202) 268-5879 8. OFFER DUE  DATE/TIME

9. ISSUED BY	CODE	5ASNET	10. ACO   CODE 5ASNET	11.SOLICITATION METHOD ¨ RFQ x RFP ¨ ORAL	12. DELIVERY FOR FOB DESTINATION UNLESS BLOCK IS CHECKED ¨  SEE SCHEDULE	13. DISCOUNT TERMS See Schedule
Air CMC Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 20260-0650 EMAIL: gregory.j.bayne@usps.gov
14 SUPPLIER	CODE	000389122	15. BILLING ADDRESS NO INVOICE
FEDERAL EXPRESS CORPORATION 3610 HACKS CROSS ROAD MEMPHIS TN 38125-8800 TEL:                                     FAX: EMAIL:
16. REMITTANCE ADDRESS	CODE	00001	17. DELIVERY ADDRESS
FEDERAL EXPRESS CORPORATION 3680 HACKS CROSS ROAD BLDG H 1ST FLOOR ATTN MR RON STEVENS MEMPHIS TN 381258800 TEL:                                     FAX: EMAIL:		¨ CHECK     x  EFT	Multiple Destinations TELEPHONE NO: DELIVER BY/END DATE:

18. ITEM NO	19. SCHEDULE OF SUPPLIES/SERVICES	20. QUANTITY	21. UNIT	22. UNIT PRICE	23. AMOUNT
	The purpose of this contract is to provide air transportation and ancillary services for mail to and from destinations within the contiguous forty-eight (48) states as well as non-contiguous areas to include Alaska, Hawaii, and Puerto Rico.
	FedEx proposals 2F and 2B are incorporated in their entirety, with the exception of the following attachments:
	•    Attachment 10: Pricing
	•    Attachment 12: Tender & Delivery Time Commitment Continued…

24.		TOTAL AWARD AMOUNT          (USPS Use Only)                                              $10,587,215,777.61
25. x The supplier is required to sign this document and return copies to the issuing office. The supplier agrees, subject to the terms and conditions specified herein, to provide and deliver all items identified above and on any additional sheets.	2	26. ¨ Award of Contract: Your offer on Solicitation (block 5) is accepted as to items
27a. SIGNATURE OF SUPPLIER /s/ PAUL HERRON		28a. UNITED STATES POSTAL SERVICE             (SIGNATURE  OF CONTRACTING OFFICER) /s/ GREGORY BAYNE

27b. PRINTED NAME AND TITLE OF SUPPLIER Paul Herron, Vice President 27c. DATE SIGNED
04/23/2013 28b. PRINTED NAME OF CONTRACTING OFFICER
Gregory                     Bayne 28c. DATE SIGNED
04/23/2013

PS Form 8203 (March 2007)

CONTINUATION SHEET REQUISITION NO.                          PAGE 2 OF 4

CONTRACT/ORDER NO. ACN-13-FX AWARD/ EFFECTIVE DATE 04/23/2013 MASTER/AGENCY CONTRACT NO. SOLICITATION NO. SA- 12- A- 0024 SOLICITATION ISSUE DATE 01/08/2013

ITEM NO	SCHEDULE OF SUPPLIES / SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	•   Attachment 13: SCA Wage Determinations
	Attachment 10: Pricing and Attachment 13: SCA Wage Determinations, from FedEx proposals 2F and 2B, are superseded by Attachment 10: Pricing and Attachment 13: SCA Wage Determinations, as incorporated in this contract. Attachment 12: Tender & Delivery Time Commitment, from FedEx proposals 2F and 2B, is superseded by Attachment 3: Operating Plan, Day Network and Attachment 4: Operating Plan, Night Network, as incorporated in this contract.
	FedEx agrees that the final determination of the Department of Labor regarding the applicability of the common carrier exemption to the services covered by this contract, as described in Attachment 9: Wage Determination and Attachment 13: Service Contract Act Wage Determinations, will not require an adjustment to the prices contained in Attachment 10: Pricing.
	FedEx agrees to meeting and providing details on the Subcontracting Plan and associated goals and the Security Plan within sixty (60) days of contract award.
	In accordance with Clause 6-1, the COR appointment letter is incorporated.
	Box 6, Solicitation issue date is 9/7/2012. Period of Performance: 10/01/2013 to 09/30/2020
00001	Day Network					[*]
	Accounting Info: BFN: 670167 Funded: [*] FOB: Destination
00002	Night Network					[*]
	Accounting Info: BFN: 670166 Funded: [*] Continued…

PS Form 8203 (March 2007) * Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET			REQUISITION NO.		PAGE     3	OF   4
CONTRACT/ORDER NO. ACN-13-FX	AWARD/ EFFECTIVE DATE 04/23/2013	MASTER/AGENCY CONTRACT NO.		SOLICITATION NO. SA-12-A-0024	SOLICITATION ISSUE DATE 01/08/2013

ITEM NO	SCHEDULE OF SUPPLIES / SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
00003	FOB Destination Option 1: Truck Location Tender and Delivery Times				[*]
	After contract award but not later than one hundred twenty (120) days prior to Operating Period 1, as shown in Attachment 1: Postal Service Operating Periods, the Postal Service, at its sole discretion, may exercise Option 1 to implement Option 1, Attachment 3: Operating Plan, Day Network, and Option 1, Attachment 4: Operating Plan, Night Network, reflecting changes to the process codes and tender and delivery times allowing the Postal Service to truck to and from Memphis and these air stops.
	In consideration for exercising Option 1, the subject pricing will be reduced in accordance with Option 1, Attachment 10: Pricing. (Option Line Item)
	Accounting Info: BFN: 670167 Funded: $0.00 FOB: Destination
					[*]
00004	Option 2: San Juan Delivery Time
	During the first twelve (12) months following contract award, upon ninety (90) days advance written notice to the aviation supplier, the Postal Service, at its sole discretion, may Exercise Option 2 to implement Option 2, Attachment 3: Operating Plan, Day Network, reflecting changes to the tender and delivery times for San Juan (SJU). In consideration for exercising Option 2, the subject pricing will be reduced in accordance with Option 2, Attachment 10: Pricing. (Option Line Item)
	Accounting Info: BFN: 670167 Funded: $0.00 Continued…

PS Form 8203 (March 2007) * Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET			REQUISITION NO.		PAGE     4	OF   4
CONTRACT/ORDER NO. ACN-13-FX	AWARD/ EFFECTIVE DATE 04/23/2013	MASTER/AGENCY CONTRACT NO.		SOLICITATION NO. SA-12-A-0024	SOLICITATION ISSUE DATE 01/08/2013

ITEM NO	SCHEDULE OF SUPPLIES / SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
	FOB Destination
00005	Option 3: Partial Container Calculation Language				[*]
	During the first twelve (12) months following the first day of contract performance, upon written notice to the aviation supplier, the Postal Service, at its sole discretion, may exercise Option 3 and modify the language set forth in the contract at Payment Processing - Day Network - Per Cube: Mail Tendered in ULDs as follows:
	Recognizing operational inefficiencies filling the last ULD at every location, the Postal Service will incorporate within the daily invoice a daily credit of [*] cubic feet for each origin air stop per day. The rate used will be the applicable base or tier cubic foot rate used at the beginning of the invoice day.
	In consideration for exercising Option 3, the subject pricing will be reduce in accordance with Option 3, Attachment 10: Pricing.
	If Option 1 has been executed, the reduction will be [*]. If Option 2 has been executed, the reduction will be [*]. If both Options 1 and 2 have been executed, the reduction will be [*]. (Option Line Item)
	Accounting Info: BFN: 670167 Funded: $0.00 FOB: Destination
	The dollar amounts included in boxes 23 and 24 are fir USPS internal budgeting purposes only, and in no way provide a guarantee to the supplier.

PS Form 8203 (March 2007) * Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

United States Postal Service

AIR CARGO NETWORK

Contract ACN-13-FX

Awarded By:

Air Transportation CMC

Transportation Portfolio

Supply Management

475 L’Enfant Plaza SW

Room 1P 650

Washington, DC 20260-0650

April 23, 2013

Air Cargo Network

Contract ACN-13-FX

Table of Contents

Table of Contents

Part 1: Statement of Work	5
Purpose and Scope	5
Scale	5
Services Provided	5
Service Points	6
Management Plan	6
Frequency	7
Mail Assignment and Transport—Day Network	7
Mail Assignment and Transport—Night Network	7
Local Agreements	7
Postal Service Performs Terminal Handling Service (THS) Operation—Day Network	7
Aviation Supplier Planned Accommodation—Day Network	8
Aviation Supplier Planned Accommodation—Night Network	9
Delivery—Day Network	9
Delivery—Night Network	9
Saturday Delivery—Day Network	9
Specific Delivery Instructions	9
Boarding Priority—Day Network	9
Boarding Priority—Night Network	10
Repossession of Mail by the Postal Service	10
Treatment of Exceptional Types of Mail	10
Perishable Mail and Live Mail	12
Registered Mail	12
Offshore Capacity Requirement—Day Network	12
Volume Commitment—General Information	12
Volume Commitment—Contract Volume Minimum—Day Network	13
Operating Period Volume Minimum—Day Network	13
Operating Period Volume Minimum—Night Network	13
Volume Commitment—Holiday—Day Network	14
Volume Commitment—Holiday—Night Network	14
Operating Periods	14
Ordering Process—Non-Peak—Day Network	15
Ordering Process—Non-Peak—Night Network	15
Ordering Process—Peak—Day Network	15
Ordering Process—Peak—Night Network	16
Electronic Data Interchange (EDI)	16
Operational Condition Reports	17
Dimensional Weight Reports	18
Scanning and Data Transmission	18
Performance Requirements and Measurement	19
Reduction of Payment	20
Performance Management	20
Sustainability	21
Security	21
Postal Service Employees Allowed Access	21
Personnel Screening	22
Payment Procedures	26
Rates and Payment General	26
Payment Processing—Day Network—Per Cube	27
Payment Processing—Night Network—Per Pound	29
Reconciliation Process	29

Page 2 of 100

Air Cargo Network

Contract ACN-13-FX

Table of Contents

Part 3: Contract Clauses		31
Clause B-1:	Definitions (March 2006) (Tailored)	31
Clause B-3:	Contract Type (March 2006) (Tailored)	34
Clause B-9:	Claims and Disputes (March 2006) (Tailored)	34
Clause B-10:	Pricing of Adjustments (March 2006) (Tailored)	35
Clause B-15:	Notice of Delay (March 2006) (Tailored)	35
Clause B-22:	Interest (March 2006) (Tailored)	35
Clause B-25:	Advertising of Contract Awards (March 2006)	36
Clause B-30:	Permits and Responsibilities (March 2006) (Tailored)	36
Clause B-39:	Indemnification (March 2006) (Tailored)	36
Clause B-45:	Other Contracts (March 2006) (Tailored)	36
Clause B-65:	Adjustments to Compensation (March 2006) (Tailored)	36
Clause B-69:	Events of Default (March 2006) (Tailored)	37
Clause B-75:	Accountability of the Aviation Supplier (Non-Highway) (March 2006) (Tailored)	37
Clause B-77:	Protection of the Mail (Non-Highway) (March 2006) (Tailored)	38
Clause B-80:	Laws and Regulations Applicable (March 2006) (Tailored)	39
Clause B-81:	Information or Access by Third Parties (March 2006) (Tailored)	39
Clause B-82:	Access by Officials (March 2006) (Tailored)	39
Clause 1-1:	Privacy Protection (July 2007)	40
Clause 1-5:	Gratuities or Gifts (March 2006)	41
Clause 1-6:	Contingent Fees (March 2006)	41
Clause 1-11:	Prohibition Against Contracting with Former Officers or PCES Executives (March 2006) (Tailored)	42
Clause 1-12:	Use of Former Postal Service Employees (March 2006) (Tailored)	42
Clause 2-11:	Postal Service Property—Fixed-Price (March 2006) (Tailored)	42
Clause 2-22:	Value Engineering Incentive (March 2006)	44
Clause 3-1:	Small, Minority, and Woman-owned Business Subcontracting Requirements (March 2006)	47
Clause 3-2:	Participation of Small, Minority, and Woman-owned Businesses (March 2006)	48
Clause 4-1:	General Terms and Conditions (July 2007) (Tailored)	48
Clause 4-2:	Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders (July 2009) (Tailored)	52
Clause 4-7:	Records Ownership (March 2006)	53
Clause 6-1:	Contracting Officer’s Representative (March 2006)	53
Clause 9-1:	Convict Labor (March 2006)	53
Clause 9-2:	Contract Work Hours and Safety Standards Act—Overtime Compensation (March 2006)	54
Clause 9-7:	Equal Opportunity (March 2006) (Tailored)	54
Clause 9-9:	Equal Opportunity Preaward Compliance of Subcontracts (March 2006) (Tailored)	55
Clause 9-10:	Service Contract Act (March 2006)	55
Clause 9-12:	Fair Labor Standards Act and Service Contract Act—Price Adjustment (February 2010)	62
Clause 9-13:	Affirmative Action for Workers with Disabilities (March 2006) (Tailored)	63
Clause 9-14:	Equal Opportunity for Disabled Veterans, Recently Separated Veterans, Other Protected Veterans, and Armed Forces Service Medal Veterans (February 2010) (Tailored)	64
Contract Term		66
Renewal Process		66
Amendments or Modifications		66
Assignment		66
Bankruptcy		67
Confidentiality		67
Entire Agreement		67

Page 3 of 100

Air Cargo Network

Contract ACN-13-FX

Table of Contents

Force Majeure		68
Frequency Adjustment		68
Notices		69
Severability		69
Third Party Governmental Delays		70
Waiver of Breach		70
Part 4—List of Attachments and Forms		71
Attachment 1	Postal Service Operating Periods, dated October 4, 2012	72
Attachment 2	Air Stops & Projected Volumes, dated January 8, 2013	74
Attachment 3	Operating Plan, Day Network, dated April 22, 2013	75
Attachment 4	Operating Plan, Night Network, dated April 22, 2013	81
Attachment 5	Reserved
Attachment 6	Postal Furnished Property, April 16, 2013	89
Attachment 7	Electronic Data Interchange Service Requirements, dated September 1, 2012	90
Attachment 8	Investigative / Security Protocol and Guidelines, dated July 2012	91
Attachment 9	Wage Determination, dated October 31, 2012	95
Attachment 10	Pricing, dated April 18, 2013	97
Attachment 11	Perishable Mail and Lives, April 22, 2013	98
Attachment 12	Reserved
Attachment 13	Service Contract Act Wage Determinations, dated April 17, 2013	100
Forms

DOT Form F 5800.1	Hazardous Materials Incident Report
I-9 Form	Employment Eligibility Verification
PS Form 2025	Contract Personnel Questionnaire
PS Form 8203	Order / Solicitation / Offer / Award
US Treasury Form 941	Quarterly Federal Tax Return

Page 4 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

Part 1: Statement of Work

Purpose and Scope

The United States Postal Service is seeking to purchase air transportation and ancillary services for mail to and from destinations within the contiguous forty-eight (48) states as well as non-contiguous areas to include Alaska, Hawaii, and Puerto Rico. This statement of work (SOW) provides for the transportation of mail on any flight in the aviation supplier’s air transportation network. It also provides for services associated with the transportation of mail by the aviation supplier. The air carrier’s network or transportation system may include its own flights, flights of its approved subcontractors, flights that may be dedicated to Postal operations, and Road Feeder Service.

Scale

The volume of mail (expressed in pounds and cubic feet) transported as contracted under this air cargo network contract may increase or decrease significantly over the term of the contract consistent with the needs of the Postal Service.

Services Provided

The aviation supplier shall provide sufficient resources to efficiently and effectively take possession, sort (if necessary), transport, scan, load, and deliver all mail to the designated destination Service Points specified by the Postal Service in Attachment 2: Air Stops & Projected Volumes, Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

The aviation supplier will present scan data for these events electronically to the Postal Service. See Attachment 7: Electronic Data Interchange Service Requirements.

[*]

The aviation supplier will be expected to (this list is not all inclusive):

a. Coordinate and oversee its own operations; supervise and protect its own employees.

b. Ensure that the necessary facility support and administrative functions are performed.

c. Monitor performance.

d. Provide feedback to the Postal Service.

e. Ensure the integrity of data entry.

f. Coordinate the exchange of information.

g. Provide notification of changes or anticipated changes in services provided (including subcontractors) to the Postal Service.

h. Scan material Handling Units.

i. Assist in unloading or loading Unit Load Devices (ULDs) to or from surface transportation.

j. Provide the correct type and quantity of equipment necessary to support the service requirements of this contract.

k. Process mail for dispatch from the aviation supplier’s facility to the Postal Service facility.

l. Close-out, receive, and dispatch all surface vehicles.

m. Handle overflow volumes per Postal Service general directions.

n. Cooperate with all aviation suppliers in the transportation service chain.

o. Enter data timely and accurately.

p. Prepare required reports.

q. Perform verification of security seals on surface transportation.

r. Ensure the security of all mail.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 5 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

Service Points

Service Points are the locations where tender and / or delivery takes place. The locations and tender and delivery specifications are listed in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

The Day Network will service approximately eighty (80) origin and destination Service Points.

The Night Network will service approximately one hundred forty-five (145) origin and destination Service Points

Management Plan

The aviation supplier shall develop and maintain a current Management Plan for dealing with normal daily operations as well as unscheduled and unexpected events affecting the expeditious operation of the facility, including aviation and surface service failure and delays. The Management Plan must also address the key personnel involved on a day to day basis.

Updates to this plan shall be submitted to the Contracting Officer within ten (10) days of any changes to the plan. The aviation supplier shall review and verify, at least annually, that its management plan is current.

The aviation supplier must train its employees to a level of familiarity that ensures a contingency plan can be exercised without delay. The following items must be addressed by the Management Plan; the list is not all inclusive.

a. Late arriving aircraft and trucks

• Ability to conduct two operations – Originating and Destinating

b. Early arriving aircraft and trucks

c. Mail arriving out of normal sequence

d. Trucks not on-site for dispatch

e. Inclement weather during operations

• Snow issues

• Ice storms

• Airport closures

f. Protection of the mail during inclement weather

g. Labor actions

h. Inadequate staffing

i. An inability to complete all loading in time to meet tender

j. Overflow mail

k. Damaged and / or non air worthy containers

l. Damaged surface containers

m. Damaged or non-labeled mail

n. Plan and schedule changes

o. Loose load mail

p. Hazardous Material (HAZMAT)-acceptable and non-acceptable pieces

q. Handling and staging of live animals

r. Running out of supplies such as placards, bypass tape, etc.

s. Power losses – Describe in detail all steps to be taken in the event of power loss to include specific actions for back up power at the Terminal Handling Service (THS) location such as generators and other systems.

t. Natural disasters

u. Equipment breakdowns

v. Airport closings

w. Air Traffic Control (ATC) impact mitigation plan

Page 6 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

Frequency

The initial frequency of service for the Day Network (Priority Mail / First Class network) is based on six (6) days of Postal Service delivery and shall be Tuesday through Sunday (X1).¹ This will provide for approximately 307 (308 in a leap year) operating days annually. This excludes the widely observed holidays as listed in the sections titled, Volume Commitment – Holiday – Day Network and Volume Commitment – Holiday – Night Network.

The initial frequency of service for the Night Network (Express Mail network) is based on five (5) days of Postal Service delivery and shall be Monday through Friday (X67).² This will provide for approximately 254 (255 in a leap year) operating days annually. This excludes the widely observed holidays as listed in the sections titled, Volume Commitment – Holiday – Day Network and Volume Commitment – Holiday – Night Network.

Mail Assignment and Transport—Day Network

The aviation supplier shall provide flight schedules at least thirty (30) days in advance of the Operating Period. The Postal Service will create dispatch routing instructions based on the aviation supplier’s flight schedule and subsequently shown on the Postal Service Dispatch and Routing (D&R) Tag.

The Postal Service agrees to provide up to seventy-five (75%) percent of the total volume assigned to the outbound flights to the aviation supplier one (1) hour before the scheduled ‘All Mail Due Aviation Supplier’ column as listed in Attachment 3: Operating Plan, Day Network. The Postal Service agrees to provide the remaining twenty-five (25%) percent by the ‘All Mail Due Aviation Supplier’ column listed in Attachment 3: Operating Plan, Day Network.

Mail Assignment and Transport—Night Network

The Postal Service agrees to provide up to seventy-five (75%) percent of the total volume assigned to the outbound flights to the aviation supplier thirty (30) minutes before the scheduled ‘All Mail Due Aviation Supplier’ column as listed in Attachment 4: Operating Plan, Night Network. The Postal Service agrees to provide the remaining twenty-five (25%) percent by the ‘All Mail Due Aviation Supplier’ column listed in Attachment 4: Operating Plan, Night Network.

Local Agreements

No Local Agreement (any informal agreement or working arrangement made between representatives of the aviation supplier, the Postal Service, or their agents who lack authority to bind either company) shall be binding, obligate the Postal Service or the aviation supplier, or otherwise give rise to any claim under this contract.

Postal Service Performs Terminal Handling Service (THS) Operation—Day Network

Mail will be tendered to the aviation supplier in accordance with the Operating Plan provided by the aviation supplier. The aviation supplier’s Operating Plan will be provided thirty (30) days before the start up of the Operating Period. The aviation supplier’s Operating Plan will specify the following information:

Specific Type of Airline ULD per origin / destination

Destination of Airline ULD – Direct (bypass)

Destination of Airline ULD – Mixed (to be sorted at hub)

¹  X1 refers to the day of the week that service will not be performed. The days of the week are numbered consecutively from 1 through 7 beginning with Monday (1). “X1” means that service will operate each day of the week except Monday.

²  X67 refers to the days of the week that service will not be performed. “X67” means that service will operate each day of the week except Saturday and Sunday.

Page 7 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

The Operating Plan will be mutually agreed upon prior to implementation.

The aviation supplier will transport, scan, and deliver the ULDs to the specific Service Points listed in Attachment 3: Operating Plan, Day Network. The Postal Service or its representative will build the ULDs in conformance with the aviation supplier’s Operating Plan.

The aviation supplier will perform the following activities including, but not limited to:

a. Sorting and scanning mail at an aviation supplier hub, as necessary, which also may include re-wrap and reapplication of Distribution & Routing (D&R) Tags to mail requiring such treatment, and dispatch on service responsive transportation

b. In the unlikely event that mail tendered to the aviation supplier is in excess (overflow) of what may be transported, the aviation supplier shall:

i. Secure the mail.

ii. Scan all Handling Units and record the number of pieces, weight, and destination of all overflow Handling Units.

iii. Immediately notify the local Postal official after becoming aware of an overflow situation. The Postal official will direct the aviation supplier to either hold the mail for the next outbound flight or return it to the designated Postal facility.

iv. Prepare all overflow mail for delivery to the local designated Postal facility within twenty (20) minutes of receipt of Postal direction.

v. Provide a written report of the overflow to the local Postal official with a copy to the COR.

When transporting mail in carts, containers, or other vehicles, the mail must be securely enclosed to protect it from loss, depredation, and damage. The aviation supplier will stage mail in a secure area while in its possession. The aviation supplier is not allowed to transport mail in the cabs of its vehicles except for mail containing live animals.

Aviation Supplier Planned Accommodation—Day Network

The aviation supplier will guarantee space to accommodate up to 105% of the Planned Capacity from each origin daily. All mail accepted by the aviation supplier is subject to the service commitments set forth in this contract.

If the Postal Service tenders mail in excess of 105% of the Planned Capacity for that Service Point, the aviation supplier may refuse to transport the excess tender. If the volume is accepted, the same service requirements apply.

If the Postal Service tenders mail to the aviation supplier after the ‘All Mail Due Aviation Supplier’ column as shown in Attachment 3: Operating Plan, Day Network, the aviation supplier has the right to refuse that volume.

Mail accepted after the agreed upon ‘All Mail Due Aviation Supplier’ column in Attachment 3: Operating Plan, Day Network, shall be subject to the same service commitments as mail tendered at or before the ‘All Mail Due Aviation Supplier’ column.

Page 8 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

Aviation Supplier Planned Accommodation—Night Network

The aviation supplier will guarantee space to accommodate up to 120% of the Planned Capacity from each origin daily. All mail accepted by the aviation supplier is subject to the service commitments set forth in this contract.

If the Postal Service tenders mail in excess of 120% of the Planned Capacity for that Service Point, the aviation supplier may refuse to transport the excess tender. If the volume is accepted, the same service requirements apply.

If the Postal Service tenders mail to the aviation supplier after the ‘All Mail Due Aviation Supplier’ column as shown in Attachment 4: Operating Plan, Night Network, the aviation supplier has the right to refuse that volume.

Mail accepted after the agreed upon ‘All Mail Due Aviation Supplier’ column in Attachment 4: Operating Plan, Night Network, shall be subject to the same service commitments as mail tendered at or before the ‘All Mail Due Aviation Supplier’ column.

Delivery—Day Network

The aviation supplier will deliver mail to a destination Service Point by the scheduled ‘Latest Delivery Time to Postal Service’ column in Attachment 3: Operating Plan, Day Network.

Delivery—Night Network

The aviation supplier will deliver mail to a Service Point by the scheduled ‘Latest Delivery Time to Postal Service’ column in Attachment 4: Operating Plan, Night Network, on or before the scheduled delivery day (D+1) on Attachment 4: Operating Plan, Night Network. “D+1” is defined as the day following acceptance by the aviation supplier.

At destination, the aviation supplier is required to unload the mail from the ULDs received, scan, and deliver the mail to the Postal Service.

Saturday Delivery—Day Network

See Attachment 3: Operating Plan, Day Network, for details on Saturday delivery.

Specific Delivery Instructions

The aviation supplier shall:

a. Assist in loading and dispatching all outbound surface vehicles, as required

b. Must develop a cooperative line of communication with the Postal Service to ensure the timely delivery and dispatch of mail. All efforts shall be made to provide an efficient and effective delivery to the Postal Service.

Boarding Priority—Day Network

The aviation supplier must board accepted mail using the following mail boarding preference order:

a. Registered (Con-Con) Mail

b. Lives

c. Perishables

d. HAZMAT, regardless of mail class

Page 9 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

e. Domestic Priority and Express Mail

f. First-Class Mail

g. All Other Mail

The Manager, Air Transportation Operations, or a Postal Service designee, will determine if the Postal Service should repossess any mail without exercising rights as described in the section titled Repossession of Mail by the Postal Service.

Boarding Priority—Night Network

The aviation supplier must board accepted mail using the following mail boarding preference order:

a. Express Mail

b. All other classes of mail

Repossession of Mail by the Postal Service

The Postal Service may, at any time, require the aviation supplier to return to the local Postal Service representative or agent at a Service Point, any or all of the mail in its possession at that location or the Postal Service may take possession of such mail from the aviation supplier.

Treatment of Exceptional Types of Mail

1. Tagging of Hazardous Material

The aviation supplier may carry mailable HAZMAT, subject to applicable law, rules and regulations, including, without limitation:

a. ORM-D Air

“ORM-D” stands for “Other Regulated Material-Class D.” ORM-D is a term developed by the Department of Transportation (DOT) that signifies the hazard class associated with a consumer commodity. Most hazardous materials accepted by the Postal Service for mailing are classified as ORM-D. A package marked ORM-D meets the standards for surface transportation only. “ORM-D-Air” signifies that the item meets the requirements for air and surface transportation.

The Postal Service currently accepts limited quantity alternative marking options (square on point) for ORM-D and ORM-D-Air and plans to adopt mandatory effective dates as identified by the Department of Transportation. There are no intended changes to quantity limits, package weights, or documentation requirements for these mailable materials.

b. Division Class 6.2

Division Class 6.2 materials are not permitted in international mail or domestic mail, except when they are intended for medical or veterinary use, research, or laboratory certification related to the public health. These materials are permitted only when they are properly prepared for mailing to withstand shocks, pressure changes, and other conditions related to ordinary handling in transit.

c. Division Class 9

Division Class 9 items are miscellaneous hazardous materials or substance articles that present a hazard during transportation but do not meet the definition of any other hazard class. Examples of miscellaneous hazardous materials (not all of which are mailable) include solid dry ice, elevated temperature substances, environmentally hazardous substances, life-saving appliances, and asbestos.

Page 10 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

d. Hazardous and Dangerous Goods

The aviation supplier will accept all Dangerous Goods as defined in the Domestic Mail Manual, section 601.10. All Dangerous Goods will be tendered on the Night Network. The Postal Service will be in compliance with the current International Air Transport Association (IATA) allowed variations as listed for the aviation supplier. The Postal Service will tender all Dangerous Goods at least two hours prior to the tender time shown in Attachment 4: Operating Plan, Night Network. The Postal Service shall not tender any used sharps. Any future changes to Hazardous and Dangerous Goods requirements will be reviewed and must be acceptable to the aviation supplier prior to implementation of the changes.

e. All other hazardous material that is packaged and distributed in a quantity and form intended or suitable for retail sale and designed for consumption by individuals for their personal care or household use purposes; reference http://pe.usps.gov/text/dmm300/601.htm#wp1065003.

2. Assignment of Hazardous Materials

a. The tender of all hazardous materials will be performed a minimum of two (2) hours prior to the final tender time of the intended flight.

b. The desired flight assignment of HAZMAT is to non-stop or direct flights.

c. No surcharge is offered for the transportation of HAZMAT mail.

d. A copy of the manifest and the assigned item MUST be handed to an aviation supplier representative a minimum of two (2) hours prior to the closeout time of the intended flight. The aviation supplier representative will be responsible for ensuring that the information on the postal manifest which includes the number of pieces, weight, and appropriate shipper’s certification detail is incorporated onto the aircraft load manifest and pilot notification paperwork as outlined in CFR 49, Part 175, Carriage by Aircraft.

e. Aviation supplier Refusal to Accept Hazardous Materials: If the aviation supplier refuses to accept a properly prepared HAZMAT item, it shall document the reasons leading to the refusal. Documentation will include:

i. Name and address of mailer and air carrier;

ii. The type and amount of hazardous material; and

iii. The reason for refusal.

f. HAZMAT Spills, Releases, Incidents, and Emergencies

i. While in the possession of the aviation supplier, but not on board an aircraft:

Hazardous Material items which are damaged must not be boarded on the aircraft. HAZMAT incidents which occur following the tender but prior to boarding of the aircraft, or after unloading from an aircraft and before delivery to the Postal Service, causing injury, illness, significant property damage, or disruption in operations will require the aviation supplier to enter the required information into the Mail Piece Incident Reporting Tool (MIRT), a Postal Service intranet tool for the collection of information on leaking and other non-mailable items.

ii. While on board an aircraft:

Any incident which occurs while on board an aircraft will require the aviation supplier to complete a Department of Transportation (DOT) Form F 5800.1 (01-2004), Hazardous Materials Incident Report. A copy of this form must be sent to the COR within twenty-four (24) hours of the incident with all information available. The incident type is not limited to hazardous material and may include hazardous cargo spills which come in contact with the mail.

Page 11 of 100

Air Cargo Network

Contract ACN-13-FX

Part 1: Statement of Work

Perishable Mail and Live Mail

The aviation supplier will be required to transport as mail perishable items which the Postal Service has accepted as mailable under Domestic Mail Manual (DMM) 601, sub section 9.0, including live animals as discussed at DMM 601 subsection 9.3. The Postal Service will notify the aviation supplier a minimum of two (2) hours prior to the ‘All Mail Due Aviation Supplier’ time as listed in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network, of the intended flight of known perishable mail, including live animals.

Attachment 11: Perishable Mail and Lives, details the requirements for preparation and tender of perishable mail and live animal shipments.

Registered Mail

The aviation supplier will accept Registered Mail provided in Con-Cons for the Day Network only.

Registered Mail Con-Cons will be a part of the Planned Capacity and will be tendered in accordance with Attachment 3: Operating Plan, Day Network.

Upon request, the aviation supplier shall furnish the Postal Service the following information concerning Registered Mail:

• Aircraft number,

• Aircraft compartment location,

• Actual flight departure time, and

• Any accident or irregularity which occurs to a flight containing Registered Mail.

Registered Mail Handling Units will have a D&R Tag affixed indicating the final destination air stop. This Handling Unit shall remain intact and shall not be opened by the aviation supplier. The desired routing for Registered Mail shipments will be to non-stop or direct flights only.

The aviation supplier shall advise the U.S. Postal Inspection Service, local Postal Service representatives, and will send an email message to the COR of any Registered Mail that does not make its planned dispatch for disposition instructions.

Offshore Capacity Requirement—Day Network

The aviation supplier will make available at least the following daily volumes into and out of the following locations.

Cube Based:

[ * ] cube (Originating) and [ * ] cube Destinating Anchorage (ANC)

[ * ] cube (Originating) and [ * ] cube Destinating Honolulu (HNL)

[ * ] cube (Originating) and [ * ] cube Destinating San Juan (SJU)

The Postal Service may increase this capacity as needed through the planning process through the mutual agreement of the parties.

Volume Commitment—General Information

The Day Network operating week is defined as Tuesday through Sunday inclusive (X1).

The Night Network operating week is defined as Monday through Friday inclusive (X67).

The Postal Service is not obligated to request consistent capacity by day of the week. Requests for capacity are detailed in the Ordering Process sections.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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The following constitute the only minimum volume guarantees under this contract:

• Contract Volume Minimum of [ * ] cubic feet on the Day Network.

• The Contract Volume Minimum may be reduced in accordance with Clause 4-1: General Terms and Conditions, paragraph m, and Frequency Adjustment found in Part 3: Contract Clauses.

• [ * ]

• [ * ].

• 90% of Planned Capacity for the Night Network for each Operating Period

Any monies due as a result of the Postal Service not meeting its Contract Volume Minimum or its Operating Period Volume Minimum as measured and calculated at the end of each Operating Period will be included as part of the Operating Period’s reconciliation process.

On operating days where volume for lanes with Planned Capacity is withdrawn, withheld, or not transported under the Repossession of Mail by the Postal Service or Force Majeure sections, that volume will not be included in calculating the Operating Period Volume Minimum. The Contract Volume Minimum will be reduced for the Operating Period by the amount of that volume.

Volume Commitment—Contract Volume Minimum—Day Network

A minimum of [ * ] cubic feet per operational day, averaged across six (6) days per week, and measured across each Operating Period, will constitute the Contract Volume Minimum guaranteed to be paid by the Postal Service.

Operating Period Volume Minimum—Day Network

[ * ]

Operating Period Volume Minimum—Night Network

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Part 1: Statement of Work

Volume Commitment—Holiday—Day Network

Each holiday will be addressed separately between the parties during the Ordering Process. The holidays are:

• New Year’s Day (widely observed)

• Martin Luther King Day

• Presidents’ Day

• Memorial Day (widely observed)

• Independence Day (widely observed)

• Labor Day (widely observed)

• Columbus Day

• Veterans Day

• Thanksgiving (widely observed)

• Christmas (widely observed)

For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the following days will not be included:

• Widely observed holidays

• The day following the widely observed holidays that occur on a Monday

• Non-widely observed holidays that occur on a Monday

For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the following days will be included at a 50% volume level:

• The day following widely observed holidays not occurring on a Monday

• Non-widely observed holidays not occurring on a Monday

• The day after a non-widely observed holiday

Volume Commitment—Holiday—Night Network

Each holiday will be addressed separately between the parties during the Ordering Process. The holidays are:

• New Year’s Day (widely observed)

• Martin Luther King Day

• Presidents’ Day

• Memorial Day (widely observed)

• Independence Day (widely observed)

• Labor Day (widely observed)

• Columbus Day

• Veterans’ Day

• Thanksgiving (widely observed)

• Christmas (widely observed)

The widely observed holidays will not be included in the Operating Period Volume Minimum calculation.

The non-widely observed holidays will be included at a 50% volume level in the Operating Period Volume Minimum calculation.

Operating Periods

The Operating Periods are incorporated as Attachment 1: Postal Service Operating Periods. No Operating Period will exceed five weeks. The Peak Operating Periods are designated in Attachment 1: Postal Service Operating Periods.

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Ordering Process—Non-Peak—Day Network

The Postal Service will provide the aviation supplier mail volumes in accordance with the identified schedule specified below. The forecasting structure will specify each origin / destination lane pair including cubic feet by day of week for the pairs. The Postal Service will request capacity based on specific plans for a Tuesday / Wednesday plan, a Thursday / Friday plan, a Saturday plan, and a Sunday plan.

[ * ]

Over the course of the Ordering Process for two (2) Operating Periods, the Postal Service may reduce volume down to the Contract Volume Minimum.

The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format.

Bypass containers will be allocated in lanes where the requested capacity is greater than one hundred and ten (110) percent of the cubic capacity of the ULD configuration for the aircraft planned for the Service Point provided there is sufficient space to flow the Bypass container from the origin to the final destination on the scheduled flights. To facilitate this process, the Postal Service and the aviation supplier will jointly agree upon both Bypass and Mixed containers to be built at all origins during the Ordering Process.

Ordering Process—Non-Peak—Night Network

The Postal Service will provide the aviation supplier mail volumes in accordance with the identified schedule specified below. The forecasting structure will specify each origin / destination lane pair including weight.

[ * ]

The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format.

Ordering Process—Peak—Day Network

The Peak Operating Period will consist of four or five individual weeks, measured and planned as independent of each other. One of the five weeks of the Peak Operating Period will include the week of Christmas. As such, the requested volume capacity will include the Christmas week. The forecasting structure will specify each origin / destination lane pair including weight or cubic feet by day of week for the pairs. The Postal Service will request capacity based on specific plans for a Tuesday / Wednesday plan, a Thursday / Friday plan, and a Saturday / Sunday plan.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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The aviation supplier will make available at least [ * ] cubic feet of capacity per week for the Peak Operating Period for the Day Network. As a general planning guideline, the historical volume transported per day during the Peak Operating Period ranges between [ * ] to [ * ] cubic feet. The Peak season tab included in Attachment 2: Air Stops & Projected Volumes provides the historic mail volume in pounds by mail class by week during the Peak Operating Period. These volumes are provided for initial planning purposes and do not constitute a guarantee of volume for the Peak Ordering Period.

For the Peak Operating Period, the Postal Service will provide the aviation supplier a request for capacity by lane, expressed in cubic feet, one hundred fifty (150) days prior to the beginning of the Peak Operating Period. The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format. The aviation supplier will reply to the request by providing the Postal Service with its response expressed in cubic feet one hundred twenty (120) days prior to the start of the Peak Operating Period. The Postal Service will communicate its acceptance of the aviation supplier’s response ninety (90) days prior to the commencement of the Peak Operating Period. The Postal Service acceptance establishes the Planned Capacity for the Peak Operating Period.

The Operating Period Minimum Volume for Peak will be [ * ] of the Planned Capacity.

The aviation supplier will guarantee space to accommodate up to 105% of the Planned Capacity from each origin daily.

Ordering Process—Peak—Night Network

The Peak Operating Period will consist four or five individual weeks, measured and planned as independent of each other. One of the five weeks of the Peak Operating Period will include the week of Christmas. As such, the requested volume capacity will include the Christmas week. The forecasting structure will specify each origin / destination lane pair including weight.

For the Peak Operating Period, the Postal Service will provide the aviation supplier a request for capacity by lane, expressed in pounds, one hundred fifty (150) days prior to the beginning of the Peak Operating Period. The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format. The aviation supplier will reply to the request by providing the Postal Service with its response expressed in pounds one hundred twenty (120) days prior to the start of the Peak Operating Period. The Postal Service will communicate its acceptance of the aviation supplier’s response ninety (90) days prior to the commencement of the Peak Operating Period. The Postal Service acceptance establishes the Planned Capacity for the Peak Operating Period.

The Operating Period Minimum Volume for Peak will be [ * ] of the Planned Capacity.

The aviation supplier will guarantee space to accommodate up to 120% of the Planned Capacity from each origin daily.

Electronic Data Interchange (EDI)

The aviation supplier will provide status and operational data as specified in Attachment 7: Electronic Data Interchange Service Requirements. The aviation supplier will use the EDI methods specified in the attachment to transmit and receive volume, and appropriate scans from its system to the Postal Service system.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Operational Condition Reports

The aviation supplier shall submit reports of hub and Service Point operating conditions on a daily basis for the Day Network and the Night Network.

Some examples of these daily reports (more may be required) are: service performance reports, operations reports for departures / arrivals late due to mechanical issues, operations reports for departures / arrivals late due to weather and other issues, sort mail volume , mis-sent mail volume, surface truck utilization, etc. The format of the report and the items reported will be mutually agreed upon by the COR and the aviation supplier.

In addition to these daily reports, the aviation supplier will coordinate with and advise the COR of any contingency plans to move mail delayed in transit, as soon as practical.

The table below lists the reports required initially.

Report Type	Name	Frequency
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Monthly
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Tuesday / Wednesday / Thursday / Saturday
Operational Reports	[ * ]	Monday through Thursday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday / Wednesday / Thursday / Saturday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Daily
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday through Sunday

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Dimensional Weight Reports

The aviation supplier will provide a weekly report electronically for the Day Network of the dimensional weights [ * ]. This report will provide the following information for each Outside Piece’s Handling Unit D&R tag:

• Time of each Handling Unit through the sort

• The length of each Handling Unit

• The width of each Handling Unit

• The height of each Handling Unit

• The D&R tag of each Handling Unit

A sample of the report is below:

‘Sorter’,‘Time Stamp’,‘Length’,‘Width’,‘Height’,‘D&R Tag’

‘AS002’,‘10170703012011’,‘1863’,‘1663’,‘1005’,‘1GBNP673BF’

‘AS002’,‘10172003012011’,‘2413’,‘1107’,‘0460’,‘1ICK9H2YF/’

‘AS002’,‘10172703012011’,‘3425’,‘1911’,‘0968’,‘15HPP8W7D6’

‘AS002’,‘10175003012011’,‘1864’,‘1200’,‘1149’,‘1FZFOM73BX’

‘AS002’,‘10175103012011’,‘2404’,‘1153’,‘0460’,‘17MKSORVBQ’

Scanning and Data Transmission

All scanning data required to be presented to the Postal Service shall be in an electronic format acceptable to the Postal Service, containing all required data elements, and reported within two (2) hours after the occurrence of a reportable event. Available data will be transmitted in EDI message format at fifteen (15) minute intervals.

Scanning will be used to measure performance and serve as the basis for payment for both the Day Network and the Night Network.

Technical aspects of Electronic Data Interchange and the types of messaging events are discussed in Attachment 7: Electronic Data Interchange Service Requirements.

The aviation supplier will be responsible for providing technology compatible with Postal Service systems for purposes of sending and receiving scanning data.

The aviation supplier will be responsible for performing the following scans of D&R Tags and ULD identification tags.

a. Possession or Load Scan of all Handling Units and ULDs at origin Service Points, including Outside Handling Units

b. Load Scan that associates the ULD to an aircraft

c. [ * ].

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Part 1: Statement of Work

d. [ * ].

e. [ * ].

f. Delivery Scan of each Handling Unit and ULD at the specified delivery Service Point.

Performance Requirements and Measurement

Mail delivery performance will be measured against the contract requirements based upon transmitted scan data.

Delivery performance requirements are:

Day Network: [ * ]%

Night Network: [ * ]%

Peak Operating Period: [ * ]% for the Day and Night Networks

Delivery performance will be measured across an Operating Period on a lane-by-lane basis, using actual scan delivery time versus Required Delivery Time (RDT), as outlined in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Part 1: Statement of Work

Delivery performance will be measured using the following methodology:

a. The Postal Service will scan all Handling Units at origin.

b. The Postal Service will nest all Handling Units into ULDs at origin.

c. The Postal Service will tender the nested ULDs to the aviation supplier at origin.

d. The aviation supplier will scan the ULDs with a Possession Scan at origin.

e. The aviation supplier will scan all Handling Units processed through the sort at the hub.

f. The aviation supplier will nest all Handling Units to ULDs departing from the hub.

g. The aviation supplier will scan the ULDs as delivered to the Postal Service upon arrival at destination.

h. The Postal Service will break the ULDs and scan / de-nest all Handling Units.

Delivery performance will be measured for all ULDs and Handling Units receiving at least a Delivery Scan by the aviation supplier.

The Postal Service will provide data to the aviation supplier via electronic files. The electronic file will show the nested date and time into the ULD, the possession time and date from the aviation supplier, the delivery time and date from the aviation supplier, and the de-nested break time and date from the Postal Service. Additionally, the files will show the weights of each Handling Unit.

Delivery performance on a lane level basis will be calculated as follows:

Total on-time Handling Units, by lane, for the Operating Period, receiving a Delivery Scan

Divided by

Total Handling Units, by lane, for the Operating Period, receiving a Delivery Scan

Reduction of Payment

If the calculated delivery performance is less than the delivery performance requirement, the late D&R tags will be ordered chronologically by the RDT. The percentage of D&R tags corresponding to the difference between [ * ]% and the delivery performance requirement (i.e., [ * ]% (Day Network), [ * ]% (Night Network) or [ * ]% (Peak Operating Period)) will not be assessed a reduction in payment. The remaining late D&R tags will be assessed a reduction in payment as follows:

a. All Handling Units delivered up to thirty (30) minutes late will be subject to a [ * ]% reduction of the Transportation Payment.

b. All Handling Units delivered from thirty-one (31) minutes up to one (1) hour to late will be subject to a [ * ]% reduction of the Transportation Payment.

c. All Handling Units delivered 1 hour and one minute late or later will be subject to a [ * ]% reduction of the Transportation Payment.

The reduction in payment will be based on a conversion of the weight of the late Handling Units to cubic feet by the applicable mail class density and will be applied at the base or the tier in which the late delivery occurred.

Performance Management

The aviation supplier and the Postal Service will meet once a quarter (at a minimum) to discuss items such as the following:

a. Cost Control

b. Holiday Operations and Planning

c. Aviation Supplier Performance

d. Peak Season Planning

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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e. Quality

f. Ramp Operations

g. Reconciliation of Irregularities

h. Security

i. Technology Issues

j. Tender and Delivery Hygiene

k. Volume Planning

l. Other Pertinent Topics

Sustainability

The aviation supplier must provide following sustainability metrics at the times specified below:

a. All greenhouse gas emission estimates that are attributed to the transport of Postal Service mail products via air and (if applicable) ground transport by the aviation supplier.

i. Emissions in a standard unit – CO_2e

ii. Total weight of Postal Service products contributing to the emissions in the Calendar Year.

iii. Total air miles travelled to transport the Postal Service products per Calendar Year.

iv. High level summary describing methodology which could include the basis for the Postal Service emissions allocation such as space, cost, weight, number of packages or other methods used to derive numbers. For example, estimates based on gallons used, flight characteristics, or both.

v. Assurance letter of independent verification of Scope 1, 2, and 3 data.

• Scope 1: Emissions arising from when the aviation supplier burns fuel in its aircraft or its owned buildings

• Scope 2: Emissions from purchased electricity or steam.

• Scope 3: Emissions arising from activities over which the aviation supplier has less control.

b. Fiscal Year (October through September) and Calendar Year (January through December) greenhouse gas emissions data to be received by the Postal Service no later than three (3) months after the close of the fiscal and calendar year.

The aviation supplier will convene a meeting with the Postal Service no later thirty (30) days after contract award to discuss high level greenhouse gas emissions estimation methodologies and network boundaries.

The aviation supplier will hold quarterly meetings with the Postal Service to discuss reporting methodology developments, boundaries and notification of estimation methodology or boundary changes.

Security

See Attachment 8: Investigative / Security Protocol and Guidelines.

Postal Service Employees Allowed Access

The aviation supplier shall allow escorted Postal officials showing proper credentials access to all buildings, field areas, ground equipment being used to sort, stage, or transport mail under this contract or under any subcontract services performed under this contract. Government regulations (e.g., Transportation Security Administration) will supersede this section.

The aviation supplier will allow unescorted access to Postal Service employees stationed on the aviation supplier’s premises pending compliance with all required processes. Photography or video taping will not be permitted except as outlined in the security protocols.

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Part 1: Statement of Work

Personnel Screening

In general, the Postal Service accepts air carrier security program requirements set forth by the Transportation Security Administration (TSA). In addition to these, the Postal Service also mandates additional requirements.

The Postal Service is aware that the aviation supplier must implement its human resources programs in accordance with certain state laws and that in that respect there may be certain deviations to the literal application of some of the Postal Service requirements set forth herein.

In the event the aviation supplier establishes that a state law prohibits it from requesting from its employees or prospective employees any or all of the information requested in responses to questions 21a through 21e of PS Form 2025, Contract Personnel Questionnaire, as required by 1.d below, or from certifying, as the result of a criminal records check, to any of the items requested under 1.b, Criminal History, below, the aviation supplier shall be relieved of its contractual obligation to require employees or prospective employees to respond to the portions of those questions requesting the prohibited information or to provide that information as part of its criminal records check. In these situations, the Postal Service Security Investigations Service Center (SISC) shall conduct the required criminal checks as outlined in 1.b. below.

To establish the existence and the extent of the prohibitory effect of any such state law referenced above, the aviation supplier shall provide to the SISC documentary evidence (including a copy of the state law) demonstrating the stated prohibition. The Postal Service’s concurrence about the prohibitory nature of a state law shall not be unreasonably withheld.

The Contracting Officer may, in consultation with the aviation supplier and the U.S. Postal Inspection Service, grant other appropriate deviations or implement alternate processes to the standard U.S. Postal Inspection Service requirements by letter.

Applicability

Individuals providing services to the Postal Service under this contract (including aviation suppliers, employees of aviation suppliers, and subcontractors and their employees at all levels), hereinafter, “individuals,” who have been hired after the effective date of this contract and whose duties will or likely may involve handing the mail must obtain a security clearance from the Postal Service, as provided herein. Access to the mail as defined by 3.a below is permitted as soon as the security clearance package has been submitted to the SISC in Memphis.

If the aviation supplier commences a new operation (internally or with an aviation supplier) for the purpose of processing Postal volume, the employees hired since the effective date of this contract will be subject to Personnel Screening.

Access to the mail is permitted as soon as the security clearance package has been submitted to the SISC in Memphis. If the aviation supplier has ground handling services performed at air stops by another aviation supplier (subcontractor), and if, to the best knowledge of the prime aviation supplier, that subcontractor is in compliance with the provisions of this clause, the prime aviation supplier may certify that fact to the Contracting Officer in writing, and thereby be relieved of the primary responsibility for personnel screening. Prime aviation suppliers are in all cases responsible for meeting these screening requirements for all persons having access to the mail who are their direct employees. For example, if ABC, Inc. is an aviation supplier, and it performs ground handling services at one or more air stops for CDE, Inc., CDE must certify in writing that:

I certify that at the following air stops ground handling services are being performed by ABC, and that to the best of my knowledge, ABC is an aviation supplier of air transportation services under contract number     . A listing of airports served by ABC is attached hereto as follows.

Aviation suppliers must have clauses in their contracts with subcontractors requiring adherence to the Postal Service screening procedures contained in this contract.

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Part 1: Statement of Work

1. Requirements: The aviation supplier employing individuals to perform duties under this contract must provide the following documentation as early as possible, to the SISC in Memphis, Tennessee, with respect to those individuals whose duties will or likely may involve handling the mail. The items listed in sections (a) through (d) below must be completed prior to the employee being granted permission to handle mail. For purposes of this requirement, the term “completed” means that all tasks have been done, and the required submissions to the SISC in Memphis have been made.

The aviation supplier is required to maintain all certifications required in sections a., b., and d.

a. Drug Screening: The aviation supplier must certify that individuals providing service under this contract have passed a screening test for those substances identified by the Substance Abuse and Mental Health Services Administration (SAMHSA) as the five (5) most abused substances which are cocaine, marijuana, amphetamine / methamphetamine, opiates, and phencyclidine (PCP). The tests must be performed by a SAMHSA approved certified laboratory. The drug test must meet the cut-off levels established by SAMHSA. All drug screening tests must be completed within ninety (90) days prior to having access to the mail since drug tests older than ninety (90) days are invalid and must be redone. The prime aviation suppliers and all subcontractors must maintain the name of the institution conducting the test and a document indicating if the employee passed or tested positive.

b. Criminal History: The aviation supplier must certify, based upon a criminal records check (a state records check) of each employee through local agencies (state, county, or city) where the applicant has resided and worked for the past five (5) years (this may require multiple checks for applicants who live in one location and work in another location, or for applicants who have moved within that time period), that each individual:

i. Has not been convicted of a felony criminal violation in the past five (5) years;

ii. Has not been convicted of serious criminal charges (e.g. murder, rape, robbery, burglary, physical assaults, weapons violations, or drug charges [felony or misdemeanor]);

iii. Does not have any pending felony or serious criminal charges; and

iv. Is not on parole for or probation for any felony or serious criminal charges.

This will be documented on the Certification and Transmittal Cover Sheet. This form is provided under Personnel Security Administrative Instructions, and may be reproduced by the aviation supplier.

c. Fingerprinting: The aviation supplier must obtain two sets of fingerprints for each applicant. Each fingerprint card, FD-258, Applicant Fingerprint Chart, and subsequent supplies will be issued by the Postal Service. The Postal Inspection Service will provide additional original copies for aviation supplier use. These additional forms may be obtained by calling the Memphis office at (901) 747-7712.

A copy of a Case Closing Transmittal (CCT) from the Office of Personnel Management (OPM) may be submitted in lieu of fingerprint cards if the CCT was dated within twelve (12) months of the date the SISC receives the submission.

d. Citizenship: Certification of U.S. citizenship must be documented on PS Form 2025, Contract Personnel Questionnaire, or legal work status authorizing the individual to work in the United States is required. (I-9 Form, Employment Eligibility Verification, is to be used for non-citizens).

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Part 1: Statement of Work

2. Processing:

a. The Postal Service agrees to use reasonable efforts to insure that security clearance decisions are issued within thirty (30) days after the aviation supplier submits the required documents and information to the SISC. The Postal Service, however, cannot guarantee that processing will be complete within thirty (30) days due to circumstances beyond its control.

b. For each individual employed by the aviation supplier or any subcontractor, the aviation supplier will submit to the SISC:

• Full name

• Social security number

• Drug screening data (1.a)

• Criminal history certifications (1.b)

• Both sets of fingerprints (1.c)

• Citizenship certifications (1.d)

Upon receipt of the required documentation, the SISC will submit the fingerprint cards (1.c) to the Federal Bureau of Investigation, and perform a search of the National Crime Information Center (NCIC) Wants and Warrants and Inspection Service databases at its cost.

c. In cases where an individual business entity is predominant at a given airport, the Contracting Officer in consultation with the Inspection Service may approve the receipt of screening documents from that entity.

d. The aviation supplier shall maintain supporting documentation for the drug screening (1.a), criminal history inquiries (1.b), and citizenship verifications (1.d) subject to review by the Postal Service, for the life of this contract in accordance with its internal procedures, advising the Inspection Service SISC on the Certification and Transmittal Cover Sheet.

At the employee’s local station, aviation suppliers are only required to maintain a copy of the Certification and Transmittal Cover Sheet. The Certification and Transmittal Cover Sheet is provided under Personnel Security Administrative Instructions and may be reproduced by the aviation supplier, as needed.

Aviation suppliers currently maintaining security screening files under existing Postal Service contracts shall continue to maintain those files.

Submit all forms and certifications to:

Memphis SISC

Security Investigations Service Center

225 North Humphreys Boulevard

Fourth Floor, South

Memphis, TN 38161-0008

The Postal Service intends to make its best efforts to position itself to eliminate the requirement for its set of FD-258 forms, and other submissions to be determined, through cooperation with the Federal Aviation Administration, Transportation Security Administration, and other agencies or associations to share relevant information for its regulatory purposes.

3. Access to the Mail – Screening Requirements:

“Access to the mail” refers to individuals who scan, transport, sort, load, and unload mail to and from ground equipment and to and from the aircraft. This includes employees handling sealed ULDs. This includes individuals who have direct supervisory duties in directing the

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Contract ACN-13-FX

Part 1: Statement of Work

transporting, sorting, loading, and unloading of mail to and from ground equipment and aircraft. Individuals providing services to the Postal Service under this contract (including aviation suppliers, employees of aviation suppliers, and subcontractors and their employees at any tier), hereinafter, “individuals,” who have access to the mail, must obtain a security clearance from the Postal Service before such access to the mail is granted.

4. Denial:

Persons who meet the following criteria are not permitted to have access to the mail under this contract:

a. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has not received a security screening in accordance with the criteria listed above under Personnel Screening.

b. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has been convicted of, or is on probation or parole for, or under suspended sentence for assault, theft, or weapons charges or for the illegal use, possession, sale, or transfer of controlled substances during the past five (5) years.

c. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has been convicted of any criminal felony violation during the past five (5) years, who is on parole, probation, or suspended sentence for commission of a criminal felony during the past five (5) years.

d. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has ever been convicted of theft of mail or other Postal offense.

e. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has an active warrant or is on probation or is on parole.

f. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has any pending felony or serious criminal charges.

g. Any other circumstance that in the determination of the Postal Service makes the individual unfit to provide services under this contract.

In the event an employee is disqualified under the above criteria, the aviation supplier has the responsibility to insure that the employee’s duties no longer involve handling mail.

5. Appeal Process:

An individual may appeal a decision to deny access made by the Postal Inspection Service SISC by sending a letter to the Inspector In Charge, Security and Crime Prevention, Washington, DC, within three (3) weeks of the date of the denial letter. An individual may not handle the mail during the appeal process. The letter must contain the following information:

a. A statement that reconsideration of the decision is requested and the basis on which it is sought.

b. Additional information on the appellant’s behalf.

c. A copy of the denial letter.

6. Training: The Postal Service may, but is not required to, provide orientation / training for aviation suppliers during the term of this contract to clarify security clearance requirements, processes, and procedures necessary to fully implement this program.

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Payment Procedures

Rates and Payment General

The aviation supplier will be compensated based upon properly scanned ULDs and Handling Units. The payment for each ULD and Handling Unit will be based on the network (i.e., Day or Night) to which the mail is assigned by the Postal Service. This process will allow for automated payment.

[ * ]

Scan Requirements

All scan requirements listed below are specified in the Scanning and Data Transmission section.

Night Turn Scan Requirements

a. Possession Scan of all ULDs and Handling Units at the origin

b. Delivery Scan of all ULDs and Handling Units delivered at destination

Day Turn Scan Requirements

a. The aviation supplier will conduct a Possession Scan of all ULDs and Handling Units at the origin.

b. The aviation supplier will conduct a Nest Scan associating the Handling Unit with a ULD at the hub.

c. The aviation supplier will conduct a Delivery Scan of all ULDs and Handling Units delivered at destination.

The Hub Sort Scans will be paid in accordance with the pricing listed in Attachment 10: Pricing for Handling Units sorted at the hub on the Day Network for which scans are provided. Hub Sort Scans will not be paid for Handling Units assigned to a Bypass ULD or for the Night Network.

[ * ]

The base and tier pricing from Attachment 10: Pricing will be applied to the volume measured in each Operating Period as follows. Volume within the base will be paid at the Base Rate. The portion of volume exceeding the base volume and falling within the Tier 1 volume will be paid at the Tier 1 rate. A similar incremental process will be applied to volume that falls within subsequent tiers.

Payments will be made by Electronic Funds Transfer (EFT).

[ * ]

The aviation supplier will bill additional charges not covered within the automated payments system on a weekly basis. For correct and sufficient invoices received by noon Wednesday of a given week, the Postal Service will process them so as to generate a payment by Wednesday, three (3) weeks following the receipt of the invoice through the EFT process.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Payment Processing—Day Network—Per Cube

Invoicing

All invoices for the transportation of Handling Units or ULDs under this contract will be paid by the cubic foot and payment will be based on completing the required scans.

Mail Tendered in ULDs

The Line Haul rate for each ULD will be comprised of two components: Non-Fuel Line Haul and Fuel Line Haul. The Non-Fuel Line Haul rate will include all of the transportation and handling associated with a ULD. Hub Sort Scanning rates are separate from the Non-Fuel Line Haul rate.

ULD cubic feet will be paid at the agreed cubic feet size for each ULD type described in Attachment 10: Pricing.

The cubic feet paid will be based on the Postal assigned ULD type. If the Postal ULD type is missing, the aviation supplier’s ULD type will be used for invoicing. Any discrepancies between the types of ULD processed will be resolved during the Reconciliation Process.

The transportation payment for mixed ULDs will be based on the applicable cubic feet of the originating ULD. These transportation payments will be reduced for Handling Units not receiving a Delivery Scan by converting the weight of the Handling Units without a Delivery Scan at the correct destination to cubic feet by the applicable mail class density.

The transportation payment for bypass ULDs will be based on the applicable cubic feet of the originating ULD. These transportation payments will not be made for Bypass ULDs without a Delivery Scan at the correct destination.

Recognizing operational inefficiencies filling the last ULD at every location, the Postal Service will incorporate within the daily invoice a daily credit based on the total cubic feet of the mixed ULDs in the Operating Plan divided by the total number of mixed ULDs in the Operating Plan for each origin air stop per day multiplied by 50%. The rate used will be the applicable base or tier cubic foot rate used at the beginning of the invoice day.

Mail Tendered from Surface Trucks

If mail is tendered to the aviation supplier from a defined truck location as identified in Attachments 3 and 4 at contract award, the invoiced cubic feet will be calculated by dividing the Handling Unit’s Postal Service assigned rounded weight by the applicable mail class density.

Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub

The aviation supplier will accept ad hoc trucks from the Postal Service at the proposed hub locations. The invoiced cubic feet for ad hoc trucks will be calculated by dividing the Handling Unit’s Postal Service assigned rounded weight by the applicable mail class density. Recognizing the reduced work content, the aviation supplier will provide an unload rate in Attachment 10: Pricing for the receipt and processing of all ad hoc truck mail volume. The Postal Service will incorporate ad hoc truck payments in the weekly electronic payment.

Aviation Supplier Surface Transportation – Not Included in the Transportation Payment

The aviation supplier will include a separate rate per mile for Highway Transportation in Attachment 10: Pricing which will be applied when the Postal Service requires the aviation supplier to operate unplanned surface transportation of mail.

Hub Sort Scan Charge

The Postal Service will pay a Hub Sort Scan charge for mail sorted and scanned at a hub per Handling Unit (i.e., D&R Tag) as shown in Attachment 10: Pricing. This rate will not be subject to an increase for the full term of the contract.

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Handling Units sorted at a hub must receive a Hub Sort Scan for payment purposes. The Postal Service will not pay a Hub Sort Scan charge for sorts not supported by EDI scan information. The pieces scanned into a tendered Bypass container are not eligible to receive Hub Sort Scan charges.

Re-Labeling Charge

The Postal Service will pay an additional charge to the aviation supplier for re-labeling Postal Service Handling Units at the hub for which the D&R tag is missing or becomes illegible. The Postal Service will also provide all equipment necessary to perform this function. The re-labeling charge per Handling Unit is shown in Attachment 10: Pricing.

This rate will not be subject to an increase for the full term of the contract.

Payment to the aviation supplier for the transport of re-labeled Handling Units will be based upon data received from the Hub Scan plus (combined and matched with) the Delivery Scan for the Handling Unit. An average weight per Handling Unit will be established based upon the previous month’s data for average weight per Handling Unit, and for Handling Units that are not properly scanned due to conditions beyond the aviation supplier’s control.

The equipment to be supplied by the Postal Service for this function will be listed in Attachment 6: Postal Furnished Property, and will be covered by Clause 2-22, Postal Service Property. Attachment 6: Postal Furnished Property will be created upon successful installation of the equipment. Upon reasonable advance notice to the aviation supplier, the Postal Service shall be permitted to perform maintenance on any of the equipment located in an aviation supplier’s facility listed in Attachment 6: Postal Service Furnished Property.

Fuel Adjustment

There will be a monthly fuel adjustment to the Fuel Line Haul rate. Each “month” is defined in Attachment 1: Postal Service Operating Periods. The adjustment will become effective on the first operating day of each operating period after contract commencement. The adjustment may be upward or downward.

The adjustment will be based on the U.S. Gulf Coast (USGC) prices for Kerosene-type jet fuel reported by the U.S. Department of Energy for the month that is two (2) months prior to the adjustment. The adjustment will be calculated and applied monthly.

For example, assume the Fuel Line Haul rate is $0.10. If the June 20XX USGC price for Kerosene-type jet fuel is $2.68 per gallon and the July 20XX price is $3.00 per gallon, then the adjustment for September XX would be calculated as follows:

($3.00 / $2.68) = 1.12

1.12 x $0.10 = $0.11

The new Fuel Line Haul rate would be $0.11 per cubic foot.

In August 20XX, if the USGC price is $2.70 per gallon, the calculation for the October 20XX rate would be:

($2.70 / $3.00) = 0.90

0.90 x $0.11 = $0.10 per cubic foot

This calculation will be rounded after the decimal to four digits.

The proposal pricing should be based on the August 2012 U.S. Gulf Coast Kerosene-type jet fuel reported by the U.S. Department of Energy ($3.156 per gallon).

Fuel will be adjusted for October 2013 based on the August 2013 U.S. Gulf Coast Kerosene-type jet fuel reported by the U.S. Department of Energy.

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Payment Processing—Night Network—Per Pound

Invoicing

All Handling Units tendered to the aviation supplier for the Night Network will be paid by the pound and payment will be based on required scanning. The weight will be derived from the assigned rounded weight of the Handling Unit. The Non-Fuel Line Haul rate will include all of the transportation and handling associated with a Handling Unit. The Fuel Line Haul rate for the Night Network will not be subject to a fuel adjustment.

Re-Labeling Charge

The Postal Service will pay an additional charge to the aviation supplier for re-labeling Postal Service Handling Units for which the D&R tag is missing or becomes illegible. The Postal Service will also provide all equipment necessary to perform this function. The re-labeling charge per Handling Unit is shown in Attachment 10: Pricing. This rate will not be subject to an increase for the full term of the contract.

Payment to the aviation supplier for transport of re-labeled Handling Units will be based upon data received from the Hub Scan plus (combined and matched with) the Delivery Scan for the Handling Unit. An average weight per Handling Unit will be established based upon the previous month’s data for average weight per Handling Unit and for Handling Units that are not properly scanned due to conditions beyond the aviation supplier’s control.

The equipment to be supplied by the Postal Service for this function will be listed in Attachment 6: Postal Furnished Property, and will be covered by Clause 2-22, Postal Service Property. Attachment 6 will be created upon successful installation of the equipment. Upon reasonable advance notice to the aviation supplier, the Postal Service shall be permitted to perform maintenance on any of the equipment located in an aviation supplier’s facility listed in Attachment 6.

The payment for the Night Network re-labeled Handling Units will be adjusted to reflect the percentage of re-labeled Handling Units that have already been scanned. This percentage of previously scanned Handling Units will be mutually agreed upon by the Postal Service and the aviation supplier through an audit sampling of re-labeled Handling Units. Contingency Handling Units are excluded from this adjustment.

Reconciliation Process

Reconciliation of scanning and payment records between the Postal Service and the aviation supplier will be conducted in a scheduled meeting attended by the Postal Service and the aviation supplier on an Operating Period basis not more than ninety (90) days after the close of an Operating Period, or a time frame as agreed mutually by the parties. The following procedures will be observed for the reconciliation process:

a. All data exchanges between the aviation supplier and the Postal Service for the reconciliation process will be performed electronically and sent to specified mailboxes operated by each organization. Each file will have an individually specified transmission interval.

b. For all files exchanged between the aviation supplier and the Postal Service, any changes to layout or data definition must be communicated to the receiving party at a minimum of sixty (60) calendar days prior to implementation, or sooner if mutually agreed.

c. All file transfers must adhere to Postal Service Security and Privacy rules.

d. Supplemental Charges / Assessments may be assessed each Operating Period. The charges shall include but not be limited to the following:

i. Operating Period Volume Minimum and Contract Volume Minimum

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ii. Non-achievement of performance standards

e. Once the parties have mutually agreed on the Operating Period reconciliation, both parties agree that neither can re-open the Operating Period for further adjustments. By mutually agreeing to the Operating Period reconciliation, the parties thereby agree to waive their right to pursue a claim under the Contract Disputes Act based upon the Operating Period reconciliation.

In the event there is a catastrophic equipment or information system failure, the aviation supplier will provide electronic files to the Postal Service identifying all D&R Tags the aviation supplier scanned that were lost. The aviation supplier will notify the Contracting Officer and the COR as soon as the aviation supplier becomes aware of such a failure.

If the Postal Service cannot produce D&R Tags, an emergency contingency will be developed and implemented. Such a plan will include specifications for operational and information technology issues, as well as payment.

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Part 3: Contract Clauses

Part 3: Contract Clauses

Clause B-1: Definitions (March 2006) (Tailored)

For purposes of this Contract, the following terms shall have the following meanings:

1. Acceptable Dangerous Goods and Acceptable Hazardous Material: Those articles or substances which satisfy the air transportation requirements for the transportation of Hazardous Goods set forth in Chapter 601.10.0 of the Domestic Mail Manual and which are not required by applicable federal regulation to be accessible to crew members during flight.

2. Advertisement: A free or paid mass or targeted communication under the control of a party intended for the general public or a specific potential or existing customer, the ultimate purpose of which is to promote the sale of such party’s products or services, including, but not limited to, television, radio and internet commercials, out-of-home ads (e.g., billboards, sports stadium displays, transit signs), direct mail ads, print ads and free standing inserts in newspapers, magazines, and electronic media.

3. All Mail Due Aviation Supplier: A designated time predetermined when the Postal Service provides all mail to the aviation supplier as shown in Attachments 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network

4. Aviation Supplier: The person or persons, partnership, or corporation named that has been awarded the contract.

5. Bypass Container: A ULD of mail designated for delivery to destination Service Point on the network which is transferred directly from one aircraft to another without going through the sort operation.

6. Con-Con: (Convoy and Conveyance) The concentration in a container of Registered Mail for single, daily, daylight, or authorized night air dispatch

7. Contract Volume Minimum: The volume (in cubic feet) per operational day, averaged across six (6) days per week, and measured across each Operating Period that is guaranteed by the Postal Service for the Day Network

8. Contracting Officer: The person executing this contract on behalf of the Postal Service and any other officer or employee who is a properly designated Contracting Officer; the term includes, except as otherwise provided in the contract, the authorized representative of a Contracting Officer acting within the limits of the authority conferred upon that person.

9. Contracting Officer’s Representative (COR): A person who acts within the limits of authority delegated by the Contracting Officer.

10. Contingency Handling Units: Handling Units entered into the transportation network without an appropriate D&R tag. These Handling Units are subsequently processed at the aviation supplier’s hub through the re-labeling process.

11. Dangerous Goods (Hazardous Material): Articles or substances which are capable of posing a significant risk to health, safety or to property when transported by air and which are classified according to Section 3 (Classification) of the International Air Transport Association (IATA) Dangerous Good Regulations, regardless of variations, exceptions, exemptions, or limited quantity allowances.

12. Day Network: Planned network that operates Tuesday through Sunday primarily for the transportation of the Priority and First Class Mail.

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13. Delivery: The hand-off, at a destination Service Point, of all mail to the Postal Service in accordance with contract requirements.

14. Delivery Scan: A scan performed by the aviation supplier that indicates that the aviation supplier has tendered volume to the Postal Service.

15. D&R (Dispatch and Routing) Tag: Bar coded tag that identifies the origin and destination airports, mail class, Handling Unit weight, and the assigned network air carrier.

16. Exception Sort Scan: A Hub Scan performed on mail Handling Units that require re-labeling due to a missing or unreadable D&R tag.

17. Express Mail: As defined in the U.S. Postal Service Domestic Mail Manual.

18. Failure to Load: A failure to accept and load mail as specified in the contract.

19. Failure to Protect: Is a failure to protect and safeguard mail from depredation, rifling, inclement weather, mistreatment, or other hazard while in the aviation supplier’s control.

20. Failure to Protect Postal Service Equipment: A failure to protect, return or safeguard Postal Service provided equipment. This includes MTE and Postal provided scanning equipment (if supplied by the Postal Service).

21. First-Class Mail: As defined in the U.S. Postal Service Domestic Mail Manual.

22. Feeder: An aircraft normally used for local transport (for carriage of cargo and / or containers) to and from locations not scheduled to be serviced by primary aircraft from a hub, directly connecting these locations to a hub.

23. Ground Handling: Handling of mail, including unloading of mail from aircraft or ground vehicles, drayage, staging of mail, and loading of mail on receiving aircraft or ground vehicles.

24. Handling Unit: A piece of mail (an outside) or a receptacle (such as loose sacks, pouches, trays, flat tubs) that contains multiple pieces of mail which is individually processed.

25. Hub: A central sort facility that supports multiple markets via air and ground networks on a regional or national level by means of connecting flights and ground transportation.

26. Hub Sort Scan: A scan performed by the aviation supplier at a hub location.

27. Line Haul: Transporting mail by air between origin and destination locations.

28. Live Animals: Animals accepted by the Postal Service in accordance with Chapter 601.9.3 of the Domestic Mail Manual.

29. Mail: Product that carries U.S. postage and the receptacles in which it is tendered for transportation. The term includes supplies and empty mail transportation equipment of the U.S. Postal Service.

30. Mail Bags: Postal Service bags which are used by the Postal Service in the transportation of mail.

31. Mis-delivered: Any mail delivered to the wrong destination. This includes, but is not limited to, mail placed in the wrong ULD, ULDs loaded onto an incorrect flight or truck, and ULDs incorrectly placarded.

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32. Mixed Container: A Unit Load Device (ULD) containing mail for multiple destinations that requires sortation at the aviation supplier hub.

33. Nest Scan: The scan that associates the Handling Unit with the ULD (air container).

34. Night Network: Planned network that operates Monday through Friday, primarily for the transportation of Express Mail.

35. Operating Period: A scheduled period ranging from four (4) to five (5) weeks as agreed between the Postal Service and aviation supplier.

36. Operating Period Volume Minimum: The volume minimum resulting from the Planned Capacity established through the Ordering Process for the Day and Night Networks.

37. Overflow Mail: Mail that is tendered in excess of the Planned Capacity.

38. Outsides: Individual mail piece, with dimensions no greater than 108 inches in combined length and girth and with no single dimension greater than 84 inches which is not otherwise containerized and must be processed as a Handling Unit.

39. Package: Any box or envelope that is accepted by the Postal Service for delivery to a consignee.

40. Perishables: Those items which are susceptible to decay, spoilage or destruction.

41. Planned Capacity: Volume that the parties have agreed to by way of the Ordering Process for the Day and Night Networks.

42. Possession Scan: A scan performed by the aviation supplier that indicates the aviation supplier has accepted the volume from the Postal Service.

43. Priority Mail: Priority Mail and First-Class zone rated (Priority) mail as defined in the U.S. Postal Service Domestic Mail Manual, Chapter 3, Section 314.

44. Registered Mail: A mail piece which is mailed in accordance with the requirements of Chapter 501.2.0 of the Domestic Mail Manual. Registered Mail provides added protection for valuable or important mail. Registered Mail provides a receipt to the sender, special security between shipment points, a record of acceptance and delivery maintained by the Postal Service and, at the option of the mailer and for an additional fee, indemnity in case of loss or damage.

45. Re-Possessed: Regain possession of assigned mail.

46. Required Delivery Time (RDT): The latest delivery time to the Postal Service as indicated in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

47. Service Point: The physical location at which the aviation supplier must hand-off mail to the Postal Service or its duly appointed agent as specified in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

48. Tender: The drop-off, at an origin Service Point, of mail assigned by the Postal Service to the aviation supplier.

49. Tender Point: The physical location at which the Postal Service or its duly appointed agent provides mail to the aviation supplier.

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50. Tender Time: The latest time at which the aviation supplier is required to accept mail from the Postal Service at an origin Service Point in accordance with contract requirements.

51. Terminal Handling: The receipt, scanning, sorting, delivery and / or tug and dolly transportation of mail tendered under this contract.

52. Trans Log File: The Postal Service data file that contains, for each D&R Tag, the actual weight, origin, and destination market for each Handling Unit.

53. Transportation Payment:: Four items are included in the Transportation Payment:

a. Non-Fuel Line Haul

b. Fuel Line Haul

c. Aircraft Ground Handling

d. Scanning

54. Trucking Location: Those Service Points to which mail volume is transported via highway.

55. Unit Load Device (ULD): Airline container or pallet provided by the aviation supplier

Clause B-3: Contract Type (March 2006) (Tailored)

This Contract is a fixed-price, indefinite quantity with adjustments contract for the purchase of commercial services pursuant to 39 Code of Federal Regulations, Part 601 et seq.

This is not a requirements-type contract.

Clause B-9: Claims and Disputes (March 2006) (Tailored)

a. This contract is subject to the Contract Disputes Act of 1978 (41 U.S.C. 601-613) (“the Act” or “CDA”).

b. Except as provided in the Act, all disputes arising under or relating to this contract must be resolved under this clause.

c. “Claim,” as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. However, a written demand or written assertion by the aviation supplier seeking the payment of money exceeding $100,000 is not a claim under the Act until certified as required by subparagraph d.2 below. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim under the Act by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount is not acted upon in a reasonable time.

d.

1. A claim by the aviation supplier must be made in writing and submitted to the Contracting Officer for a written decision. A claim by the Postal Service against the aviation supplier is subject to a written decision by the Contracting Officer.

2. For aviation supplier claims exceeding $100,000, the aviation supplier must submit with the claim the following certification:

“I certify that the claim is made in good faith, that the supporting data are accurate and complete to the best of my knowledge and belief, that the amount requested accurately reflects the contract adjustment for which the aviation supplier believes the Postal Service is liable, and that I am duly authorized to certify the claim on behalf of the aviation supplier.”

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3. The certification may be executed by any person duly authorized to bind the aviation supplier with respect to the claim.

e. For aviation supplier claims of $100,000 or less, the Contracting Officer must, if requested in writing by the aviation supplier, render a decision within 60 days of the request. For aviation supplier-certified claims over $100,000, the Contracting Officer must, within 60 days, decide the claim or notify the aviation supplier of the date by which the decision will be made.

f. The Contracting Officer’s decision is final unless the aviation supplier appeals or files a suit as provided in the Act.

g. When a CDA claim is submitted by or against an aviation supplier, the parties shall make a good faith attempt to resolve the dispute, including an exchange of relevant information toward a mutual resolution. Accordingly, by mutual consent, the parties may agree to use an alternative dispute resolution (ADR) process to assist in resolving the claim. A certification as described in d(2) of this clause must be provided for any claim, regardless of dollar amount, before ADR is used. If either party declares the matter to be at an impasse, the dispute will be resolved through the CDA process as contemplated by Clause B-9.

h. The Postal Service will pay interest in the amount found due and unpaid from:

1. The date the Contracting Officer receives the claim (properly certified, if required); or

2. The date payment otherwise would be due, if that date is later, until the date of payment.

i. Simple interest on claims will be paid at a rate determined in accordance with the Interest clause.

j. The aviation supplier must proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract regardless of the initiating party, and comply with any decision of the Contracting Officer.

Clause B-10: Pricing of Adjustments (March 2006) (Tailored)

When costs are a factor in determining any contract price adjustment under the Changes clause, the process set forth in Clause 4-1.c will be followed. For any other provision of this contract, the parties agree to use the process set forth in Attachment 10: Pricing and in the Payment Processing sections of Part 1 for negotiating the adjustment.

Clause B-15: Notice of Delay (March 2006) (Tailored)

Immediately upon becoming aware of any difficulties that might delay deliveries under this contract, the aviation supplier will notify the Postal Service in writing. The notification must identify the difficulties, the reasons for them, and the estimated period of delay anticipated. Failure to give notice may preclude later consideration of any request for an extension of contract time.

Clause B-22: Interest (March 2006) (Tailored)

The Postal Service will pay interest on late payments and unearned prompt payment discounts in accordance with the Prompt Payment Act, 31 U.S.C. 3901 et. seq., as amended by the Prompt Payment Act Amendments of 1988, P.L. 100-496. The aviation supplier will pay interest on any payment to the Postal Service at a rate equivalent to the prevailing Contract Disputes Act interest rate.

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Clause B-25: Advertising of Contract Awards (March 2006)

Except with the Contracting Officer’s prior approval, the aviation supplier agrees not to refer in its commercial advertising to the fact that it was awarded a Postal Service contract or to imply in any manner that the Postal Service endorses its products.

Clause B-30: Permits and Responsibilities (March 2006) (Tailored)

The aviation supplier is responsible, without additional expense to the Postal Service, for obtaining any necessary licenses and permits, and for complying with any applicable federal, state, and municipal laws, codes, and regulations in connection with the performance of the contract. The aviation supplier is responsible for all damage to persons or property, including environmental damage that occurs as a result of its omission(s) or negligence. While in performance of the contract, the aviation supplier must take proper safety and health precautions to protect the work, the workers, the public, the environment, and the property of others.

Clause B-39: Indemnification (March 2006) (Tailored)

The aviation supplier must save harmless and indemnify the Postal Service and its officers, agents, representatives, and employees from all claims, losses, damage, actions, causes of action, expenses, and/or liability resulting from, brought forth, or on account of any personal injury or property damage received or sustained by any person, persons, or property growing out of, occurring, or attributable to any work performed under or related to this contract, resulting in whole or in part from negligent acts or omissions of the aviation supplier, any subcontractor of the aviation supplier, or any employee, agent, or representative of the aviation supplier or of the aviation supplier’s subcontractor.

The Postal Service must save harmless and indemnify the aviation supplier and its officers, agents, representatives, and employees from all claims, losses, damage, actions, causes of action, expenses, and / or liability resulting from, brought forth, or on account of any personal injury or property damage received or sustained by any person, persons, or property growing out of, occurring, or attributable to any work performed under or related to this contract, resulting in whole or in part from negligent acts or omissions of the Postal Service, or any employee, agent, or representative of the Postal Service.

Clause B-45: Other Contracts (March 2006) (Tailored)

The Postal Service may award other contracts for additional work, and the aviation supplier must cooperate fully with the other aviation suppliers and Postal Service employees. The aviation supplier must not commit or permit any act that will interfere with the performance of work by any other aviation supplier or by Postal Service employees.

Clause B-65: Adjustments to Compensation (March 2006) (Tailored)

Contract compensation may be adjusted, from time to time, by mutual agreement of the aviation supplier and the Contracting Officer. No adjustment to compensation will be made for changes arising from Clause 9-10: Service Contract Act or from Clause 9-12: Fair Labor Standards Act and Service Contract Act – Price Adjustment. Adjustments in compensation pursuant to this clause shall be memorialized by formal modification to the contract. All negotiations between the parties shall be conducted with respect to the implied covenant of good faith and fair dealing.

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Clause B-69: Events of Default (March 2006) (Tailored)

The aviation supplier’s right to perform this contract is subject to termination, in whole or in part, in the event of any of the following events of default.

a. The aviation supplier’s failure to perform service according to the terms of the contract;

b. If the aviation supplier has been administratively determined to have violated Postal laws and regulations and other laws related to the performance of the service;

c. Failure to follow the instructions of the Contracting Officer that fall within the scope of the contract;

d. If the aviation supplier transfers or assigns his contract, except as authorized herein, or sublets the whole or a portion of this contract contrary to the applicable provisions of the U.S. Postal Service Supplying Principles and Practices or without any required approval of the Contracting Officer;

e. If the aviation supplier combines to prevent others from proposing for the performance of Postal Service contracts;

f. If the aviation supplier or corporate officer has been or is, during the term of the contract, convicted of a crime affecting his or her reliability or trustworthiness as a mail transportation aviation supplier, such as any form of fraud or embezzlement that has impacted the Postal Service or the U.S. Government;

g. If at any time the aviation supplier, its principal owners, corporate officers or personnel are disqualified by law or regulation from performing services under this contract, and upon notice thereof, the aviation supplier fails to remove any such disqualification;

h. If the aviation supplier fails to provide any notification of a change in corporate officers which this contract may require; or

i. If the aviation supplier materially breaches any other requirement or clause of this contract.

Clause B-75: Accountability of the Aviation Supplier (Non-Highway) (March 2006) (Tailored)

a. The aviation supplier shall supervise its operations and the operations of its subcontractors that provide services under this contract personally or through representatives. The aviation supplier or its supervising representatives must be easily accessible in the event of emergencies or interruptions in service.

b. In all cases, the aviation supplier shall be liable to the Postal Service for the Postal Service’s damages if mail is subject to loss, rifling, damage, wrong delivery, depredation, and other mistreatment while in the custody and control of the aviation supplier or its subcontractors. The aviation supplier shall also be accountable and answerable in damages for the faithful performance of all other obligations assumed under this contract, whether or not it has entrusted part or all of its performance to another, except for any failure to perform that is excused by the Force Majeure clause of this contract.

c. The aviation supplier shall faithfully account for and deliver to the Postal Service all:

1. Mail,

2. Moneys, and

3. Other property of any kind belonging to or entrusted to the care of the Postal Service, that come into the possession of the aviation supplier during the term of this contract.

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d. The aviation supplier shall, promptly upon discovery, refund (i) any overpayment made by the Postal Service for service performed, or (ii) any payment made by the Postal Service for service not rendered.

Clause B-77: Protection of the Mail (Non-Highway) (March 2006) (Tailored)

The aviation supplier must protect and safeguard the mail from loss, theft, or damage while it is in the aviation supplier’s custody or control, and prevent unauthorized persons from having access to the mail.

a. Classification of Irregularities

The following classifications of irregularities are those that preclude the Postal Service from accomplishing its mission. The damage caused from these irregularities result in actual damage and degradation to its brand, and therefore, is associated with liquidated damages as stated:

1. Failure to Protect

Failure to protect the mail consists of: failure to protect or safeguard the mail from inclement weather, from damage caused by the mechanized sort, from acts of the aviation supplier’s employees or contractors, and from loss, depredation, or other hazards while in the control or custody of the aviation supplier.

2. Theft of Mail

The theft of mail can cause immeasurable damage to the Postal Service, both in terms of actual economic loss to our customers and to the competitive standing of our products and services. The aviation supplier will support law enforcement efforts to prevent theft of mail, and will support enforcement officials in the apprehension of those who may be perpetrating such crimes.

b. Damages and Liquidated Damages

The following liquidated damages for damaged and unprotected mail are applicable to the associated classifications of irregularities:

1. Damaged and Unprotected Mail

Liquidated damages may be assessed for damaged and unprotected mail. For purposes of this section, damaged mail will consist of mail pieces whether inside or outside of Postal Service MTE. This category includes but may not be limited to:

i. Failure to Protect – Causing Damage to Mail

Failure to protect causing physical damage to the U.S. Mail or MTE for which there may be damage assessed equal to the actual costs incurred by the Postal Service necessary to remedy the situation and forward the mail onward to its next processing or delivery operation. Such actual costs may include items such as administrative time at an appropriate hourly rate for documenting the irregular condition and implementing the damage, labor time used to repossess the mail, unpack, sort, dry, repack / repackage, and re-dispatch to a subsequent destination or processing operation.

If actual damages are not ascertainable, a liquidated damage may be assessed as follows, taking into account the actual damage that may typically result from such situations:

Per Letter Tray:	[ * ] per letter tray
Per Flat Tub:	[ * ] per flat tub
Per Mail Sack or Pouch:	[ * ] per sack or pouch
Per Outside Parcel:	[ * ] per piece

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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ii. Failure to Protect—Dropped or Abandoned Pouch or Piece

When U.S. Mail is discovered unprotected in an unsecured location or on the airport ramp, Liquidated Damages may be assessed at $50.00 per incident.

c. Investigative Costs for Theft of Mail

In cases where a mail theft is committed by the aviation supplier’s or its subcontractor’s personnel, actual investigative costs to the U.S. Postal Inspection Service and/or the Office of the Inspector General may be assessed as actual damages. These costs will be reasonably determined and may begin accruing only when a specific investigation begins on the basis of probable cause. The costs of routine surveillance not associated with a specific theft or series of thefts will not be assessed. In addition to allocable investigative expenses, the Postal Service may assess actual damages for loss of product value resulting from insurance claims where payouts to postal customers can be traced to the incident(s).

In addition to the above, in cases where mail theft occurs and the Postal Service determines that the aviation supplier’s failure to properly execute the mail handling employee screening requirements set forth in the Contract was a proximate cause of the theft, and that by reason of the theft it is necessary to conduct a complete audit of the aviation supplier’s adherence to the screening requirements with respect to the employment of other employees subject to those requirements, the Postal Service may assess an administrative damage in the amount of $5,000 in lieu of actual costs associated with that audit.

Depending upon the circumstances of the incident, the Vice President, Network Operations, in consultation with the Postal Inspection Service or Office of the Inspector General, and the Contracting Officer, may determine that damages pursuant to this section are not appropriate, and may waive all or a portion of the amounts that may otherwise be due the Postal Service hereunder. Factors such as the seriousness of the misconduct, the aviation supplier’s level of cooperation in investigations, implementing corrective actions, and efforts directed at loss recovery will be considered in reaching that determination.

Clause B-80: Laws and Regulations Applicable (March 2006) (Tailored)

This contract and the services performed under it are subject to all applicable federal, state, and local laws and regulations. The aviation supplier assumes sole responsibility to faithfully discharge all duties and obligations imposed by such laws and regulations, and shall obtain and pay for all permits, licenses, and other authorities required to perform this contract. The aviation supplier shall hold harmless, save, and defend the Postal Service from any consequence of the aviation supplier’s failure to abide by all applicable federal, state, and local laws and regulations (including but not limited to regulations promulgated by the DOL and IRS) relating to the contract and throughout the term of the contract and any subsequent renewal periods.

Clause B-81: Information or Access by Third Parties (March 2006) (Tailored)

The Postal Service retains exclusive authority to release any or all information about mail matter in the custody of the aviation supplier and to permit access to that mail in the custody of the aviation supplier. All requests by non-postal individuals for information about mail matter in the custody of the aviation supplier or for access to mail in the custody of the aviation supplier must be referred to the Contracting Officer or his or her designee.

Clause B-82: Access by Officials (March 2006) (Tailored)

The aviation supplier shall deny access to the cargo compartment of aircrafts or a vehicle containing mail therein to state or local officials except at a postal facility or in the presence of a postal employee or a Postal Inspection Service officer, unless to prevent immediate damage to the aircraft, vehicle, or their contents. If authorized Federal law enforcement seeks access to the cargo compartment of aircrafts or vehicles contained mail therein, the aviation supplier shall notify the Postal Inspection Service before permitting access, unless to prevent immediate damage to the aircraft, vehicle, or their contents.

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Clause 1-1: Privacy Protection (July 2007)

In addition to other provisions of this contract, the aviation supplier agrees to the following:

a. Privacy Act. If the aviation supplier operates a system of records on behalf of the Postal Service, the Privacy Act (5 U.S.C. 522a) and Postal Service regulations at 39 CFR Parts 266-267 apply to those records. The aviation supplier is considered to operate a system of records if it manages records (including collecting, revising, or disseminating records) from which information is retrieved by the name of an individual or by some number, symbol, or other identifier assigned to the individual. The aviation supplier agrees to comply with the Act and the Postal Service regulations in designing, developing, and operating the system of records, including ensuring that records are current and accurate for their intended use, and incorporating adequate safeguards to prevent misuse or improper disclosure of personal information. Violations of the Act may subject the violator to criminal penalties.

b. Customer or Employee Information. If the aviation supplier has access to Postal Service customer or employee information, including address information, whether collected online or offline by the Postal Service or by a aviation supplier acting on its behalf, the aviation supplier must comply with the following:

1. General. With regard to the Postal Service customer information to which it has access pursuant to this contract, the aviation supplier has that access as an agent of the Postal Service and must adhere to its postal privacy policy at www.usps.com/common/docs/privpol.htm.

2. Use, Ownership, and Nondisclosure. The aviation supplier may use Postal Service customer or employee information solely for purposes of this contract, and may not collect or use such information for non-Postal Service marketing, promotion, or any other purpose without the prior written approval of the Contracting Officer. The aviation supplier must restrict access to such information to those employees who need the information to perform work under this contract, and must ensure that each such employee (including subcontractors’ employees) sign a nondisclosure agreement, in a form suitable to the Contracting Officer, prior to being granted access to the information. The Postal Service retains sole ownership and rights to its customer or employee information. Unless the contract states otherwise, upon completion of the contract, the aviation supplier must turn over all Postal Service customer or employee information in its possession to the Postal Service, and must certify that no Postal Service customer or employee information has been retained unless otherwise authorized in writing by the Contracting Officer.

3. Security Plan. When applicable, and unless waived in writing by the Contracting Officer, the aviation supplier must work with the Postal Service to develop and implement a security plan that addresses the protection of customer or employee information. The plan will be incorporated into the contract and followed by the aviation supplier, and must, at a minimum, address notification to the Postal Service of any security breach. If the contract does not include a security plan at the time of contract award, it must be added within 60 days after contract award.

4. Breach Notification. If there is a breach of any nature in the security of Postal Service data, including customer or employee data, the aviation supplier must follow the breach notification requirements included in the security plan discussed in (3) above. The aviation supplier will be required to follow Postal Service policies regarding breach notification to customers and/or employees.

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5. Legal Demands for Information. If a legal demand is made for Postal Service customer or employee information (such as by subpoena), the aviation supplier must immediately notify the Contracting Officer and the nearest office of the Postal Inspection Service. After notification, the Postal Service will determine whether and to what extent to comply with the legal demand. Should the Postal Service agree to or unsuccessfully resist a legal demand, the aviation supplier may, with the written permission of the Contracting Officer, release the information specifically demanded.

c. Online Assistance. If the aviation supplier assists in the design, development, or operation of a Postal Service customer Web site, or if it designs or places an ad banner, button, or link on a Postal Service Web site or any Web site on the Postal Service’s behalf, the aviation supplier must comply with the limitations in subparagraph b (1) above relating to ad banners, buttons, or links, and the use of cookies, web beacons, or other web analysis tools. Exceptions to these limitations require the prior written approval of the Contracting Officer and the Postal Service’s chief privacy officer.

d. Marketing E-Mail. If the aviation supplier assists the Postal Service in conducting a marketing e-mail campaign, the aviation supplier does so as an agent of the Postal Service and must adhere to the Postal Service policies set out in Postal Service Management Instruction AS-350-2004-4, Marketing E-mail. Aviation suppliers wishing to conduct marketing email campaigns to postal employees must first obtain the prior written approval of the Contracting Officer.

e. Audits. The Postal Service may audit the aviation supplier’s compliance with the requirements of this clause, including through the use of online compliance software.

f. Indemnification. The aviation supplier will indemnify the Postal Service against all liability (including costs and fees) for damages arising out of violations of this clause.

g. Flow-down. The aviation supplier will flow this clause down to subcontractors that would be covered by any portion of this clause if they were the aviation supplier.

Clause 1-5: Gratuities or Gifts (March 2006)

a. The Postal Service may terminate this contract for default if, after notice and a hearing, the Postal Service Board of Contract Appeals determines that the aviation supplier or the aviation supplier’s agent or other representative:

1. Offered or gave a gratuity or gift (as defined in 5 CFR 2635) to an officer or employee of the Postal Service; and

2. Intended by the gratuity or gift to obtain a contract or favorable treatment under a contract.

b. The rights and remedies of the Postal Service provided in this clause are in addition to any other rights and remedies provided by law or under this contract.

Clause 1-6: Contingent Fees (March 2006)

a. The aviation supplier warrants that no person or selling agency has been employed or retained to solicit or obtain this contract for a commission, percentage, brokerage, or contingent fee, except bona fide employees or bona fide, established commercial or selling agencies employed by the aviation supplier for the purpose of obtaining business.

b. For breach or violation of this warranty, the Postal Service has the right to annul this contract without liability or to deduct from the contract price or otherwise recover the full amount of the commission, percentage, brokerage fee, or contingent fee.

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Clause 1-11: Prohibition Against Contracting with Former Officers or PCES Executives (March 2006) (Tailored)

During the performance of this contract, former Postal officers or Postal Career Executive Service (PCES) executives are prohibited from employment by the contractor as key personnel, experts or consultants, if such individuals, within two years after their retirement from the Postal Service, would be performing substantially the same duties as they performed during their career with the Postal Service.

Clause 1-12: Use of Former Postal Service Employees (March 2006) (Tailored)

During the term of this contract, the aviation supplier must identify any former Postal Service officers or Postal Career Executive Service (PCES) employees it proposes to be engaged, directly or indirectly, in contract performance. Such individuals may not commence performance without the Contracting Officer’s prior approval. If the Contracting Officer does not provide such approval, the aviation supplier must replace the proposed individual former employee with another individual equally qualified to provide the services called for in the contract.

Clause 2-11: Postal Service Property—Fixed-Price (March 2006) (Tailored)

a. Postal Service-Furnished Property

1. The Postal Service will deliver to the aviation supplier, for use in connection with and under the terms of this contract, the property described as Postal Service-furnished property in the Schedule or specifications, together with any related information the aviation supplier may request that may reasonably be required for the intended use of the property (hereinafter referred to as “Postal Service-furnished property”).

2. The contract delivery or performance dates are based on the expectation that Postal Service-furnished property suitable for use (except for property furnished “as is”) will be delivered at the times stated in the Schedule or, if not so stated, in sufficient time to enable the aviation supplier to meet these delivery or performance dates. If Postal Service-furnished property is not delivered by these times, the Contracting Officer will, upon timely written request from the aviation supplier, make a determination of any delay occasioned the aviation supplier and will equitably adjust the delivery or performance dates or the contract price, or both, and any other contractual provision affected by the delay, in accordance with the Changes clause.

3. Except for Postal Service-furnished property furnished “as is,” if the Postal Service-furnished property is received in a condition not suitable for its intended use, the aviation supplier must notify the Contracting Officer and (as directed by the Contracting Officer) either (a) return it at the expense of the Postal Service or otherwise dispose of it, or (b) effect repairs or modifications. Upon the completion of (a) or (b), the Contracting Officer (upon written request from the aviation supplier) will equitably adjust the delivery or performance dates or the contract price, or both, and any other affected contractual provision, in accordance with the Changes clause.

4. The provisions for adjustment in this paragraph a are exclusive, and the Postal Service is not liable to suit for breach of contract by reason of any delay in delivery of Postal Service-furnished property or its delivery in a condition not suitable for its intended use.

b. Changes in Postal Service-Furnished Property

1. By written notice, the Contracting Officer may (a) decrease the property provided or to be provided by the Postal Service under this contract, or (b) substitute other Postal Service-owned property for the property to be provided by the Postal Service, or to be acquired by the aviation supplier for the Postal Service under this contract. The aviation supplier must promptly take any action the Contracting Officer may direct regarding the removal and shipping of the property covered by this notice.

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2. In the event of any decrease in or substitution of property pursuant to subparagraph b.1 above, or any withdrawal of authority to use property provided under any other contract or lease, which property the Postal Service had agreed in the Schedule to make available for the performance of this contract, the Contracting Officer, upon the aviation supplier’s written request (or—if substitution causes a decrease in the cost of performance—on the Contracting Officer’s own initiative), will equitably adjust any contractual provisions affected by the decrease, substitution, or withdrawal, in accordance with the Changes clause.

c. Use of Postal Service Property. The Postal Service property, unless otherwise provided in this contract or approved by the Contracting Officer, must be used only for performing this contract.

d. Utilization, Maintenance, and Repair of Postal Service Property. The aviation supplier must maintain and administer, in accordance with sound industrial practice, a program or system for the utilization, maintenance, repair, protection, and preservation of Postal Service property until it is disposed of in accordance with this clause. If any damage occurs to Postal Service property, the risk of which has been assumed by the Postal Service under this contract, the Postal Service will replace the items or the aviation supplier must make such repairs as the Postal Service directs; provided, however, that if the aviation supplier cannot effect these repairs within the time required, the aviation supplier will dispose of the property in the manner directed by the Contracting Officer. The contract price includes no compensation to the aviation supplier for performing any repair or replacement for which the Postal Service is responsible, and an equitable adjustment will be made in any contractual provisions affected by such repair or replacement made at the direction of the Postal Service, in accordance with the Changes clause. Any repair or replacement for which the aviation supplier is responsible under the provisions of this contract must be accomplished by the aviation supplier at the aviation supplier’s own expense.

e. Risk of Loss. Unless otherwise provided in this contract, the aviation supplier assumes the risk of, and becomes responsible for, any loss or damage to Postal Service property provided under this contract upon its delivery to the aviation supplier or upon passage of title to the Postal Service as provided in paragraph i below, except for reasonable wear and tear and except to the extent that it is consumed in performing this contract.

f. Access. The Postal Service, and any persons designated by it, must at reasonable times have access to premises where any Postal Service property is located, for the purpose of inspecting it.

g. Final Accounting for and Disposition of Postal Service Property. Upon completion, or at such earlier dates as may be fixed by the Contracting Officer, the aviation supplier must submit, in a form acceptable to the Contracting Officer, inventory schedules covering all items of Postal Service property not consumed in performing this contract (including any resulting scrap) or not previously delivered to the Postal Service, and will prepare for shipment, deliver f.o.b. origin, or dispose of this property, as the Contracting Officer may direct or authorize. The net proceeds of disposal will be credited to the contract price or will be paid in such other manner as the Contracting Officer may direct.

h. Restoration of Aviation Supplier’s Premises and Abandonment. Unless otherwise provided in this contract, the Postal Service:

1. May abandon any Postal Service property in place, whereupon all obligations of the Postal Service regarding it will cease; and

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2. Has no obligation with regard to restoration or rehabilitation of the aviation supplier’s premises, either in case of abandonment, disposition on completion of need or of the contract, or otherwise, except for restoration or rehabilitation costs properly included in an equitable adjustment under paragraph b or e above.

i. Title.

1. Title to all Postal Service-furnished property remains in the Postal Service. To define the obligations of the parties under this clause, title to each item of facilities, special test equipment, or special tooling (other than that subject to a special-tooling clause) acquired by the aviation supplier on behalf of the Postal Service under this contract will pass to and vest in the Postal Service when its use in the performance of this contract begins, or upon payment for it by the Postal Service, whichever is earlier, whether or not title was previously vested.

2. Title to all material purchased by the aviation supplier for whose cost the aviation supplier is entitled to be reimbursed as a direct item of cost under this contract will pass to and vest in the Postal Service upon delivery of the material to the aviation supplier by the vendor.

3. Title to other material whose cost is reimbursable to the aviation supplier under this contract will pass to and vest in the Postal Service upon:

a) Its issuance for use in the performance of this contract; or

b) Reimbursement of its cost by the Postal Service, whichever occurs first.

4. All Postal Service-furnished property, together with all property acquired by the aviation supplier, title to which vests in the Postal Service under this subsection i, is subject to the provisions of this clause and is hereinafter collectively referred to as “Postal Service property.” Title to Postal Service property is not affected by its incorporation into or attachment to any property not owned by the Postal Service, nor does Postal Service property become a fixture or lose its identity as personal property by being attached to any real property.

Clause 2-22: Value Engineering Incentive (March 2006)

a. General.

The right of each party to improve its own methods for its own benefit, absent a change to the obligations of the other party which requires an modification to this Contract, and to retain such savings for itself is not affected by this clause.

The aviation supplier is encouraged to develop and submit Value Engineering Change Proposals (VECPs) voluntarily. The aviation supplier will share in savings realized from an accepted VECP as provided in paragraph (h) below. No document submitted by the aviation supplier shall be considered to be a VECP unless the aviation supplier specifically marks on the document that it is to be considered a VECP and contains a statement that the aviation supplier intends the document to be a VECP subject to the provisions of this Clause of the Contract.

b. Definitions

1. Value Engineering Change Proposal (VECP). A proposal that:

i. Requires a change to the instant contract;

ii. Results in savings to the instant contract; and

iii. Does not involve a change in:

a) Deliverable end items only;

b) Test quantities due solely to results of previous testing under the instant contract; or

c) Contract type only.

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2. Instant Contract. The contract under which a VECP is submitted. It does not include additional contract quantities.

3. Additional Contract Quantity. An increase in quantity after acceptance of a VECP due to contract modification, exercise of an option, or additional orders (except orders under indefinite-delivery contracts within the original maximum quantity limitations).

4. Postal Service Costs. Costs to the Postal Service resulting from developing and implementing a VECP, such as net increases in the cost of testing, operations, maintenance, logistics support, or property furnished. Normal administrative costs of processing the VECP are excluded.

5. Instant Contract Savings. The estimated cost of performing the instant contract without implementing a VECP minus the sum of: (a) the estimated cost of performance after implementing the VECP, and (b) Postal Service costs.

6. Additional Contract Savings. The estimated cost of performance or delivering additional quantities without the implementation of a VECP minus the sum of (a) the estimated cost of performance after the VECP is implemented and (b) Postal Service cost.

7. Aviation Supplier’s Development and Implementation Costs. Aviation supplier’s cost in developing, testing, preparing, and submitting a VECP. Also included are the aviation supplier’s cost to make the contractual changes resulting from the Postal Service acceptance of the VECP.

c. Content. A VECP must include the following:

1. A description of the difference between the existing contract requirement and that proposed, the comparative advantages and disadvantages of each, a justification when an item’s function or characteristics are being altered, the effect of the change on the end item’s performance, and any pertinent objective test data.

2. A list and analysis of the contract requirements that must be changed if the VECP is accepted, including any suggested specification revisions.

3. A separate, detailed cost estimate for: (a) the affected portions of the existing contract requirement and, (b) the VECP. The cost reduction associated with the VECP must take into account the aviation supplier’s allowable development and implementation costs.

4. A description and estimate of costs the Postal Service may incur in implementing the VECP, such as test and evaluation and operating and support costs.

5. A prediction of any effects the proposed change would have on Postal Service costs.

6. A statement of the time by which a contract modification accepting the VECP must be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule.

7. Identification of any previous submissions of the VECP to the Postal Service, including the dates submitted, purchasing offices, contract numbers, and actions taken.

d. Submission. The aviation supplier must submit VECPs to the Contracting Officer.

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e. Postal Service Action

1. The Contracting Officer will give the aviation supplier written notification of action taken on a VECP within 60 days after receipt. If additional time is needed, the Contracting Officer will notify the aviation supplier, within the 60-day period, of the expected date of a decision. The Postal Service will process VECPs expeditiously but will not be liable for any delay in acting upon a VECP.

2. If a VECP is not accepted, the Contracting Officer will so notify the aviation supplier, explaining the reasons for rejection.

f. Withdrawal. The aviation supplier may withdraw a VECP, in whole or in part, at any time before its acceptance.

g. Acceptance

1. Acceptance of a VECP, in whole or in part, will be by execution of a supplemental agreement modifying this contract and citing this clause. If agreement on price (see paragraph h below) is reserved for a later supplemental agreement, and if such agreement cannot be reached, the disagreement is subject to the Claims and Disputes clause of this contract, or another clause of the contract dealing with disputes.

2. Until a VECP is accepted by contract modification, both parties must perform in accordance with the existing contract.

3. The Contracting Officer’s decision to accept or reject all or any part of a VECP is final and not subject to the Claims and Disputes clause or otherwise subject to litigation under the Contract Disputes Act of 1978.

h. Sharing. If a VECP is accepted, the aviation supplier and the Postal Service shall negotiate their respective shares of the contract savings. The contract savings are calculated by subtracting the estimated cost of performing the contract with the VECP, Postal Service costs, and the allowable development and implementation costs from the estimated cost of performing the contract without the VECP. Profit is excluded when calculating contract savings.

i. Data

1. The aviation supplier may restrict the Postal Service’s right to use any part of a VECP or the supporting data by marking the following legend on the affected parts:

“These data, furnished under the Value Engineering Incentive clause of contract, may not be disclosed outside the Postal Service or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. This restriction does not limit the Postal Service’s right to use information contained in these data if it has been obtained or is otherwise available from the aviation supplier or from another source without limitation.”

2. If a VECP is accepted, the aviation supplier hereby grants the Postal Service unlimited rights in the VECP and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the Postal Service will have the rights specified in the contract modification implementing the VECP and will appropriately mark the data.

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Clause 3-1: Small, Minority, and Woman-owned Business Subcontracting Requirements (March 2006)

a. All aviation suppliers, except small businesses, must submit a subcontracting plan that is specific to this contract and that separately addresses subcontracting with small, minority, and woman-owned businesses. A plan approved by the Postal Service must be included in and made a part of the contract. Lack of an approved plan may make the aviation supplier ineligible for award. A subcontract is defined as any agreement (other than one involving an employer-employee relationship) entered into by a Postal Service aviation supplier or subcontractor calling for supplies or services required for performance of the contract or subcontract.

b. The aviation supplier’s subcontracting plan must include the following:

1. Goals, in terms of percentages of the total amount of this contract that the aviation supplier will endeavor to subcontract to small, minority, and woman-owned businesses. The aviation supplier must include all subcontracts that contribute to contract performance, and may include a proportionate share of supplies and services that are normally allocated as indirect costs.

2. A statement of the:

i. Total dollars planned to be subcontracted under this contract; and

ii. Total of that amount planned to be subcontracted to small, minority, and woman-owned businesses.

3. A description of the principal types of supplies and services to be subcontracted under this contract, identifying the types planned for subcontracting to small, minority, and woman-owned businesses.

4. A description of the method used to develop the subcontracting goals for this contract.

5. A description of the method used to identify potential sources for solicitation purposes and a description of efforts the aviation supplier will make to ensure that small, minority, and woman-owned businesses have an equitable opportunity to compete for subcontracts.

6. A statement as to whether the offer included indirect costs in establishing subcontracting goals for this contract and a description of the method used to determine the proportionate share of indirect costs to be incurred with small, minority, and woman-owned businesses.

7. The name of the individual employed by the aviation supplier who will administer the subcontracting program and a description of the individual’s duties.

8. Assurances that the aviation supplier will require all subcontractors receiving subcontracts in excess of $1,000,000 to adopt a plan similar to the plan agreed to by the aviation supplier.

9. A description of the types of records the aviation supplier will maintain to demonstrate compliance with the requirements and goals in the plan for this contract. The records must include at least the following:

i. Source lists, guides, and other data identifying small, minority, and woman-owned businesses;

ii. Organizations contacted in an attempt to locate sources that are small, minority, and woman-owned businesses;

iii. Records on each subcontract solicitation resulting in an award of more than $100,000, indicating whether small, minority, or woman-owned businesses were solicited and if not, why not; and

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iv. Records to support subcontract award data, including the name, address, and business size of each subcontractor.

c. Reports. The aviation supplier must provide reports on subcontracting activity under this contract on a calendar-quarter basis. The report must be one of the types described in Clause 3-2, Participation of Small, Minority, and Woman-owned Businesses.

Clause 3-2: Participation of Small, Minority, and Woman-owned Businesses (March 2006)

a. The policy of the Postal Service is to encourage the participation of small, minority, and woman-owned business in its purchases of supplies and services to the maximum extent practicable consistent with efficient contract performance. The aviation supplier agrees to follow the same policy in performing this contract.

b. Subject to the agreement of the aviation supplier and the Postal Service, the aviation supplier will report subcontracting activity on one of the following bases:

1. Showing the amount of money paid to subcontractors during the reporting period;

2. Showing subcontracting activity that is allocable to this contract using generally accepted accounting practices; or

3. A combination of the methods listed above.

c. The aviation supplier will submit a report to the Contracting Officer within 15 calendar days after the end of each calendar-year quarter, describing all subcontract awards to small, minority, or woman-owned businesses. The Contracting Officer may require more frequent reports.

Clause 4-1: General Terms and Conditions (July 2007) (Tailored)

a. Inspection and Acceptance. Not applicable

b. Assignment. If this contract provides for payments aggregating $10,000 or more, claims for monies due or to become due from the Postal Service under it may be assigned to a bank, trust company, or other financing institution, including any federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any assignment or reassignment must cover all amounts payable and must not be made to more than one party, except that assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in financing this contract. No assignment or reassignment will be recognized as valid and binding upon the Postal Service unless a written notice of the assignment or reassignment, together with a true copy of the instrument of assignment, is filed with:

1. The Contracting Officer;

2. The surety or sureties upon any bond; and

3. The office, if any, designated to make payment, and the Contracting Officer has acknowledged the assignment in writing.

4. Assignment of this contract or any interest in this contract other than in accordance with the provisions of this clause will be grounds for termination of the contract for default at the option of the Postal Service.

c. Changes

1. The Contracting Officer may, in writing, without notice to any sureties, order changes within the general scope of this contract in the following:

i. Drawings, designs, or specifications when supplies to be furnished are to be specially manufactured for the Postal Service in accordance with them;

ii. Statement of work or description of services;

iii. Method of shipment or packing;

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iv. Places of delivery of supplies or performance of services;

v. Delivery or performance schedule;

vi. Postal Service furnished property or facilities.

2. Changes pursuant to the Ordering Process and the Operating Period Volume Minimum sections in Part 1- Statement of Work are not applicable under this clause.

3. Any other written or oral order (including direction, instruction, interpretation, or determination) from the Contracting Officer that causes a change will be treated as a change order under this paragraph, provided that the aviation supplier gives the Contracting Officer written notice stating: (a) the date, circumstances, and source of the order and (b) that the aviation supplier regards the order as a change order.

4. If any such change affects the cost of performance or the delivery schedule, the contract may be modified to effect an equitable adjustment.

5. The aviation supplier’s claim for equitable adjustment must be asserted within 60 days of receiving a written change order, or on a date otherwise agreed to by the parties in writing. A later claim may be acted upon — but not after final payment under this contract — if the Contracting Officer decides that the facts justify such action.

6. Failure to agree to any adjustment is a dispute under Clause B-9, Claims and Disputes.

d. Reserved

e. Reserved

f. Reserved

g. Invoices

The Postal Service intends to certify payment for services based, in part, upon collected scanned data. For services based upon scanned data, the aviation supplier need not submit an invoice for payment. Rather, payment will be automatically processed, on a weekly basis, based on the scan data. In addition, certain supplemental charges (including, but not limited to, charges related to minimum guaranteed volumes, surface transportation, and non-achievement of performance standards) may be assessed under the contract.

Any service requiring invoicing must meet the requirements specified herein. The aviation supplier shall submit an original invoice (or electronic invoice if authorized) to the Contracting Officer’s Representative. All invoices must be submitted within ninety (90) days from completion of the service or the applicable Operating Period to be eligible for payment. Invoices received after ninety (90) days from completion of the service or Operating Period will be subject to a 10% deduction or a deduction of $10,000, whichever is less, as a liquidated damage. The aviation supplier shall allow at least twenty-eight (28) calendar days before submitting a second invoice to the Postal Service for the same service.

To ensure prompt payment, an original paper invoice (or electronic invoice, if authorized) must contain:

1. Aviation supplier’s name, remit to address (including ZIP+4), contact person and phone number;

2. Unique invoice number and invoice date;

3. Contract number;

4. A description of the supplies or services and the dates delivered or performed;

5. Points (air stops or facility) of shipment tender and delivery; if applicable;

6. Quantity, unit of measure, unit price(s) and extension(s) of the items delivered; if applicable;

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7. Payment terms, including any discounts offered;

8. Name, title, and phone number of the person to be notified in the event of a defective invoice; and

9. Any additional information required by the contract or specified by the Contracting Officer.

Invoices will be handled in accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) Circular A-125, Prompt Payment. Further guidelines may be found in the Payment Processing and Reconciliation Process sections of Part I – Statement of Work.

h. Patent Indemnity. The aviation supplier will indemnify the Postal Service and its officers, employees and agents against liability, including costs for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark, or copyright, arising out of the performance of this contract, provided the aviation supplier is reasonably notified of such claims and proceedings.

i. Payment

Payment will only be made for:

1. Items that have been properly scanned and delivered to the correct delivery destination Service Points set forth in this contract, and

2. Other services and charges agreed upon by the parties.

The Postal Service will make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and 5 CFR 1315. Payments under this contract may be made by the Postal Service either by electronic funds transfer or other method agreed upon by the parties.

j. Risk of Loss. The Postal Service shall be liable for all third-party customer claims arising from or in connection with the loss, damage, or delay of any mail transported under this contract, except to the extent of any insurance proceeds received by the aviation supplier as a result of a catastrophic loss of an aircraft or other transport vehicle and attributable to Postal Service mail.

k. Taxes. The contract price includes all applicable federal, state, and local taxes and duties except the applicable Federal excise tax on the transportation of property via air. The aviation supplier is required to report to the Postal Service on an annual basis (October 1), the portion of the rates listed in Attachment 10: Pricing that are subject to federal excise tax. The Postal Service shall hold harmless, save, and defend the aviation supplier from any demand or claim of, or on behalf of, the IRS or the United States based on the application of federal excise taxes applicable to the transportation services performed by the aviation supplier under this contract.

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l. Termination on Notice.

1. This contract does not contain a Termination for Convenience clause. In lieu of a Termination for Convenience, either party may terminate this contract without cause by providing advanced written notice to the non-terminating party and a termination fee as follows:

Advanced Notice Provided	Postal Service Termination Fee	Aviation Supplier Termination Fee
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

2. The terminating party must pay the termination fee corresponding to the advanced written notice within ninety (90) of the written notice of termination.

3. If the aviation supplier terminates the contract under this provision, the aviation supplier guarantees to provide the Postal Service a daily average capacity through the effective date of the termination of not less than the daily average capacity offered in the two most recently completed Operating Periods prior to the date of the receipt of the notice of termination, or, if two Operating Periods have not been completed when the notice of termination is received, the daily average capacity offered shall be at least equal to the average daily capacity transported prior to the receipt of the written notice of termination.

4. Either party’s termination under this provision shall not prejudice the aviation supplier’s right to payment for services rendered, but neither party shall be liable to the other for any other damages, fees, or payment except for the termination fee above.

5. This clause does not apply to changes in service resulting from the Postal Service changing from six (6) days to less than six (6) days of delivery per week. If such a scenario should occur, refer to the Frequency Adjustment clause of this contract.

m. Termination for Default. The Postal Service may terminate this contract, or any part hereof, for default if the aviation supplier fails to cure such default within thirty (30) days of being advised in writing of such by the Postal Service, or if the aviation supplier fails to provide the Postal Service, upon request, with adequate assurances of future performance. In the event of termination for default, the Postal Service will not be liable to the aviation supplier for any amount for supplies or services not provided, and the Postal Service shall have any and all rights and remedies provided by law, including the right to assess reasonable excess re-procurement costs. The Postal Service may withhold payment otherwise due the aviation supplier for services already performed in order to protect its interest in recouping excess re-procurement costs, and will promptly determine such costs so as to mitigate damage to the aviation supplier.

n. Title. Not applicable

o. Warranty. The aviation supplier warrants and represents that the services delivered under this contract shall be in accordance with the requirements and performance standards set forth in the contract. With respect to services for which performance standards are set forth in the contract, the Postal Service’s exclusive remedy (other than termination for default) shall be price adjustments as provided in this contract. With respect to all other services, the Postal Service’s exclusive remedy (other than termination for default) shall be for the aviation supplier to promptly correct, replace, or otherwise cure such performance at no cost to the Postal Service.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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p. Limitation of Liability. Except as otherwise provided by an express or implied warranty, the supplier will not be liable to the Postal Service for consequential damages resulting from any defect or deficiencies in accepted items or services.

q. Other Compliance Requirements. The aviation supplier will comply with all applicable Federal, State, and local laws, executive orders, rules and regulations applicable to its performance under this contract.

r. Order of Precedence. Any inconsistencies in this solicitation or contract will be resolved by giving precedence in the following order:

1. Contract clauses;

2. Statement of Work;

3. Attachments to the Statement of Work;

4. Solicitation provisions

5. Form 8203;

6. Other documents and attachments associated with the contract.

s. Incorporation by Reference. Not applicable

t. Shipping. Not applicable

Clause 4-2: Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders (July 2009) (Tailored)

a. Incorporation by Reference. Not applicable

b. Examination of Records.

1. Records. “Records” includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form.

2. Examination of Costs. If this is a cost-type contract, the aviation supplier must maintain, and the Postal Service will have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of this contract. This right of examination includes inspection at all reasonable times of the aviation supplier’s plants, or parts of them, engaged in the performance of this contract.

3. Cost or Pricing Data. If the aviation supplier is required to submit cost or pricing data in connection with any pricing action relating to this contract, the Postal Service, in order to evaluate the accuracy, completeness, and currency of the cost or pricing data, will have the right to examine and audit all of the aviation supplier’s records, including computations and projections directly, related to:

a. The proposal for the contract, subcontract, or modification;

b. Pricing of the contract, subcontract, or modification; or

c. Performance of the contract, subcontract or modification.

4. Reports. If the aviation supplier is required to furnish cost, funding or performance reports, the Contracting Officer or any authorized representative of the Postal Service will have the right to examine and audit the supporting records and materials, for the purposes of evaluating:

a. The effectiveness of the aviation supplier’s policies and procedures to produce data compatible with the objectives of these reports; and

b. The data reported.

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5. Availability. The aviation supplier must maintain and make available at its office at all reasonable times the records, materials, and other evidence described in (b)(1)-(4) of this clause, for examination, audit, or reproduction, until three years after final payment under this contract or any longer period required by statute or other clauses in this contract. In addition:

a. If this contract is completely or partially terminated, the aviation supplier must make available the records related to the work terminated until three years after any resulting final termination settlement; and

b. The aviation supplier must make available records relating to appeals under the claims and disputes clause or to litigation or the settlement of claims arising under or related to this contract. Such records must be made available until such appeals, litigation or claims are finally resolved.

Clause 4-7: Records Ownership (March 2006)

Notwithstanding any state law providing for retention of rights in the records, the aviation supplier agrees that the Postal Service may, at its option, demand and take without additional compensation all records relating to the services provided under this agreement. The aviation supplier must turn over all such records upon request but may retain copies of documents produced by the aviation supplier.

Clause 6-1: Contracting Officer’s Representative (March 2006)

The Contracting Officer will appoint a Contracting Officer’s representative (COR), responsible for the day-to-day administration of the contract, who will serve as the Postal Service’s point of contact with the aviation supplier on all routine matters. A copy of the notice of appointment defining the COR’s authority will be furnished to the aviation supplier upon award of the contract.

a. The COR may be changed at any time by the Postal Service without prior notice to the aviation supplier, but notification of the change, including the name and address of the successor COR, will be promptly provided to the aviation supplier by the Contracting Officer in writing.

b. The responsibilities and limitations of the COR are as follows:

1. The COR is responsible for the operational and administrative aspects of the contract and technical liaison with the aviation supplier. The COR is responsible also for the final inspection and acceptance of aviation supplier performance and submitted reports and has other responsibilities as specified by the contract.

2. The COR is not authorized to make any commitments or otherwise obligate the Postal Service or authorize any changes affecting the contract price, terms, or conditions. Any aviation supplier request for changes must be referred to the Contracting Officer directly or through the COR. No such changes may be made without the Contracting Officer’s express prior authorization.

3. The COR may place orders for the aviation supplier to transport and process mail in accordance with the provisions of the contract at the agreed-upon rate only.

Clause 9-1: Convict Labor (March 2006)

In connection with the work under this contract, the aviation supplier agrees not to employ any person undergoing sentence of imprisonment, except as provided by E.O. 11755, December 28, 1973, as amended and 18 USC 3621 and 3622.

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Clause 9-2: Contract Work Hours and Safety Standards Act—Overtime Compensation (March 2006)

a. No aviation supplier or subcontractor contracting for any part of the contract work may require or permit any laborer or mechanic to work more than 40 hours in any workweek on work subject to the provisions of the Contract Work Hours and Safety Standards Act, unless the laborer or mechanic receives compensation at a rate not less than one-and-one-half times the laborer’s or mechanic’s basic rate of pay for all such hours worked in excess of 40 hours.

b. Violation, Liability for Unpaid Wages, and Liquidated Damages. In the event of any violation of paragraph a above, the aviation supplier and any subcontractor responsible for the violation are liable to any affected employee for unpaid wages. The aviation supplier and subcontractor are also liable to the Postal Service for liquidated damages, which will be computed for each laborer or mechanic at $10 for each day on which the employee was required or permitted to work in violation of paragraph a above.

c. Withholding for Unpaid Wages and Liquidated Damages. The Contracting Officer may withhold from the aviation supplier, from any moneys payable to the aviation supplier or subcontractor under this or any other contract with the same aviation supplier, or any other federally assisted contract subject to the Contract Work Hours and Safety Standards Act held by the same aviation supplier, sums as may administratively be determined necessary to satisfy any liabilities of the aviation supplier or subcontractor for unpaid wages and liquidated damages pursuant to paragraph b above.

d. Records. The aviation supplier or subcontractor must maintain for 3 years from the completion of the contract for each laborer and mechanic (including watchmen and guards) working on the contract payroll records which contain the name, address, social security number, and classification(s) of each such employee, hourly rates of wages paid, number of daily and weekly hours worked, deductions made, and actual wages paid. The aviation supplier or subcontractor must make these records available for inspection, copying, or transcription by authorized representatives of the Contracting Officer and the Department of Labor, and must permit such representatives to interview employees during working hours on the job. (The Department of Labor information collection and record keeping requirements in this paragraph d have been approved by the Office of Management and Budget under OMB control numbers 1215-0140 and 1215-0017.)

e. Subcontracts. The aviation supplier must insert paragraphs a through d of this clause in all subcontracts, and must require their inclusion in all subcontracts at any tier.

Clause 9-7: Equal Opportunity (March 2006) (Tailored)

During the performance of this contract, the contractor agrees as follows:

1. The contractor may not discriminate against employees or applicants for employment because of race, color, religion, sex, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to race, color, religion, sex, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of this nondiscrimination clause.

2. The contractor, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin.

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3. The contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, provided by the agency Contracting Officer, advising the labor union or workers’ representative of the contractor’s commitments under section 202 of Executive Order 11246 of September 24, 1965, and must post copies of the notice in conspicuous places available to employees and applicants for employment.

4. The contractor will comply with all provisions of Executive Order (EO) 11246 of September 24, 1965, as amended, and of the rules, regulations, and relevant orders of the Secretary of Labor.

5. The contractor will furnish all information and reports required by Executive Order, 11246 of September 24, 1964, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

6. In the event of the contractor’s non-compliance with the non-discrimination clauses of this contract or with any of such rules, regulations, or orders, this contract may be canceled, terminated, or suspended, in whole or in part and the contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

7. The contractor will include the provisions of paragraphs (1) through (7) in every subcontract or purchase order under this contract unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as may be directed by the Secretary of Labor as a means of enforcing such provisions including sanctions for noncompliance, provided, however, that in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction, the contractor may request the United States to enter into such litigation to protect the interest of the United States.

Clause 9-9: Equal Opportunity Preaward Compliance of Subcontracts (March 2006) (Tailored)

The aviation supplier may not enter into a first-tier subcontract for an estimated or actual amount of $1 million or more without obtaining in writing from the Contracting Officer a clearance that the proposed subcontractor is in compliance with equal opportunity requirements and therefore eligible for award.

Clause 9-10: Service Contract Act (March 2006)

a. This contract is subject to the Service Contract Act of 1965, as amended (41 U.S.C. 351 et seq.), and to the following provisions and all other applicable provisions of the Act and regulations of the Secretary of Labor issued under the Act (29 CFR Part 4).

b.

1) Each service employee employed in the performance of this contract by the aviation supplier or any subcontractor must be: a) paid not less than the minimum monetary wages and b) furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor or an authorized representative, as specified in any wage determination attached to this contract.

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2)

a) If a wage determination is attached to this contract, the Contracting Officer must require that any class of service employees not listed in it and to be employed under the contract (that is, the work to be performed is not performed by any classification listed in the wage determination) be classified by the aviation supplier so as to provide a reasonable relationship (that is, appropriate level of skill comparison) between the unlisted classifications and the classifications in the wage determination. The conformed class of employees must be paid the monetary wages and furnished the fringe benefits determined under this clause. (The information collection requirements contained in this paragraph b have been approved by the Office of Management and Budget under OMB control number 1215-0150.)

b) The conforming procedure must be initiated by the aviation supplier before the performance of contract work by the unlisted class of employees. A written report of the proposed conforming action, including information regarding the agreement or disagreement of the authorized representative of the employees involved or, if there is no authorized representative, the employees themselves, must be submitted by the aviation supplier to the Contracting Officer no later than 30 days after the unlisted class of employees performs any contract work. The Contracting Officer must review the proposed action and promptly submit a report of it, together with the agency’s recommendation and all pertinent information, including the position of the aviation supplier and the employees, to the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, for review. Within 30 days of receipt, the Wage and Hour Division will approve, modify, or disapprove the action, render a final determination in the event of disagreement, or notify the Contracting Officer that additional time is necessary.

c) The final determination of the conformance action by the Wage and Hour Division will be transmitted to the Contracting Officer, who must promptly notify the aviation supplier of the action taken. The aviation supplier must give each affected employee a written copy of this determination, or it must be posted as a part of the wage determination.

d)

i. The process of establishing wage and fringe benefit rates bearing a reasonable relationship to those listed in a wage determination cannot be reduced to any single formula. The approach used may vary from determination to determination, depending on the circumstances. Standard wage and salary administration practices ranking various job classifications by pay grade pursuant to point schemes or other job factors may, for example, be relied upon. Guidance may also be obtained from the way various jobs are rated under federal pay systems (Federal Wage Board Pay System and the General Schedule) or from other wage determinations issued in the same locality. Basic to the establishment of conformable wage rates is the concept that a pay relationship should be maintained between job classifications on the basis of the skill required and the duties performed.

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ii. If a contract is modified or extended or an option is exercised, or if a contract succeeds a contract under which the classification in question was previously conformed pursuant to this clause, a new conformed wage rate and fringe benefits may be assigned to the conformed classification by indexing (that is, adjusting) the previous conformed rate and fringe benefits by an amount equal to the average (mean) percentage increase change in the wages and fringe benefits specified for all classifications to be used on the contract that are listed in the current wage determination, and those specified for the corresponding classifications in the previously applicable wage determination. If these conforming actions are accomplished before the performance of contract work by the unlisted class of employees, the aviation supplier must advise the Contracting Officer of the action taken, but the other procedures in b.2(c) above need not be followed.

iii. No employee engaged in performing work on this contract may be paid less than the currently applicable minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended.

e) The wage rate and fringe benefits finally determined pursuant to b.2(a) and (b) above must be paid to all employees performing in the classification from the first day on which contract work is performed by them in the classification. Failure to pay unlisted employees the compensation agreed upon by the interested parties and/or finally determined by the Wage and Hour Division retroactive to the date the class of employees began contract work is a violation of the Service Contract Act and this contract.

f) Upon discovery of failure to comply with b.2(a) through (e) above, the Wage and Hour Division will make a final determination of conformed classification, wage rate, and / or fringe benefits that will be retroactive to the date the class of employees commenced contract work.

3) If, as authorized pursuant to section 4(d) of the Service Contract Act, the term of this contract is more than one year, the minimum monetary wages and fringe benefits required to be paid or furnished to service employees will be subject to adjustment after one year and not less often than once every two years, pursuant to wage determinations to be issued by the Wage and Hour Division, Employment Standards Administration of the Department of Labor.

c. The aviation supplier or subcontractor may discharge the obligation to furnish fringe benefits specified in the attachment or determined conformably to it by furnishing any equivalent combinations of bona fide fringe benefits, or by making equivalent or differential payments in cash in accordance with the applicable rules set forth in Subpart D of 29 CFR Part 4, and not otherwise.

d.

1) In the absence of a minimum-wage attachment for this contract, neither the aviation supplier nor any subcontractor under this contract may pay any person performing work under the contract (regardless of whether they are service employees) less than the minimum wage specified by section 6(a)(1) of the Fair Labor Standards Act of 1938. Nothing in this provision relieves the aviation supplier or any subcontractor of any other obligation under law or contract for the payment of a higher wage to any employee.

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2)

a) If this contract succeeds a contract subject to the Service Contract Act, under which substantially the same services were furnished in the same locality, and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, in the absence of a minimum wage attachment for this contract setting forth collectively bargained wage rates and fringe benefits, neither the aviation supplier nor any subcontractor under this contract may pay any service employee performing any of the contract work (regardless of whether or not the employee was employed under the predecessor contract), less than the wages and fringe benefits provided for in the agreement, to which the employee would have been entitled if employed under the predecessor contract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for under the agreement.

b) No aviation supplier or subcontractor under this contract may be relieved of the foregoing obligation unless the limitations of section 4.1(b) of 29 CFR Part 4 apply or unless the Secretary of Labor or an authorized representative finds, after a hearing as provided in section 4.10 of 29 CFR Part 4, that the wages and/or fringe benefits provided for in the agreement vary substantially from those prevailing for services of a similar character in the locality, or determines, as provided in section 4.11 of 29 CFR Part 4, that the agreement applicable to service employees under the predecessor contract was not entered into as a result of arm’s-length negotiations.

c) If it is found in accordance with the review procedures in 29 CFR 4.10 and/or 4.11 and Parts 6 and 8 that wages and/or fringe benefits in a predecessor aviation supplier’s collective bargaining agreement vary substantially from those prevailing for services of a similar character in the locality, and/or that the agreement applicable to service employees under the predecessor contract was not entered into as a result of arm’s-length negotiations, the Department will issue a new or revised wage determination setting forth the applicable wage rates and fringe benefits. This determination will be made part of the contract or subcontract, in accordance with the decision of the Administrator, the Administrative Law Judge, or the Board of Service Contract Appeals, as the case may be, irrespective of whether its issuance occurs before or after award (53 Comp. Gen. 401 (1973)). In the case of a wage determination issued solely as a result of a finding of substantial variance, it will be effective as of the date of the final administrative decision.

e. The aviation supplier and any subcontractor under this contract must notify each service employee starting work on the contract of the minimum monetary wage and any fringe benefits required to be paid pursuant to the contract, or must post the wage determination attached to this contract. The poster provided by the Department of Labor (Publication WH 1313) must be posted in a prominent and accessible place at the worksite. Failure to comply with this requirement is a violation of section 2(a)(4) of the Act and of this contract. (Approved by the Office of Management and Budget under OMB control number 1215-0150.)

f. The aviation supplier or subcontractor may not permit services called for by this contract to be performed in buildings or surroundings or under working conditions provided by or under the control or supervision of the aviation supplier or subcontractor that are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to furnish these services, and the aviation supplier or subcontractor must comply with the safety and health standards applied under 29 CFR Part 1925.

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g.

1) The aviation supplier and each subcontractor performing work subject to the Act must maintain for 3 years from the completion of the work records containing the information specified in (a) through (f) following for each employee subject to the Service Contract Act and must make them available for inspection and transcription by authorized representatives of the Wage and Hour Division, Employment Standards Administration of the U.S. Department of Labor (approved by the Office of Management and Budget under OMB control numbers 1215-0017 and 1215-0150):

a) Name, address, and social security number of each employee.

b) The correct work classification, rate or rates of monetary wages paid and fringe benefits provided, rate or rates of fringe benefit payments in lieu thereof, and total daily and weekly compensation of each employee.

c) The number of daily and weekly hours so worked by each employee.

d) Any deductions, rebates, or refunds from the total daily or weekly compensation of each employee.

e) A list of monetary wages and fringe benefits for those classes of service employees not included in the wage determination attached to this contract but for whom wage rates or fringe benefits have been determined by the interested parties or by the Administrator or authorized representative pursuant to paragraph b above. A copy of the report required by b.2(b) above is such a list.

f) Any list of the predecessor aviation supplier’s employees furnished to the aviation supplier pursuant to section 4.6(1)(2) of 29 CFR Part 4.

2) The aviation supplier must also make available a copy of this contract for inspection or transcription by authorized representatives of the Wage and Hour Division.

3) Failure to make and maintain or to make available the records specified in this paragraph g for inspection and transcription is a violation of the regulations and this contract, and in the case of failure to produce these records, the Contracting Officer, upon direction of the Department of Labor and notification of the aviation supplier, must take action to suspend any further payment or advance of funds until the violation ceases.

4) The aviation supplier must permit authorized representatives of the Wage and Hour Division to conduct interviews with employees at the worksite during normal working hours.

h. The aviation supplier must unconditionally pay to each employee subject to the Service Contract Act all wages due free and clear and without subsequent deduction (except as otherwise provided by law or regulations, 29 CFR Part 4), rebate, or kickback on any account. Payments must be made no later than one pay period following the end of the regular pay period in which the wages were earned or accrued. A pay period under the Act may not be of any duration longer than semimonthly.

i. The Contracting Officer must withhold or cause to be withheld from the Postal Service aviation supplier under this or any other contract with the aviation supplier such sums as an appropriate official of the Department of Labor requests or the Contracting Officer decides may be necessary to pay underpaid employees employed by the aviation supplier or subcontractor. In the event of failure to pay employees subject to the Act wages or fringe benefits due under the Act, the Postal Service may, after authorization or by direction of the Department of Labor and written notification to the aviation supplier, suspend any further

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payment or advance of funds until the violations cease. Additionally, any failure to comply with the requirements of this clause may be grounds for termination of the right to proceed with the contract work. In this event, the Postal Service may enter into other contracts or arrangements for completion of the work, charging the aviation supplier in default with any additional cost.

j. The aviation supplier agrees to insert this clause in all subcontracts subject to the Act. The term “aviation supplier,” as used in this clause in any subcontract, is deemed to refer to the subcontractor, except in the term “aviation supplier.”

k. Service employee means any person engaged in the performance of this contract other than any person employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in Part 541 of Title 29, Code of Federal Regulations, as of July 30, 1976, and any subsequent revision of those regulations. The term includes all such persons regardless of any contractual relationship that may be alleged to exist between an aviation supplier or subcontractor and them.

l.

1) If wages to be paid or fringe benefits to be furnished service employees employed by the aviation supplier or a subcontractor under the contract are provided for in a collective bargaining agreement that is or will be effective during any period in which the contract is being performed, the aviation supplier must report this fact to the Contracting Officer, together with full information as to the application and accrual of these wages and fringe benefits, including any prospective increases, to service employees engaged in work on the contract, and furnish a copy of the agreement. The report must be made upon starting performance of the contract, in the case of collective bargaining agreements effective at the time. In the case of agreements or provisions or amendments thereof effective at a later time during the period of contract performance, they must be reported promptly after their negotiation. (Approved by the Office of Management and Budget under OMB control number 1215-0150.)

2) Not less than 10 days before completion of any contract being performed at a Postal facility where service employees may be retained in the performance of a succeeding contract and subject to a wage determination containing vacation or other benefit provisions based upon length of service with a aviation supplier (predecessor) or successor (section 4.173 of Regulations, 29 CFR Part 4), the incumbent aviation supplier must furnish to the Contracting Officer a certified list of the names of all service employees on the aviation supplier’s or subcontractor’s payroll during the last month of contract performance. The list must also contain anniversary dates of employment on the contract, either with the current or predecessor aviation suppliers of each such service employee. The Contracting Officer must turn over this list to the successor aviation supplier at the commencement of the succeeding contract. (Approved by the Office of Management and Budget under OMB control number 1215-0150.)

m. Rulings and interpretations of the Service Contract Act of 1965, as amended, are contained in Regulations, 29 CFR Part 4.

n.

1) By entering into this contract, the aviation supplier and its officials certify that neither they nor any person or firm with a substantial interest in the aviation supplier’s firm are ineligible to be awarded government contracts by virtue of the sanctions imposed pursuant to section 5 of the Act.

2) No part of this contract may be subcontracted to any person or firm ineligible for award of a government contract pursuant to section 5 of the Act.

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3) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001.

o. Notwithstanding any of the other provisions of this clause, the following employees may be employed in accordance with the following variations, tolerances, and exemptions, which the Secretary of Labor, pursuant to section 4(b) of the Act before its amendment by Public Law 92-473, found to be necessary and proper in the public interest or to avoid serious impairment of the conduct of government business:

1) Apprentices, student-learners, and workers whose earning capacity is impaired by age, or physical or mental deficiency or injury may be employed at wages lower than the minimum wages otherwise required by section 2(a)(1) or 2(b)(1) of the Service Contract Act without diminishing any fringe benefits or cash payments in lieu thereof required under section 2(a)(2) of the Act, in accordance with the conditions and procedures prescribed for the employment of apprentices, student-learners, handicapped persons, and handicapped clients of sheltered workshops under section 14 of the Fair Labor Standards Act of 1938, in the regulations issued by the Administrator (29 CFR Parts 520, 521, 524, and 525).

2) The Administrator will issue certificates under the Service Contract Act for the employment of apprentices, student-learners, handicapped persons, or handicapped clients of sheltered workshops not subject to the Fair Labor Standards Act of 1938, or subject to different minimum rates of pay under the two Acts, authorizing appropriate rates of minimum wages (but without changing requirements concerning fringe benefits or supplementary cash payments in lieu thereof), applying procedures prescribed by the applicable regulations issued under the Fair Labor Standards Act of 1938 (29 CFR Parts 520, 521, 524, and 525).

3) The Administrator will also withdraw, annul, or cancel such certificates in accordance with the regulations in Parts 525 and 528 of Title 29 of the Code of Federal Regulations.

p. Apprentices will be permitted to work at less than the predetermined rate for the work they perform when they are employed and individually registered in a bona fide apprenticeship program registered with a State Apprenticeship Agency recognized by the U.S. Department of Labor, or if no such recognized agency exists in a state, under a program registered with the Bureau of Apprenticeship and Training, Employment and Training Administration, U.S. Department of Labor. Any employee not registered as an apprentice in an approved program must be paid the wage rate and fringe benefits contained in the applicable wage determination for the journeyman classification of work actually performed. The wage rates paid apprentices may not be less than the wage rate for their level of progress set forth in the registered program, expressed as the appropriate percentage of the journeyman’s rate contained in the applicable wage determination. The allowable ratio of apprentices to journeymen employed on the contract work in any craft classification may not be greater than the ratio permitted to the aviation supplier for its entire workforce under the registered program.

q. An employee engaged in an occupation in which he or she customarily and regularly receives more than $30 a month tips may have the amount of tips credited by the employer against the minimum wage required by section 2(a)(1) or section 2(b)(1) of the Act in accordance with section 3(m) of the Fair Labor Standards Act and Regulations, 29 CFR Part 531. However, the amount of this credit may not exceed $1.24 per hour beginning January 1, 1980, and $1.34 per hour after December 31, 1980. To utilize this proviso:

1) The employer must inform tipped employees about this tip credit allowance before the credit is utilized;

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2) The employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether the employer elects to take a credit for tips received);

3) The employer must be able to show by records that the employee receives at least the applicable Service Contract Act minimum wage through the combination of direct wages and tip credit (approved by the Office of Management and Budget under OMB control number 1214-0017); and

4) The use of tip credit must have been permitted under any predecessor collective bargaining agreement applicable by virtue of section 4(c) of the Act.

r. Disputes arising out of the labor standards provisions of this contract are not subject to the Claims and Disputes clause but must be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 4, 6, and 8. Disputes within the meaning of this clause include disputes between the aviation supplier (or any of its subcontractors) and the Postal Service, the U.S. Department of Labor, or the employees or their representatives.

Clause 9-12: Fair Labor Standards Act and Service Contract Act—Price Adjustment (February 2010)

a. The aviation supplier warrants that the contract prices do not include allowance for any contingency to cover increased costs for which adjustment is provided under this clause.

b. The minimum prevailing wage determination, including fringe benefits, issued under the Service Contract Act of 1965 by the Department of Labor (DOL), current at least every two years after the original award date, current at the beginning of any option or renewal period, or in the case of a significant change in labor requirements, applies to this contract and any exercise of an option or renewal of this contract. When no such determination has been made as applied to this contract, the minimum wage established in accordance with the Fair Labor Standards Act applies to any exercise of an option or renewal of this contract.

c. When, as a result of the determination of minimum prevailing wages and fringe benefits applicable (1) every two years after original award date, (2) at the beginning of any option or renewal period, or (3) in the case of a significant change in labor requirements, an increased or decreased wage determination is applied to this contract, or when as a result of any amendment to the Fair Labor Standards Act enacted after award that affects minimum wage, and whenever such a determination becomes applicable to this contract under law, the aviation supplier increases or decreases wages or fringe benefits of employees working on the contract to comply, the aviation supplier and the Contracting Officer will negotiate whether and to what extent either party will absorb the costs of the wage change. Any resulting change in contract price is limited to increases or decreases in wages or fringe benefits, and the concomitant increases or decreases in Social Security, unemployment taxes, and workers’ compensation insurance, but may not otherwise include any amount for general and administrative costs, overhead, or profit.

d. The aviation supplier or Contracting Officer may request a contract price adjustment within 30 days of the effective date of a wage change. If a request for contract price adjustment has been made, and the parties have not reached an agreement within thirty days of that request, the Contracting Officer should issue a unilateral change order in the amount considered to be a fair and equitable adjustment. The aviation supplier may then either accept the amount, or the aviation supplier may file a claim under Clause B-9: Claims and Disputes unless the Contracting Officer and aviation supplier extend this period in writing. Upon agreement of the parties, the contract price or unit price labor rates will be modified in writing. Pending agreement on or determination of any such adjustment and its effective date, the aviation supplier must continue performance.

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e. The Contracting Officer or the Contracting Officer’s authorized representative must, for 3 years after final payment under the contract, be given access to and the right to examine any directly pertinent books, papers, and records of the aviation supplier.

Clause 9-13: Affirmative Action for Workers with Disabilities (March 2006) (Tailored)

a. The contractor will not discriminate against any employee or applicant for employment because of physical or mental disability in regard to any position for which the employee or applicant for employment is qualified. The contractor agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified individuals with disabilities without discrimination based on their physical or mental disability in all employment practices, including the following:

1. Recruitment, advertising, and job application procedures;

2. Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff and rehiring

3. Rates of pay or any other form of compensation and changes in compensation

4. Job assignments, job classifications, organizational structures, position descriptions, lines of progression, and seniority lists

5. Leaves of absence, sick leave, or any other leave

6. Fringe benefits available by virtue of employment, whether or not administered by the contractor

7. Selection and financial support for training, including apprenticeship, professional meetings, conferences, and other related activities, and selection for leaves of absence to pursue training

8. Activities sponsored by the contractor including social or recreational programs; and

9. Any other term, condition, or privilege of employment.

b. The contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Rehabilitation Act of 1973, as amended.

c. In the event of the contractor’s noncompliance with the requirements, actions for noncompliance may be taken in accordance with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the act.

d. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices in a form to be prescribed by the Deputy Assistant Secretary for Federal Contract Compliance Programs, provided by or through the Contracting Officer. Such notices shall state the rights of applicants and employees as well as the contractor’s obligation under the law to take affirmative action to employ and advance in employment qualified employees and applicants with disabilities. The contractor must ensure that applicants and employees with disabilities are informed of the contents of the notice (e.g., the contractor may have the notice read to a visually disabled individual, or may lower the posted notice so that it might be read by a person in a wheelchair).

e. The contractor will notify each labor organization or representative of workers with which it has a collective bargaining agreement or other understanding that the contractor is bound by the terms of section 503 of the Rehabilitation Act of 1973, as amended, and is committed to take affirmative action to employ and advance in employment individuals with physical or mental disabilities.

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f. The contractor must include the provisions of this clause in every subcontract or purchase order in excess of $10,000, unless exempted by the rules, regulations, or orders of the Secretary issued pursuant to section 503 of the Act, as amended, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the Deputy Assistant Secretary for Federal Contract Compliance Programs may direct to enforce such provisions, including action for noncompliance.

Clause 9-14: Equal Opportunity for Disabled Veterans, Recently Separated Veterans, Other Protected Veterans, and Armed Forces Service Medal Veterans (February 2010) (Tailored)

a. The contractor will not discriminate against any employee or applicant for employment because he or she is a disabled veteran, recently separated veteran, other protected veteran, or Armed Forces service medal veteran in regard to any position for which the employee or applicant for employment is qualified. The contractor agrees to take affirmative action to employ, advance in employment and otherwise treat qualified individuals without discrimination based on their status as a disabled veteran, recently separated veteran, other protected veteran, or Armed Forces service medal veteran in all employment practices, including the following:

1. Recruitment, advertising, and job application procedures;

2. Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff and rehiring;

3. Rates of pay or any other form of compensation and changes in compensation;

4. Job assignments, job classifications, organizational structures, position descriptions, lines of progression, and seniority lists;

5. Leaves of absence, sick leave, or any other leave;

6. Fringe benefits available by virtue of employment, whether or not administered by the contractor;

7. Selection and financial support for training, including apprenticeship, and on-the-job training under 38 U.S.C. 3687, professional meetings, conferences, and other related activities, and selection for leaves of absence to pursue training;

8. Activities sponsored by the contractor including social or recreational programs; and

9. Any other term, condition, or privilege of employment.

b. The contractor agrees to immediately list all employment openings which exist at the time of the execution of this contract and those which occur during the performance of this contract, including those not generated by this contract and including those occurring at an establishment of the contractor other than the one where the contract is being performed, but excluding those of independently operated corporate affiliates, with the appropriate employment service delivery system where the opening occurs. Listing employment openings with the state workforce agency job bank or with the local employment service delivery system where the opening occurs will satisfy the requirement to list jobs with the appropriate employment service delivery system.

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c. Listing of employment openings with the appropriate employment service delivery system pursuant to this clause shall be made at least concurrently with the use of any other recruitment source or effort and shall involve the normal obligations which attach to the placing of a bona fide job order, including the acceptance of referrals of veterans and nonveterans. The listing of employment openings does not require the hiring of any particular job applicants or from any particular group of job applicants, and nothing herein is intended to relieve the contractor from any requirements in Executive orders or regulations regarding nondiscrimination in employment.

d. Whenever a contractor, other than a state or local governmental contractor, becomes contractually bound to the listing provisions in paragraphs 2 and 3 of this clause, it shall advise the state workforce agency in each state where it has establishments of the name and location of each hiring location in the state. As long as the contractor is contractually bound to these provisions and has so advised the state agency, there is no need to advise the state agency of subsequent contracts. The contractor may advise the state agency when it is no longer bound by this contract clause.

e. The provisions of paragraphs 2 and 3 of this clause do not apply to the listing of employment openings which occur and are filled outside of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, Wake Island, and the Trust Territories of the Pacific Islands.

f. As used in this clause:

1. All employment openings includes all positions except executive and senior management, those positions that will be filled from within the contractor’s organization, and positions lasting three days or less. This term includes full-time employment, temporary employment of more than three days’ duration, and part-time employment.

2. Executive and senior management means: (1) Any employee (a) compensated on a salary basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities; (b) whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (c) who customarily and regularly directs the work of two or more other employees; and (d) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight; or (2) any employee who owns at least a bona fide 20-percent equity interest in the enterprise in which the employee is employed, regardless of whether the business is a corporate or other type of organization, and who is actively engaged in its management.

3. Positions that will be filled from within the contractor’s organization means employment openings for which no consideration will be given to persons outside the contractor’s organization (including any affiliates, subsidiaries, and parent companies) and includes any openings which the contractor proposes to fill from regularly established “recall” lists. The exception does not apply to a particular opening once an employer decides to consider applicants outside of his or her own organization.

g. The contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Act.

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h. In the event of the contractor’s noncompliance with the requirements of this clause, actions for noncompliance may be taken in accordance with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Act.

i. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices in a form to be prescribed by the Deputy Assistant Secretary for Federal Contract Compliance, provided by or through the Contracting Officer. Such notices shall state the rights of applicants and employees as well as the contractor’s obligation under the law to take affirmative action to employ and advance in employment qualified employees and applicants who are disabled veterans, recently separated veterans, other protected veterans, or Armed Forces service medal veterans. The contractor must ensure that applicants or employees who are disabled veterans are informed of the contents of the notice (e.g., the contractor may have the notice read to a visually disabled individual, or may lower the posted notice so that it might be read by a person in a wheelchair).

j. The contractor will notify each labor organization or representative of workers with which it has a collective bargaining agreement or other contract understanding, that the contractor is bound by the terms of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended, and is committed to take affirmative action to employ and advance in employment qualified disabled veterans, recently separated veterans, other protected veterans, and Armed Forces service medal veterans.

k. The contractor will include the provisions of this clause in every subcontract or purchase order of $100,000 or more, unless exempted by the rules, regulations, or orders of the Secretary issued pursuant to the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the Deputy Assistant Secretary for Federal Contract Compliance may direct to enforce such provisions, including action for noncompliance.

Contract Term

The contract base period of performance will be October 1, 2013, through September 30, 2020, with two, five year renewal periods to be exercised by mutual agreement of the parties. The Night Network will begin operation on September 30, 2013; the Day Network will begin operation on October 1, 2013.

Renewal Process

[ * ]

Amendments or Modifications

In order to be binding upon the Postal Service or the aviation supplier, any amendment or modification of this Contract must be in writing signed by the Contracting Officer on behalf of the Postal Service and an officer of the aviation supplier authorized to bind the company.

Assignment

Neither Party shall, directly or indirectly (whether by succession, merger, or otherwise) assign, delegate, novate, or otherwise transfer this Contract or any of its rights or obligations hereunder, without the prior written approval of the other. However, the aviation supplier may assign this contract to any of its internal business affiliates upon written notice to the Postal Service.

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Bankruptcy

In the event the aviation supplier enters into proceedings relating to bankruptcy, whether voluntary or involuntary, the aviation supplier will furnish, by certified mail, written notification of the bankruptcy to the Contracting Officer responsible for administering the contract. The notification must be furnished within five days of the initiation of the bankruptcy proceedings. The notification must include the date on which the bankruptcy petition was filed, the court in which the petition was filed, and a list of Postal Service contracts and Contracting Officers for all Postal Service contracts for which final payment has not yet been made. This obligation remains in effect until final payment under this contract.

Confidentiality

a. During the term of this contract and until the earlier of five (5) years after such termination or until such time as the information is no longer confidential as described below, each party shall treat as confidential and appropriately safeguard and shall not use for the benefit of any person or corporation other than the other party:

1. Written information identified in writing as confidential or oral information promptly confirmed in writing as being confidential;

2. Written information or oral information disclosed by the parties during the negotiation of this contract and written information or oral information promptly confirmed in writing as confidential pertaining to a party’s pricing, business or assets which is received at any time from a party that is identified in writing; or

3. Any information or knowledge concerning the methods of operation, promotion, sale, or distribution used by a party which may be communicated to the other party or which a party may otherwise acquire by virtue of its performance of this Agreement.

b. Notwithstanding the provisions of subparagraphs 1 through 3, above, neither party shall be required to obtain prior written approval before providing information regarding this contract:

1. To Members of Congress serving on a committee or subcommittee with oversight responsibility of the Postal Service;

2. In response to legal process or otherwise required by law;

3. In response to a request from the Department of Justice Antitrust Division attorneys or economists in pursuit of a non-public investigation; or

4. In response to requests submitted to the Postal Service under the Freedom of Information Act. In this regard, the Postal Service shall follow the procedures promulgated at 39 CFR Section 265.8.

c. Information shall not be considered confidential if it is:

1. Generally known to the trade or public;

2. Rightfully possessed by a party prior to the effective date of this contract;

3. Received by a party from a third party which rightfully possesses it;

4. Independently developed by the other party; or

5. Releasable pursuant to Postal Service regulations addressing how information is maintained by the Postal Service.

Entire Agreement

This Contract, together with all Attachments, constitutes the entire agreement and understanding between the Parties in connection with the subject matter described, and supersedes and cancels all previous negotiations, commitments, and writings related to the subject matter.

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Force Majeure

Both the Postal Service and the aviation supplier shall be excused from their obligations for volume guarantees or service performance, respectively, under this Contract, and neither Party shall be liable to the other or any other person or entity for loss, damage, delay, mis-delivery or non-delivery of shipments transported pursuant to this Contract, resulting in whole or in part from any of the following:

a. When there occurs a State or Federal government-declared State of Emergency and / or instructions by a government agency that has actual or apparent powers or authority (including, but not limited to, the Federal Aviation Administration (FAA) or the Transportation Security Administration (TSA)) to order airport closures or limitations on airport activity;

b. When the failure to meet contractual obligations results in whole or in part from public enemies, terrorist acts, criminal acts of any person or entity, public authorities acting with actual or apparent authority (including U.S. Postal Inspectors), civil commotion, hazards incident to a state of war, national disruptions in transportation networks or operations (of any mode) of the aviation supplier, Postal Service, or any other entity, strikes, natural disasters, or disruption or failure of third-party communication and information systems; or

c. When there exist any conditions that present a danger to each Party’s personnel.

d. In every case the failure to perform must be beyond the control and without the fault or negligence of the party claiming that its performance is excused. Each Party is required to continue and attempt to recommence performance to the greatest extent possible without delay.

It is the responsibility of the Party asserting the Force Majeure event to formally declare that a Force Majeure event has taken place within twenty-four (24) hours of the event. The party declaring the Force Majeure event must document the circumstances of the event in writing to the Contracting Officer, who will review the information with the Manager, Air Transportation Operations, and relevant aviation supplier officials. In the absence of a formal request for relief under this clause, all appropriate volume guarantees and performance standards will remain in force. Except for the calculation of the service levels, nothing in this section shall relieve or excuse the aviation supplier of its service obligations. Subsequent to a Force Majeure event being declared, the declaring party must provide reasonable, written documentation with sufficient detail to support the declaration.

If, as a result of the occurrence of one of the foregoing events, the aviation supplier is excused from performance, and the Postal Service is excused from meeting its minimum volume commitment for the identified period, the Parties will meet to agree upon the pro-rata adjustments to be made.

On days where mail volume is withdrawn, withheld, or not transported under this provision, the minimum volume commitment for the identified period will be reduced for that period by the amount of that volume.

Frequency Adjustment

If, during the term of this contract, the Postal Service decides to reduce, in whole or in part, the number of delivery days, for any mail type it provides, to fewer than six (6) per week, the Postal Service reserves the right to effectuate a change in delivery days by adjusting the Statement of Work of this contract, including, but not limited to, the annual number of operating days or the frequency of service hereunder. The parties agree that such an adjustment does not constitute a partial termination of the contract, nor will it give rise to an equitable adjustment.

If the number of delivery days is reduced, in whole or in part, to five (5) and the Postal Service decides to reduce the number of operating days under this contract, in whole or in part, to five (5), the parties agree to reduce the Contract Volume Minimum calculation. The Contract Volume Minimum calculation

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will be reduced by the average daily volume for the previous twelve (12) months excluding the weeks of Peak associated with the removed day of service without adjustment to the tier structure, the contract rate, or be subject to any other price-related adjustment. The monies associated with the volume removed from the calculation will be eliminated.

If the number of delivery days is reduced to fewer than five (5), and the Postal Service decides to reduce the number of operating days under this contract, in whole or in part, to fewer than five (5), the parties will negotiate an equitable adjustment if necessary.

No later than 120 days prior to the effective date of such reduction in delivery days, the parties shall commence discussions as to how to implement the change. Within 90 days of such notice, the supplier must implement the changes outlined above.

Notices

Any notice, report, demand, acknowledgement or other communication which under the terms of this Contract or otherwise must be given or made by either Party, unless specifically otherwise provided in this Contract, shall be in the English language and in writing, and shall be given or made by express delivery service with proof of delivery, certified air mail (return receipt requested). The parties may also send a copy of the same communication through electronic mail, facsimile with acknowledgement of receipt/proof of receipt, or personal delivery. If a party sends a copy of the official correspondence by electronic mail or facsimile, the correspondence shall not be deemed received until the receiving party confirms receipt.

Such notice, report, demand, acknowledgement or other communication shall be deemed to have been given or made in the case of express delivery service with tracking and tracing capability on the date of signature of the proof of delivery, and in the case of certified mail on the fifth business day in the place of receipt after the date sent.

The notice address for the Postal Service shall be:

U.S. Postal Service

Air Transportation CMC

Attention: Manager

475 L’Enfant Plaza SW, Room 1P 650

Washington, DC 20260-0650

The notice address for the aviation supplier shall be:

Federal Express Corporation

Attention: Vice President, Postal Transportation Management

3610 Hacks Cross Road

Building A 1st Floor

Memphis, TN 38125-8800

Severability

a. If any term, provision, covenant or condition of this Contract is held by a court or Board of competent jurisdiction or by a request, direction or indication of an agency or department of a Governmental Body having subject matter jurisdiction to be invalid or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation or unenforceability.

b. If a material provision of this Contract is materially altered or abridged as the result of a final and binding order of a Governmental Body having subject matter jurisdiction, then the Postal Service and the aviation supplier will meet to negotiate in good faith to reach a mutually satisfactory modification to this Contract. If the Parties are unable to reach a mutually satisfactory resolution, then either Party may declare the negotiations to be at an impasse and the parties shall resolve the dispute in accordance with the provisions of this contract.

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c. Notwithstanding the foregoing, the Parties agree to make their best efforts to oppose any changes requested by a Governmental Body to any material provision of this Contract.

Third Party Governmental Delays

If, during the term of this contract, a governmental entity with subject matter jurisdiction enacts laws, promulgates regulations, or issues orders mandating that the aviation supplier screen mail dispatched for transportation by aircraft within the United States for bombs, explosives, or other hazardous materials, and aviation supplier does not have a method for otherwise complying at no additional cost to the Postal Service, either party may, at no cost to the other party, suspend performance under the contract during the period in which such screening is actually required to be accomplished.

Within fourteen (14) days of the enactment of any law, promulgation of any regulation, or issuance of any order referenced above, the parties shall commence negotiations in an attempt to modify this contract to address any adverse impacts and / or other concerns asserted by one or both parties that may arise as a result of additional screening requirements.

If the parties cannot agree upon such a modification within 180 days, or within such longer period as the parties may mutually agree, the contract and all orders hereunder may be terminated at no cost to either party.

Waiver of Breach

No waiver of breach of any of the provisions of this Contract shall be construed to be a waiver of any succeeding breach of the same or any other provision.

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Part 4: List of Attachments

Part 4—List of Attachments and Forms

Attachments:

Attachment 1 Postal Service Operating Periods, dated October 4, 2012

Attachment 2 Air Stops & Projected Volumes, dated January 8, 2013

Attachment 3 Operating Plan, Day Network, dated April 22, 2013

Attachment 4 Operating Plan, Night Network, dated April 22, 2013

Attachment 5 Reserved

Attachment 6 Postal Furnished Property, April 16, 2013

Attachment 7 Electronic Data Interchange Service Requirements, dated September 1, 2012

Attachment 8 Investigative / Security Protocol and Guidelines, dated July 2012

Attachment 9 Wage Determination, dated October 31, 2012

Attachment 10 Pricing, dated April 18, 2013

Attachment 11 Perishable Mail and Lives, April 22, 2013

Attachment 12 Reserved

Attachment 13 Service Contract Act Wage Determinations, dated April 17, 2013

Forms:

DOT Form F 5800.1 Hazardous Materials Incident Report

I-9 Form Employment Eligibility Verification

PS Form 2025 Contract Personnel Questionnaire

PS Form 8203 Order / Solicitation / Offer / Award

US Treasury Form 941 Quarterly Federal Tax Return

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Attachment 1: Postal Service Operating Periods

Attachment 1

Postal Service Operating Periods

October 4, 2012

Operating Period: Monday – Sunday

*All Operating Periods begin with the Monday Night Network

Operating Period	Begin	End	Number of Weeks	Month	Peak Periods
1	09/30/13	11/03/13	5	OCT
2	11/04/13	12/01/13	4	NOV
3	12/02/13	01/05/14	5	DEC	2013 PEAK
4	01/06/14	02/02/14	4	JAN
5	02/03/14	03/02/14	4	FEB
6	03/03/14	03/30/14	4	MAR
7	03/31/14	04/27/14	4	APR
8	04/28/14	06/01/14	5	MAY
9	06/02/14	06/29/14	4	JUN
10	06/30/14	07/27/14	4	JUL
11	07/28/14	08/31/14	5	AUG
12	09/01/14	09/28/14	4	SEP
13	09/29/14	10/26/14	4	OCT
14	10/27/14	11/30/14	5	NOV
15	12/01/14	01/04/15	5	DEC	2014 PEAK
16	01/05/15	02/01/15	4	JAN
17	02/02/15	03/01/15	4	FEB
18	03/02/15	03/29/15	4	MAR
19	03/30/15	04/26/15	4	APR
20	04/27/15	05/31/15	5	MAY
21	06/01/15	06/28/15	4	JUN
22	06/29/15	08/02/15	5	JUL
23	08/03/15	08/30/15	4	AUG
24	08/31/15	09/27/15	4	SEP
25	09/28/15	11/02/15	5	OCT
26	11/03/15	11/29/15	4	NOV
27	11/30/15	01/03/16	5	DEC	2015 PEAK
28	01/04/16	01/31/16	4	JAN
29	02/01/16	02/28/16	4	FEB
30	02/29/16	04/03/16	5	MAR
31	04/04/16	05/01/16	4	APR
32	05/02/16	05/29/16	4	MAY
33	05/30/16	06/26/16	4	JUN
34	06/27/16	07/31/16	5	JUL
35	08/01/16	08/28/16	4	AUG
36	08/29/16	10/02/16	5	SEP
37	10/03/16	10/30/16	4	OCT
38	10/31/16	12/04/16	5	NOV
39	12/05/16	01/01/17	4	DEC	2016 PEAK
40	01/02/17	01/29/17	4	JAN
41	01/30/17	02/26/17	4	FEB

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Attachment 1: Postal Service Operating Periods

Operating Period	Begin	End	Number of Weeks	Month	Peak Periods
42	02/27/17	04/02/17	5	MAR
43	04/03/17	04/30/17	4	APR
44	05/01/17	06/04/17	5	MAY
45	06/05/17	07/02/17	4	JUN
46	07/03/17	07/30/17	4	JUL
47	07/31/17	08/27/17	4	AUG
48	08/28/17	10/01/17	5	SEP
49	10/02/17	10/29/17	4	OCT
50	10/30/17	11/27/17	4	NOV
51	11/28/17	12/30/17	5	DEC	2017 PEAK
52	12/31/17	01/28/18	4	JAN
53	01/29/18	02/25/18	4	FEB
54	02/26/18	04/01/18	5	MAR
55	04/02/18	04/29/18	4	APR
56	04/30/18	06/03/18	5	MAY
57	06/04/18	07/01/18	4	JUN
58	07/02/18	07/29/18	4	JUL
59	07/30/18	08/26/18	4	AUG
60	08/27/18	09/30/18	5	SEP
61	10/01/18	10/28/18	4	OCT
62	10/29/18	12/02/18	5	NOV
63	12/03/18	01/06/19	5	DEC	2018 PEAK
64	01/07/19	02/03/19	4	JAN
65	02/04/19	03/03/19	4	FEB
66	03/04/19	03/31/19	4	MAR
67	04/01/19	04/28/19	4	APR
68	04/29/14	06/02/19	5	MAY
69	06/03/19	06/30/19	4	JUN
70	07/01/19	07/28/19	4	JUL
71	07/29/19	09/01/19	5	AUG
72	09/02/19	09/29/19	4	SEP
73	09/30/19	10/27/19	4	OCT
74	10/30/19	12/01/19	5	NOV
75	12/02/19	01/05/20	5	DEC	2019 PEAK
76	01/06/20	02/02/20	4	JAN
77	02/03/20	03/01/20	4	FEB
78	03/02/20	03/29/20	4	MAR
79	03/30/20	05/03/20	5	APR
80	05/04/20	05/31/20	4	MAY
81	06/01/20	06/28/20	4	JUN
82	06/29/20	08/02/20	5	JUL
83	08/03/20	08/30/20	4	AUG
84	08/31/20	09/30/20	5	SEP

Page 73 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 2: Air Stops & Projected Volumes

Attachment 2

Air Stops & Projected Volumes

January 8, 2013

Refer to the Excel file provided with the awarded contract.

** Attachment 2 contains an Excel file totaling approximately 2000 pages that outlines daily air stops and projected volumes by USPS service product for each air stop. Because this information is not material, it has been omitted from this exhibit. FedEx Corporation will furnish supplementally a copy of this Attachment 2 to the Securities and Exchange Commission upon request.

Page 74 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 75 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 76 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday*	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 77 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday*	Required Delivery Time to Postal Service Sunday
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 78 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A	Postal Service Builds ULDs	F	Aviation Supplier Unloads ULD into MTE
B	Postal Service Transports ULDs to Ramp	G	Aviation Supplier Builds ULDs
C	Postal Service Tenders in MTE	H	Aviation Supplier Delivers ULDs to Ramp
D	Postal Service Picks Up MTE	I	Aviation Supplier Picks Up ULDs from Plant
E	Postal Service Deck loads	J	Aviation Supplier Delivers ULDs to Plant

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	A , B	H
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	A , B	H
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H
35	LOS ANGELES CA	LAX	A , B	H

Page 79 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
36	LOUISVILLE KY	SDF	A , B	H
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	A , B	H
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	A , B	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	A , B	Origin Only
75	SPRINGFIELD IL	SPI	A , B	Origin Only
76	ST. LOUIS MO	STL	A , B	H
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Page 80 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Attachment 4

Operating Plan, Night Network

April 22, 2013

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
1	ALBANY NY	ALB	[ * ]	[ * ]	[ * ]
2	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
3	ALLENTOWN PA	ABE	[ * ]	[ * ]	[ * ]
4	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
5	APPLETON WI	ATW	[ * ]	[ * ]	[ * ]
6	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
7	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
8	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
9	BANGOR ME	BGR	[ * ]	[ * ]	[ * ]
10	BATON ROUGE LA	BTR	[ * ]	[ * ]	[ * ]
11	BEND OR	RDM	[ * ]	[ * ]	[ * ]
12	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
13	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
14	BISMARK ND	BIS	[ * ]	[ * ]	[ * ]
15	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
16	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
17	BOZEMAN MT	BZN	[ * ]	[ * ]	[ * ]
18	BRISTOL TN / VA	TRI	[ * ]	[ * ]	[ * ]
19	BUFFALO NY	BUF	[ * ]	[ * ]	[ * ]
20	BURBANK CA	BUR	[ * ]	[ * ]	[ * ]
21	BURLINGTON VT	BTV	[ * ]	[ * ]	[ * ]
22	BUTTE MT	BTM	[ * ]	[ * ]	[ * ]
23	CASPER WY	CPR	[ * ]	[ * ]	[ * ]
24	CEDAR RAPIDS IA	CID	[ * ]	[ * ]	[ * ]
25	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
26	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
27	CHATTANOOGA TN	CHA	[ * ]	[ * ]	[ * ]
28	CHEYENNE WY	CYS	[ * ]	[ * ]	[ * ]
29	CHICAGO IL (O’Hare)	ORD	[ * ]	[ * ]	[ * ]
30	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
31	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
32	COLORADO SPRINGS CO	COS	[ * ]	[ * ]	[ * ]
33	COLUMBIA SC	CAE	[ * ]	[ * ]	[ * ]
34	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
35	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
36	DAYTON OH	DAY	[ * ]	[ * ]	[ * ]
37	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
38	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
39	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
40	DULLES VA	IAD	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 81 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
41	DULUTH MN	DLH	[ * ]	[ * ]	[ * ]
42	DURANGO CO	DRO	[ * ]	[ * ]	[ * ]
43	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
44	ELMIRA NY	ELM	[ * ]	[ * ]	[ * ]
45	EUGENE OR	EUG	[ * ]	[ * ]	[ * ]
46	FAIRBANKS AK	FAI	[ * ]	[ * ]	[ * ]
47	FLINT MI	FNT	[ * ]	[ * ]	[ * ]
48	FORT MYERS FL	RSW	[ * ]	[ * ]	[ * ]
49	FORT WAYNE IN	FWA	[ * ]	[ * ]	[ * ]
50	FRESNO CA	FAT	[ * ]	[ * ]	[ * ]
51	FT LAUDERDALE FL	FLL	[ * ]	[ * ]	[ * ]
52	GRAND FORKS ND	GFK	[ * ]	[ * ]	[ * ]
53	GRAND JUNCTION CO	GJT	[ * ]	[ * ]	[ * ]
54	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
55	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
56	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
57	GREENVILLE SC	GSP	[ * ]	[ * ]	[ * ]
58	HARRISBURG PA	MDT	[ * ]	[ * ]	[ * ]
59	HARTFORD CT	BDL	[ * ]	[ * ]	[ * ]
60	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
61	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
62	HUNTSVILLE AL	HSV	[ * ]	[ * ]	[ * ]
63	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
64	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
65	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
66	JFK NY	JFK	[ * ]	[ * ]	[ * ]
67	KALISPELL MT	FCA	[ * ]	[ * ]	[ * ]
68	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
69	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
70	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
71	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
72	LONG BEACH CA	LGB	[ * ]	[ * ]	[ * ]
73	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
74	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
75	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
76	MADISON WI	MSN	[ * ]	[ * ]	[ * ]
77	MANCHESTER NH	MHT	[ * ]	[ * ]	[ * ]
78	MCALLEN TX	MFE	[ * ]	[ * ]	[ * ]
79	MEDFORD OR	MFR	[ * ]	[ * ]	[ * ]
80	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
81	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
82	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Attachment 4: Operating Plan, Night Network

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
83	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
84	MINOT ND	MOT	[ * ]	[ * ]	[ * ]
85	MISSOULA MT	MSO	[ * ]	[ * ]	[ * ]
86	MOBILE AL	MOB	[ * ]	[ * ]	[ * ]
87	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
88	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
89	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
90	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
91	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
92	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
93	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
94	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
95	ORANGE CNTY AIRPORT	SNA	[ * ]	[ * ]	[ * ]
96	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
97	PALM BEACH FL	PBI	[ * ]	[ * ]	[ * ]
98	PASCO WA	PSC	[ * ]	[ * ]	[ * ]
99	PEORIA IL	PIA	[ * ]	[ * ]	[ * ]
100	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
101	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
102	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
103	POCATELLO ID	PIH	[ * ]	[ * ]	[ * ]
104	PORTLAND ME	PWM	[ * ]	[ * ]	[ * ]
105	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
106	PRESQUE ISLE ME	PQI	[ * ]	[ * ]	[ * ]
107	PROVIDENCE RI	PVD	[ * ]	[ * ]	[ * ]
108	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
109	RAPID CITY SD	RAP	[ * ]	[ * ]	[ * ]
110	RENO NV	RNO	[ * ]	[ * ]	[ * ]
111	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
112	ROANOKE VA	ROA	[ * ]	[ * ]	[ * ]
113	ROCHESTER MN	RST	[ * ]	[ * ]	[ * ]
114	ROCHESTER NY	ROC	[ * ]	[ * ]	[ * ]
115	ROCK SPRINGS WY	RKS	[ * ]	[ * ]	[ * ]
116	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
117	SALT LAKE CITY UT	SLC	[ * ]	[ * ]	[ * ]
118	SAN ANTONIO TX	SAT	[ * ]	[ * ]	[ * ]
119	SAN DIEGO CA	SAN	[ * ]	[ * ]	[ * ]
120	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
121	SAN JOSE CA	SJC	[ * ]	[ * ]	[ * ]
122	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
123	SAVANNAH GA	SAV	[ * ]	[ * ]	[ * ]
124	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Attachment 4: Operating Plan, Night Network

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
125	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
126	SIOUX CITY IA	SUX	[ * ]	[ * ]	[ * ]
127	SOUIX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
128	SOUTH BEND IN	SBN	[ * ]	[ * ]	[ * ]
129	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
130	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
131	ST CLOUD MN	STC	[ * ]	[ * ]	[ * ]
132	ST LOUIS MO	STL	[ * ]	[ * ]	[ * ]
133	STEWART NY	SWF	[ * ]	[ * ]	[ * ]
134	SYRACUSE NY	SYR	[ * ]	[ * ]	[ * ]
135	TALLAHASSEE FL	TLH	[ * ]	[ * ]	[ * ]
136	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
137	TRAVERSE CITY MI	TVC	[ * ]	[ * ]	[ * ]
138	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
139	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
140	TWIN FALLS ID	TWF	[ * ]	[ * ]	[ * ]
141	WATERLOO IA	ALO	[ * ]	[ * ]	[ * ]
142	WAUSAU WI	CWA	[ * ]	[ * ]	[ * ]
143	WENATCHEE WA	EAT	[ * ]	[ * ]	[ * ]
144	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]
145	YAKIMA WA	YKM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 84 of 100

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Attachment 4: Operating Plan, Night Network

Attachment 4

Operating Plan, Night Network

April 22, 2013

Tender and Delivery Process Codes

A Postal Service Builds ULDs

B Postal Service Transports ULDs to Ramp

C Postal Service Transports Loose Volume to and from Aviation Supplier Location other than Airport Ramp

D Postal Service Transports Loose Volumes to and from Aviation Supplier Ramp

E Aviation Supplier Picks Up ULDs

F Aviation Supplier Delivers in ULDs

G Aviation Supplier Delivers Volume Loose to a Postal Service Designated Location

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBANY NY	ALB	D	D
2	ALBURQUERQUE NM	ABQ	D	D
3	ALLENTOWN PA	ABE	D	Origin Only
4	ANCHORAGE AK	ANC	D	D
5	APPLETON WI	ATW	D	D
6	ATLANTA GA	ATL	E	D
7	AUSTIN (Air Stop) TX	AUS	D	D
8	BALTIMORE MD	BWI	D	D
9	BANGOR ME	BGR	D	D
10	BATON ROUGE LA	BTR	D	D
11	BEND OR	RDM	D	Origin Only
12	BILLINGS MT	BIL	D	D
13	BIRMINGHAM AL	BHM	D	D
14	BISMARK ND	BIS	D	Origin Only
15	BOISE ID	BOI	E	F
16	BOSTON MA	BOS	D	D
17	BOZEMAN MT	BZN	D	Origin Only
18	BRISTOL TN / VA	TRI	D	Origin Only
19	BUFFALO NY	BUF	D	D
20	BURBANK CA	BUR	D	D
21	BURLINGTON VT	BTV	D	D
22	BUTTE MT	BTM	D	Origin Only
23	CASPER WY	CPR	D	Origin Only
24	CEDAR RAPIDS IA	CID	D	D
25	CHARLESTON WV	CRW	D	D
26	CHARLOTTE NC	CLT	D	D
27	CHATTANOOGA P&DC TN	CHA	D	D
28	CHEYENNE WY	CYS	D	Origin Only
29	CHICAGO IL	ORD	D	D
30	CINCINNATI OH	CVG	D	D
31	CLEVELAND OH	CLE	D	D
32	COLORADO SPRINGS CO	COS	D	D

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Attachment 4: Operating Plan, Night Network

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
33	COLUMBIA SC	CAE	D	D
34	COLUMBUS OH	CMH	D	D
35	DALLAS TX	DFW	D	D
36	DAYTON OH	DAY	D	D
37	DENVER CO	DEN	D	D
38	DES MOINES IA	DSM	D	D
39	DETROIT MI	DTW	D	D
40	DULLES VA	IAD	D	D
41	DULUTH MN	DLH	D	D
42	DURANGO CO	DRO	D	Origin Only
43	EL PASO TX	ELP	D	D
44	ELM NY	ELM	D	D
45	EUGENE OR	EUG	D	Origin Only
46	FAIRBANKS AK	FAI	D	Origin Only
47	FLINT P&DC MI	FNT	D	D
48	FORT MYERS P&DC FL	RSW	E	F
49	FORT WAYNE IN P&DC	FWA	D	D
50	FRESNO CA	FAT	D	D
51	FT LAUDERDALE FL	FLL	D	F
52	GRAND FORKS ND	GFK	D	D
53	GRAND JUNCTION CO	GJT	D	Origin Only
54	GRAND RAPIDS MI	GRR	D	D
55	GREAT FALLS MT	GTF	D	D
56	GREENSBORO NC	GSO	D	D
57	GREENVILLE SC	GSP	D	D
58	HARRISBURG PA	MDT	D	D
59	HARTFORD CT	BDL	D	D
60	HONOLULU HI	HNL	D	D
61	HOUSTON TX	IAH	D	D
62	HUNTSVILLE P&DF AL	HSV	D	D
63	INDIANAPOLIS IN	IND	D	D
64	JACKSON MS	JAN	C	C
65	JACKSONVILLE FL	JAX	E	F
66	JFK NY	JFK	BD	D
67	KALISPELL MT	FCA	D	Origin Only
68	KANSAS CITY MO	MCI	D	D
69	KNOXVILLE TN	TYS	D	D
70	LAS VEGAS NV	LAS	D	D
71	LITTLE ROCK AR	LIT	C	C
72	LONG BEACH CA	LGB	D	Origin Only
73	LOS ANGELES CA	LAX	D	D
74	LOUISVILLE KY	SDF	D	D
75	LUBBOCK TX	LBB	D	D
76	MADISON WI	MSN	D	D
77	MANCHESTER NH	MHT	D	D
78	MCALLEN TX	MFE	D	Origin Only
79	MEDFORD OR	MFR	D	Origin Only
80	MEMPHIS TN	MEM	D	D

Page 86 of 100

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Attachment 4: Operating Plan, Night Network

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
81	MIAMI FL	MIA	D	F/D
82	MILWAUKEE WI	MKE	D	D
83	MINNEAPOLIS MN	MSP	D	D
84	MINOT ND	MOT	D	Origin Only
85	MISSOULA MT	MSO	D	Origin Only
86	MOBILE AL	MOB	D	D
87	NASHVILLE TN	BNA	D	D
88	NEW ORLEANS LA	MSY	D	D
89	NEWARK NJ	EWR	E	F
90	NORFOLK VA	ORF	D	D
91	OAKLAND CA	OAK	D	D
92	OKLAHOMA CITY OK	OKC	D	D
93	OMAHA NE	OMA	D	D
94	ONTARIO CA	ONT	D	D
95	ORANGE COUNTY AIRPORT	SNA	D	Origin Only
96	ORLANDO FL	MCO	A	D
97	PALM BEACH FL	PBI	D	D (T-F) / G (Sat)
98	PASCO WA	PSC	D	Origin Only
99	PEORIA MPO IL	PIA	D	D
100	PHILADELPHIA PA	PHL	D	D
101	PHOENIX AZ	PHX	D	D
102	PITTSBURGH PA	PIT	D/E	D
103	POCATELLO ID	PIH	D	Origin Only
104	PORTLAND ME	PWM	D	D
105	PORTLAND OR	PDX	D	D
106	PRESQUE ISLE ME	PQI	D	D
107	PROVIDENCE RI	PVD	D	D
108	RALEIGH NC	RDU	D	D
109	RAPID CITY SD	RAP	D	Origin Only
110	RENO NV	RNO	D	D
111	RICHMOND VA	RIC	D	D
112	ROANOKE VA	ROA	D	D
113	ROCHESTER MN	RST	D	D
114	ROCHESTER NY	ROC	D	D
115	ROCK SPRINGS WY	RKS	D	Origin Only
116	SACRAMENTO CA	SMF	D	D
117	SALT LAKE CITY UT	SLC	E	F
118	SAN ANTONIO TX	SAT	D	D
119	SAN DIEGO CA	SAN	D	D
120	SAN FRANCISCO CA	SFO	E/D	F/D
121	SAN JOSE CA	SJC	D	D
122	SAN JUAN PR	SJU	D	D
123	SAVANNAH P&DF GA	SAV	D	D
124	SEATTLE WA	SEA	D	D
125	SHREVEPORT LA	SHV	D	D
126	SIOUX CITY IA	SUX	D	Origin Only
127	SOUIX FALLS SD	FSD	D	D
128	SOUTH BEND IN P&DC	SBN	D	D

Page 87 of 100

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Attachment 4: Operating Plan, Night Network

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
129	SPOKANE WA	GEG	D	D
130	SPRINGFIELD MO	SGF	D	D
131	ST CLOUD MN	STC	D	Origin Only
132	ST LOUIS MO	STL	D	D
133	STEWART NY 125	SWF	D	D
134	SYRACUSE NY	SYR	D	D
135	TALLAHASSEE P&DF FL	TLH	D	D
136	TAMPA FL	TPA	A	D
137	TRAVERSE CITY MI	TVC	D	D
138	TUCSON AZ	TUS	D	D
139	TULSA OK	TUL	D	D
140	TWIN FALLS ID	TWF	D	Origin Only
141	WATERLOO IA	ALO	D	Origin Only
142	WAUSAU WI	CWA	D	D
143	WENATCHEE WA	EAT	D	Origin Only
144	WICHITA KS	ICT	D	D
145	YAKIMA WA	YKM	D	Origin Only

Page 88 of 100

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Contract ACN-13-FX

Attachment 6: Postal Furnished Property

Attachment 6

Postal Furnished Property

April 16, 2013

Description	Quantity Memphis:	Quantity Indianapolis	Quantity Oakland
Computer Workstation	1*
Hand Scanners	14
Intermec Printers	14	8
Keyboards / Mouse	14	9	6
Keyboards / Mouse	1
Monitor	1
Monitors	14
MSWYB-2 HP Computers	14
Router	1	1	1
S-AMS Computer & Monitor	1**	9	6
Scales	4

* TIMES computer located at the Truck Gate office

** Located at FedEx administrative offices

Page 89 of 100

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Contract ACN-13-FX

Attachment 7: Electronic Data Interchange Service Requirements

Attachment 7

Electronic Data Interchange Service Requirements

September 1, 2012

Part I – RESDIT

Part II – CARDIT

Part III – INVOIC

Part IV – Claims

Refer to the rtf files provided with the contract.

** The Electronic Data Interchange Service Requirements referred to above have not yet been provided by the USPS. Because this information in Attachment 7 is not material, it will continue to be omitted when provided by the USPS. FedEx Corporation will furnish supplementally a copy of this Attachment 7 (once it has been provided to FedEx Express by the USPS) to the Securities and Exchange Commission upon request.

Page 90 of 100

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Contract ACN-13-FX

Attachment 8: Investigative / Security Protocol and Guidelines

Attachment 8

Investigative / Security Protocol and Guidelines

U.S. Postal Inspection Service

July 2012

This document contains a statement of principles which will be used by the U.S. Postal Inspection Service (“Inspection Service”) and the aviation supplier to address U.S. Mail investigations and security matters related to contract ACN-13-FX (“the Agreement”) between the aviation supplier and the United States Postal Service (“the Postal Service”). This statement of principles is not intended to be all-inclusive but is designed to provide a broad framework that will allow flexibility for the parties to accomplish their respective security and investigative missions. In no event should this statement of principles be construed as an expansion of the aviation supplier’s obligations or the Inspection Service’s authority under any applicable law or regulation or to expand either party’s rights or obligations under the Agreement. For purposes of this statement of principles, the term “mail” shall hereinafter mean any item that is tendered to the aviation supplier by the Postal Service for transportation. This statement of principles is based on open communication and cooperation between the parties at each organizational level to the fullest extent possible in postal-related matters.

Coordination

1. The local contact points for the coordination of any mail related investigations and security issues related to this agreement will be at the aviation supplier’s Security Director level and the Inspection Service Division level. (Attachment A: Postal Contact Listing and Attachment B: Aviation supplier Contact Listing for Postal Service Inspectors)

2. The aviation supplier’s Corporate Security and the Inspection Service, Deputy Chief Inspector, Headquarters Operations, will address all policy issues and any investigative or operational issues not resolved at the local level.

Communication

1. The aviation supplier Security will notify the appropriate Inspection Service Division of any known theft, vandalism or criminal activity involving the mail while in the custody of the aviation supplier.

2. The Inspection Service Division will notify the appropriate aviation supplier representative of any criminal activity or security issues related issues to the mail that is handled by the aviation supplier.

3. The parties will cooperate and assist, with relevant security and investigative information related to the transportation and handling of the mail and with the aviation supplier facilities and equipment on postal owned or leased property.

Security of U.S. Mails

1. While in the custody of the aviation supplier, its employees or agents, mail may not be opened, searched or seized unless (a) expressly authorized by a Postal Inspector or (b) as required by a properly executed federal search warrant. The aviation supplier shall notify a Postal Inspector of any warrants served for mail in the custody of the aviation supplier before coordinating the warrant execution.

2. Address information from the mail in the custody and control of the aviation supplier may not be recorded or disclosed by the aviation supplier employees, except as required for operational purposes regarding the sortation and transportation of the mail. Address

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Attachment 8: Investigative / Security Protocol and Guidelines

information from the mail may only be disclosed to another law enforcement or government agency upon express approval by a Postal Inspector in accordance with postal regulations. The aviation supplier shall notify a Postal Inspector of all requests from law enforcement for information about mail in the custody of the aviation supplier.

3. In situations where the aviation supplier has reason to believe that mail contains dangerous or injurious contents (including hazmat) that pose potential danger to the aviation supplier’s employees, customers, equipment, products or facilities, the aviation supplier may take actions necessary to secure the item and minimize the risk. In these situations, the Inspection Service immediately will be notified and the aviation supplier and the Inspection Service will coordinate the disposition of the item.

4. In situations where the Inspection Service identifies dangerous or hazardous mail that was transported by the aviation supplier that posed a risk to the aviation supplier’s employees, equipment, products or facilities, the Inspection Service immediately will notify the aviation supplier’s Security.

5. Mail security regulations from the Administrative Support Manual, section 274, apply to this contract.

Investigations

1. The aviation supplier’s Security will notify the Inspection Service of all investigative and security issues affecting the mail in the custody of the aviation supplier.

2. The Inspection Service will be responsible for conducting all criminal investigations involving the theft or obstruction of mail or contraband found in the mail while in the aviation supplier’s system and for criminal activities directed at the aviation supplier’s equipment, facilities, customers, or employees on postal owned or leased property. The Inspection Service will give, as much notice to the aviation supplier involving the aviation supplier’s property or employees, and will coordinate with the aviation supplier to prevent disruption to the aviation supplier’s business operations consistent with the obligation under the Noninterference section of this document.

Criminal and Administrative Proceedings

1. The aviation supplier (subject to the receipt of a properly issued subpoena or other compulsory process) and Inspection Service personnel may serve as witnesses in criminal and administrative proceedings that result from these investigations.

Access to the Aviation Supplier’s Operations, Facilities, Personnel and Loss Data

1. The Inspection Service acknowledges that the prime responsibility of the aviation supplier lies in the safe and expeditious movement of cargo. The Inspection Service agrees not to direct any aviation supplier personnel to facilitate the operations of a law enforcement agency.

2. Subject always to the matters addressed under the heading Noninterference below, the aviation supplier will provide the Inspection Service with reasonable access to its facilities, operations, and records when necessary for investigations involving the mail, as mutually agreed upon by the local Postal Inspector and local security.

3. The aviation supplier will coordinate interviews of its employees with the Inspection Service relevant to their investigations involving the mail. Except as otherwise agreed upon, it is within the aviation supplier’s sole discretion, whether investigative interviews of the aviation supplier’s employees by the Inspection Service shall occur on the aviation supplier’s facilities or property. The aviation supplier may not participate in custodial interviews conducted by Postal Inspectors.

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Attachment 8: Investigative / Security Protocol and Guidelines

4. Investigative reports prepared by the aviation supplier will be provided to the Inspection Service in response to a validly issued subpoena after the aviation supplier’s investigation has been completed. The aviation supplier’s management will make independent determinations about the discipline or discharge of any of the aviation supplier’s employee. The Inspection Service shall not attempt to dictate, direct or carry out such actions.

5. The Inspection Service will provide its investigative reports to the aviation supplier through the Postal Service Contracting Officer and will provide an information copy directly to the aviation supplier.

Surveillance Operations

1. The aviation supplier will provide access to its own CCTV systems and will assist the Inspection Service with the installation of temporary camera systems required in investigations involving the mail. The installation of Inspection Service camera systems will be in compliance with federal and state laws governing video surveillance investigations, and the aviation supplier’s privacy policies.

2. Upon request of the aviation supplier, the Inspection Service will share the information obtained from the use of its investigative camera systems installed in the aviation supplier’s facilities and other surveillance equipment used in their investigations.

Undercover Operations

1. The aviation supplier may, subject to the heading Noninterference below, authorize the temporary placement of Inspection Service undercover personnel in its facilities where deemed necessary for investigations involving the mail, provided, however, in no circumstances will the aviation supplier be responsible for any controlled deliveries.

2. The Postal Service will defend and indemnify the aviation supplier for any loss, damage or other liability arising from the use of undercover personnel in the aviation supplier’s facilities.

Contingency Planning and Notification

1. The aviation supplier will ensure the Inspection Service is listed as a party to be notified in its critical incident or contingency plans related to the loss, destruction, or delay of the mail caused by catastrophic losses of an aircraft or other vehicle transporting the mail, or at the aviation supplier’s facility. The aviation supplier will cooperate with the Inspection Service in the recovery of the mail where reasonable.

Overgoods Operations

1. The aviation supplier will provide security to any identified mail or mail contents processed in its overgoods operations and will ensure its transfer to the Postal Service in accordance with standard operating plans.

2. When directly relevant to mail security and investigations, the aviation supplier may, in its sole discretion, provide information to the Inspection Service regarding losses of the aviation supplier’s product identified in its overgoods operations.

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Attachment 8: Investigative / Security Protocol and Guidelines

Protection and Disclosure of Information from Investigations

1. The aviation supplier and the Inspection Service agree to protect all information obtained in the course of their respective investigations from any unauthorized disclosure. Any confidential, proprietary, privileged, or otherwise sensitive information obtained during the course of an investigation will be handled under mutual agreement between the Inspection Service and the aviation supplier.

2. All information related to Inspection Service investigations involving mail in the aviation supplier’s system or investigations of the aviation supplier’s employees will be maintained in the Inspection Service Investigative File System as prescribed by the Privacy Act of 1974, 5 U.S.C. 552a. Any requests by third parties for records maintained in this system will be processed in accordance with requirements of the Privacy Act and applicable privacy policies of the aviation supplier.

3. All public disclosures of information related to investigations conducted by the Inspection Service and THE AVIATION SUPPLIER Security, including media requests or press releases, will be coordinated between and approved by the Inspection Service and the aviation supplier in accordance with a mutually agreed communications plan and the aviation supplier’s privacy policies.

Noninterference

1. The Inspection Service agrees that in the exercise of its rights under this protocol it will not disrupt or interfere with any of the aviation supplier’s operations.

Modifications

1. This protocol and guidelines may be modified based on the mutual agreement of the aviation supplier and the Inspection Service.

Postal Contact for Inspectors

Contact Number: 877-876-2455

Option 2 Emergency

Option 3 Mail Theft

Page 94 of 100

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Attachment 9: Wage Determination

Attachment 9

Wage Determination

October 31, 2012

Due to the size and complexity of this solicitation, it is impracticable to attach all relevant wage determinations to the solicitation packet. In lieu of a physical attachment, the Postal Service has worked with the Department of Labor to provide instructions to potential contractors for accessing the wage determination(s) on the Department of Labor website. The instructions are as follows:

Current wage determinations can be found at www.wdol.gov. This is the official Department of Labor website from which to access wage determinations. To access wage determinations, enter the website and click “Selecting SCA WDs” under the column heading “Service Contract Act.” Use the drop down menu to select the state and county for the designated wage determination, and then click “Continue.” Answer “No” for the question “Were these services previously performed at this locality under an SCA-covered contract?” Answer “No” for the question “Are the contract services to be performed listed below as Non-Standard Services?” Click on the Printer Friendly Version for a full view and printable Wage Determination. Identify the SCA wage determination(s), including determination number, revision date, and state and counties that were used to determine that the rates offered are in compliance on Attachment 13: Service Contract Act Wage Determinations.* The revision numbers of the wage determinations listed in the solicitation index of wage determinations should be used in the comparisons. For all the identified SCA eligible labor categories, map the SCA equivalent labor category title (titles/descriptions available at http://www.wdol.gov. Click on the “library” link, then download the SCA Directory of Occupations, 5th Edition). Also identify the Wage Determination number that the labor categories in your offer are predicated. Note that the applicable revision number for all Wage Determination numbers is the revision number identified in the solicitation index of wage determinations. In those instances where the aviation supplier has a non-standard classification (a standard wage does not fit the work category) that requires a special SCA wage determination, the aviation supplier must contact the Postal Service Contracting Officer at:

Manager, Air Transportation CMC

475 L’ Enfant Plaza SW, Room 1P650

Washington, DC 20260-0650

Although the aviation supplier assumes sole responsibility to faithfully discharge all duties and obligations with regards to wage determinations imposed by the Department of Labor, the Postal Service will assist the aviation supplier upon the aviation supplier’s request, to the extent necessary, in selecting the appropriate wage determinations.

The aviation supplier should review the Service Contract Act Directory of Occupations to confirm whether the positions the aviation supplier wishes to offer fit into the currently published occupation titles under the wage determination. If the position will not fit into any of the currently published occupation titles, please review the instructions in the wage determination entitled “The process for preparing a conformance request.” In accordance with the Department of Labor instructions (that can be found at www.wdol.gov) in each wage determination, entitled Conformance Process, any class of service employee that is not listed therein and that is to be employed under the contract (i.e., the work to be performed is not performed by any classification listed in the wage determination) must be classified by the contractor so as to provide a reasonable relationship (i.e., appropriate level of skill comparison) between such unlisted classifications and the classifications listed in the wage determination. Such conformed classes of employees shall be paid the monetary wages and furnished the fringe benefits as are determined. Such conforming process shall be initiated by the contractor prior to the

Page 95 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 9: Wage Determination

performance of contract work by such unlisted class(es) of employees. The conformed classification, wage rate, and/or fringe benefits shall be retroactive to the commencement date of the contract.

* Given the desire of the offerors to seek additional information from the Department of Labor regarding the applicability of the Service Contract Act to the contract(s) that may result from this solicitation, the completed submission of Attachment 13: Service Contract Act Wage Determination may be delayed until a mutually agreeable date prior to contract award. As a condition of acceptance of the offeror’s proposal(s), the offeror must explicitly state that the proposed pricing will hold firm irrespective of any determination made by the Department of Labor.

Page 96 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Attachment 10

Pricing

April 18, 2013

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 97 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 11: Perishable Mail and Lives

Attachment 11

Perishable Mail and Lives

April 22, 2013

The aviation supplier will accept perishable mail and live animals as specified under Domestic Mail Manual 601, subsection 9.3, effective on June 19, 2006. All live animal shipments are designated as ‘air only’ shipments.

The Postal Service will tender perishable mail and live animal shipments to the aviation supplier for the Day Network, Tuesday through Saturday, and for the Night Network, Monday through Friday. Due to potential extended delivery times, the Postal Service will not tender any live animal shipments the day before a holiday.

All volume for perishable mail and live animals will be planned during the Ordering Process.

The Postal Service will be required to supply each air stop with a determined number of coverings of loosely woven material for covering the live animal shipments in weather events.

The Postal Service shall ensure that its Terminal Handling Suppliers follow the procedures established by the aviation supplier for the proper loading and securing of live animal shipments.

For the Day and Night Networks, all bee shipments must be tendered separately from all other shipments. Bee shipments are prohibited on the aviation supplier’s Feeder Network.

The aviation supplier will provide specific details on the pallet building for live animal shipments.

The Postal Service will tender all live animals with a ULD D&R tag attached to the cargo net. The D&R tag will be attached to a manila tag (supplied by the Postal Service) and secured to the net with a cable tie.

Day Network

All live animal shipments must be tendered to the aviation supplier on an aircraft pallet per the market aircraft type as provided by the aviation supplier. The pallet types and aircraft assignment per air stop will be provided by the aviation supplier Tender will be by the ‘All Mail Due Aviation Supplier’ column as shown in Attachment 3: Operating Plan, Day Network.

Night Network

The aviation supplier will accept live animals for loose loading for the Night Network. The aviation supplier will accept a maximum of two hundred (200) cubic feet (approximately twenty (20) pieces) of live animals for loose loading at the time specified in the ‘All Mail Due Aviation Supplier’ column in Attachment 4: Operating Plan, Night Network. For more than two hundred (200) cubic feet, the Postal Service will be required to tender no less than two (2) hours prior to the scheduled aircraft departure. More time may be required based on volume and local ramp circumstances.

Terminal Handling

The Postal Service will not place live animals inside of a closed ULD. All live animals will be shipped via pallet which will be provided by the aviation supplier. Live animal shipments will be maintained in an upright position throughout the transportation process to prevent fatality. The Postal Service will not accept or load any shipment that appears to be damaged. The Postal Service will ensure four (4) inches of air space around the perimeter of stacks of boxes. The ‘spacers / pallets’ used between the stacks of live animals will be provided by the Postal Service.

Page 98 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 11: Perishable Mail and Lives

The live animals cannot be left in direct sunlight for extended periods. Additionally, the live animals cannot be left in drafty areas or exposed to exhaust fumes. Live animals cannot be placed near dry ice shipments. If for any particular trunk flight for any origin or destination air stop on the Night Network there is more than 1,000 pounds of dry ice, any live animal shipments will be rolled to the following Day Network operation. If it is necessary to roll live animal shipments to the following Day Network operation, the aviation supplier will not incur a reduction in payment for the applicable live animal shipments. On the Day Network, live animal shipments have priority over dry ice. Live animal shipments cannot be covered with any plastic. Cargo or mail cannot be placed on top of live animals.

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Air Cargo Network

Contract ACN-13-FX

Attachment 13: Service Contract Act Wage Determinations

Attachment 13

Service Contract Act Wage Determinations

April 17, 2013

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 100 of 100

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 1

Option 1

Attachment 10

Pricing

April 18, 2013

Attachment 10 – Option 1 Surface Only 18 April 2013

Aviation Supplier Rates Provided on a Per Cubic Foot Basis & USPS Providing THS Services (Day Network Only)

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 2

Option 2

Attachment 10

Pricing

April 18, 2013

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 3

Option 3

Attachment 10

Pricing

April 18, 2013

Attachment 10 – Option 3 Partials Only 18 April 2013

Aviation Supplier Rates Provided on a Per Cubic Foot Basis & USPS Providing THS Services (Day Network Only)

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 1 and 2

Option 1 and 2

Attachment 10

Pricing

April 18, 2013

Attachment 10 – Option 1 & 2 – SJU & Surface 18 April 2013

Aviation Supplier Rates Provided on a Per Cubic Foot Basis & USPS Providing THS Services (Day Network Only)

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 1 and 3

Option 1 and 3

Attachment 10

Pricing

April 18, 2013

Attachment 10 – Option 1 & 3 –Surface & Partials 18 April 2013

Aviation Supplier Rates Provided on a Per Cubic Foot Basis & USPS Providing THS Services (Day Network Only)

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 2 and 3

Option 2 and 3

Attachment 10

Pricing

April 18, 2013

Attachment 10 – Option 2 & 3 –SJU & Partials 18 April 2013

Aviation Supplier Rates Provided on a Per Cubic Foot Basis & USPS Providing THS Services (Day Network Only)

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 10: Pricing

Option 1, 2, and 3

Option 1, 2, and 3

Attachment 10

Pricing

April 18, 2013

Attachment 10 – Option 1, 2 & 3 –Surface, SJU & Partials 18 April 2013

Aviation Supplier Rates Provided on a Per Cubic Foot Basis & USPS Providing THS Services (Day Network Only)

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A      Postal Service Builds ULDs	F       Aviation Supplier Unloads ULD into MTE
B      Postal Service Transports ULDs to Ramp	G      Aviation Supplier Builds ULDs
C      Postal Service Tenders in MTE	H      Aviation Supplier Delivers ULDs to Ramp
D      Postal Service Picks Up MTE	I        Aviation Supplier Picks Up ULDs from Plant
E       Postal Service Deck Loads	J        Aviation Supplier Delivers ULDs to Plant
	K      Aviation Supplier Deck Loads

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	E	K
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	E	K
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	E	K
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	E	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	E	Origin Only
75	SPRINGFIELD IL	SPI	E	Origin Only
76	ST. LOUIS MO	STL	E	K
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

Option 1

Attachment 4

Operating Plan, Night Network

April 22, 2013

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
1	ALBANY NY	ALB	[ * ]	[ * ]	[ * ]
2	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
3	ALLENTOWN PA	ABE	[ * ]	[ * ]	[ * ]
4	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
5	APPLETON WI	ATW	[ * ]	[ * ]	[ * ]
6	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
7	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
8	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
9	BANGOR ME	BGR	[ * ]	[ * ]	[ * ]
10	BATON ROUGE LA	BTR	[ * ]	[ * ]	[ * ]
11	BEND OR	RDM	[ * ]	[ * ]	[ * ]
12	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
13	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
14	BISMARK ND	BIS	[ * ]	[ * ]	[ * ]
15	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
16	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
17	BOZEMAN MT	BZN	[ * ]	[ * ]	[ * ]
18	BRISTOL TN / VA	TRI	[ * ]	[ * ]	[ * ]
19	BUFFALO NY	BUF	[ * ]	[ * ]	[ * ]
20	BURBANK CA	BUR	[ * ]	[ * ]	[ * ]
21	BURLINGTON VT	BTV	[ * ]	[ * ]	[ * ]
22	BUTTE MT	BTM	[ * ]	[ * ]	[ * ]
23	CASPER WY	CPR	[ * ]	[ * ]	[ * ]
24	CEDAR RAPIDS IA	CID	[ * ]	[ * ]	[ * ]
25	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
26	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
27	CHATTANOOGA TN	CHA	[ * ]	[ * ]	[ * ]
28	CHEYENNE WY	CYS	[ * ]	[ * ]	[ * ]
29	CHICAGO IL (O’Hare)	ORD	[ * ]	[ * ]	[ * ]
30	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
31	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
32	COLORADO SPRINGS CO	COS	[ * ]	[ * ]	[ * ]
33	COLUMBIA SC	CAE	[ * ]	[ * ]	[ * ]
34	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
35	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
36	DAYTON OH	DAY	[ * ]	[ * ]	[ * ]
37	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
38	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
39	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
40	DULLES VA	IAD	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
41	DULUTH MN	DLH	[ * ]	[ * ]	[ * ]
42	DURANGO CO	DRO	[ * ]	[ * ]	[ * ]
43	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
44	ELMIRA NY	ELM	[ * ]	[ * ]	[ * ]
45	EUGENE OR	EUG	[ * ]	[ * ]	[ * ]
46	FAIRBANKS AK	FAI	[ * ]	[ * ]	[ * ]
47	FLINT MI	FNT	[ * ]	[ * ]	[ * ]
48	FORT MYERS FL	RSW	[ * ]	[ * ]	[ * ]
49	FORT WAYNE IN	FWA	[ * ]	[ * ]	[ * ]
50	FRESNO CA	FAT	[ * ]	[ * ]	[ * ]
51	FT LAUDERDALE FL	FLL	[ * ]	[ * ]	[ * ]
52	GRAND FORKS ND	GFK	[ * ]	[ * ]	[ * ]
53	GRAND JUNCTION CO	GJT	[ * ]	[ * ]	[ * ]
54	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
55	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
56	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
57	GREENVILLE SC	GSP	[ * ]	[ * ]	[ * ]
58	HARRISBURG PA	MDT	[ * ]	[ * ]	[ * ]
59	HARTFORD CT	BDL	[ * ]	[ * ]	[ * ]
60	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
61	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
62	HUNTSVILLE AL	HSV	[ * ]	[ * ]	[ * ]
63	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
64	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
65	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
66	JFK NY	JFK	[ * ]	[ * ]	[ * ]
67	KALISPELL MT	FCA	[ * ]	[ * ]	[ * ]
68	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
69	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
70	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
71	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
72	LONG BEACH CA	LGB	[ * ]	[ * ]	[ * ]
73	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
74	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
75	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
76	MADISON WI	MSN	[ * ]	[ * ]	[ * ]
77	MANCHESTER NH	MHT	[ * ]	[ * ]	[ * ]
78	MCALLEN TX	MFE	[ * ]	[ * ]	[ * ]
79	MEDFORD OR	MFR	[ * ]	[ * ]	[ * ]
80	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
81	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
82	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
83	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
84	MINOT ND	MOT	[ * ]	[ * ]	[ * ]
85	MISSOULA MT	MSO	[ * ]	[ * ]	[ * ]
86	MOBILE AL	MOB	[ * ]	[ * ]	[ * ]
87	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
88	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
89	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
90	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
91	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
92	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
93	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
94	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
95	ORANGE COUNTY AIRPORT	SNA	[ * ]	[ * ]	[ * ]
96	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
97	PALM BEACH FL	PBI	[ * ]	[ * ]	[ * ]
98	PASCO WA	PSC	[ * ]	[ * ]	[ * ]
99	PEORIA IL	PIA	[ * ]	[ * ]	[ * ]
100	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
101	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
102	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
103	POCATELLO ID	PIH	[ * ]	[ * ]	[ * ]
104	PORTLAND ME	PWM	[ * ]	[ * ]	[ * ]
105	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
106	PRESQUE ISLE ME	PQI	[ * ]	[ * ]	[ * ]
107	PROVIDENCE RI	PVD	[ * ]	[ * ]	[ * ]
108	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
109	RAPID CITY SD	RAP	[ * ]	[ * ]	[ * ]
110	RENO NV	RNO	[ * ]	[ * ]	[ * ]
111	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
112	ROANOKE VA	ROA	[ * ]	[ * ]	[ * ]
113	ROCHESTER MN	RST	[ * ]	[ * ]	[ * ]
114	ROCHESTER NY	ROC	[ * ]	[ * ]	[ * ]
115	ROCK SPRINGS WY	RKS	[ * ]	[ * ]	[ * ]
116	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
117	SALT LAKE CITY UT	SLC	[ * ]	[ * ]	[ * ]
118	SAN ANTONIO TX	SAT	[ * ]	[ * ]	[ * ]
119	SAN DIEGO CA	SAN	[ * ]	[ * ]	[ * ]
120	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
121	SAN JOSE CA	SJC	[ * ]	[ * ]	[ * ]
122	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
123	SAVANNAH GA	SAV	[ * ]	[ * ]	[ * ]
124	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
125	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
126	SIOUX CITY IA	SUX	[ * ]	[ * ]	[ * ]
127	SOUIX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
128	SOUTH BEND IN	SBN	[ * ]	[ * ]	[ * ]
129	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
130	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
131	ST CLOUD MN	STC	[ * ]	[ * ]	[ * ]
132	ST LOUIS MO	STL	[ * ]	[ * ]	[ * ]
133	STEWART NY	SWF	[ * ]	[ * ]	[ * ]
134	SYRACUSE NY	SYR	[ * ]	[ * ]	[ * ]
135	TALLAHASSEE FL	TLH	[ * ]	[ * ]	[ * ]
136	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
137	TRAVERSE CITY MI	TVC	[ * ]	[ * ]	[ * ]
138	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
139	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
140	TWIN FALLS ID	TWF	[ * ]	[ * ]	[ * ]
141	WATERLOO IA	ALO	[ * ]	[ * ]	[ * ]
142	WAUSAU WI	CWA	[ * ]	[ * ]	[ * ]
143	WENATCHEE WA	EAT	[ * ]	[ * ]	[ * ]
144	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]
145	YAKIMA WA	YKM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

Option 1

Attachment 4

Operating Plan, Night Network

April 22, 2013

Tender and Delivery Process Codes

A Postal Service Builds ULDs

B Postal Service Transports ULDs to Ramp

C Postal Service Transports Loose Volume to and from Aviation Supplier Location other than Airport Ramp

D Postal Service Transports Loose Volumes to and from Aviation Supplier Ramp

E Aviation Supplier Picks Up ULDs

F Aviation Supplier Delivers in ULDs

G Aviation Supplier Delivers Volume Loose to a Postal Service Designated Location

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBANY NY	ALB	D	D
2	ALBURQUERQUE NM	ABQ	D	D
3	ALLENTOWN PA	ABE	D	Origin Only
4	ANCHORAGE AK	ANC	D	D
5	APPLETON WI	ATW	D	D
6	ATLANTA GA	ATL	E	D
7	AUSTIN (Air Stop) TX	AUS	D	D
8	BALTIMORE MD	BWI	D	D
9	BANGOR ME	BGR	D	D
10	BATON ROUGE LA	BTR	D	D
11	BEND OR	RDM	D	Origin Only
12	BILLINGS MT	BIL	D	D
13	BIRMINGHAM AL	BHM	D	D
14	BISMARK ND	BIS	D	Origin Only
15	BOISE ID	BOI	E	F
16	BOSTON MA	BOS	D	D
17	BOZEMAN MT	BZN	D	Origin Only
18	BRISTOL TN / VA	TRI	D	Origin Only
19	BUFFALO NY	BUF	D	D
20	BURBANK CA	BUR	D	D
21	BURLINGTON VT	BTV	D	D
22	BUTTE MT	BTM	D	Origin Only
23	CASPER WY	CPR	D	Origin Only
24	CEDAR RAPIDS IA	CID	D	D
25	CHARLESTON WV	CRW	D	D
26	CHARLOTTE NC	CLT	D	D
27	CHATTANOOGA P&DC TN	CHA	D	D
28	CHEYENNE WY	CYS	D	Origin Only
29	CHICAGO IL	ORD	D	D
30	CINCINNATI OH	CVG	D	D
31	CLEVELAND OH	CLE	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
32	COLORADO SPRINGS CO	COS	D	D
33	COLUMBIA SC	CAE	D	D
34	COLUMBUS OH	CMH	D	D
35	DALLAS TX	DFW	D	D
36	DAYTON OH	DAY	D	D
37	DENVER CO	DEN	D	D
38	DES MOINES IA	DSM	D	D
39	DETROIT MI	DTW	D	D
40	DULLES VA	IAD	D	D
41	DULUTH MN	DLH	D	D
42	DURANGO CO	DRO	D	Origin Only
43	EL PASO TX	ELP	D	D
44	ELM NY	ELM	D	D
45	EUGENE OR	EUG	D	Origin Only
46	FAIRBANKS AK	FAI	D	Origin Only
47	FLINT P&DC MI	FNT	D	D
48	FORT MYERS P&DC FL	RSW	E	F
49	FORT WAYNE IN P&DC	FWA	D	D
50	FRESNO CA	FAT	D	D
51	FT LAUDERDALE FL	FLL	D	F
52	GRAND FORKS ND	GFK	D	D
53	GRAND JUNCTION CO	GJT	D	Origin Only
54	GRAND RAPIDS MI	GRR	D	D
55	GREAT FALLS MT	GTF	D	D
56	GREENSBORO NC	GSO	D	D
57	GREENVILLE SC	GSP	D	D
58	HARRISBURG PA	MDT	D	D
59	HARTFORD CT	BDL	D	D
60	HONOLULU HI	HNL	D	D
61	HOUSTON TX	IAH	D	D
62	HUNTSVILLE P&DF AL	HSV	D	D
63	INDIANAPOLIS IN	IND	D	D
64	JACKSON MS	JAN	C	C
65	JACKSONVILLE FL	JAX	E	F
66	JFK NY	JFK	BD	D
67	KALISPELL MT	FCA	D	Origin Only
68	KANSAS CITY MO	MCI	D	D
69	KNOXVILLE TN	TYS	D	D
70	LAS VEGAS NV	LAS	D	D
71	LITTLE ROCK AR	LIT	C	C
72	LONG BEACH CA	LGB	D	Origin Only
73	LOS ANGELES CA	LAX	D	D
74	LOUISVILLE KY	SDF	D	D
75	LUBBOCK TX	LBB	D	D
76	MADISON WI	MSN	D	D
77	MANCHESTER NH	MHT	D	D
78	MCALLEN TX	MFE	D	Origin Only
79	MEDFORD OR	MFR	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
80	MEMPHIS TN	MEM	D	D
81	MIAMI FL	MIA	D	F/D
82	MILWAUKEE WI	MKE	D	D
83	MINNEAPOLIS MN	MSP	D	D
84	MINOT ND	MOT	D	Origin Only
85	MISSOULA MT	MSO	D	Origin Only
86	MOBILE AL	MOB	D	D
87	NASHVILLE TN	BNA	D	D
88	NEW ORLEANS LA	MSY	D	D
89	NEWARK NJ	EWR	E	F
90	NORFOLK VA	ORF	D	D
91	OAKLAND CA	OAK	D	D
92	OKLAHOMA CITY OK	OKC	D	D
93	OMAHA NE	OMA	D	D
94	ONTARIO CA	ONT	D	D
95	ORANGE COUNTY AIRPORT	SNA	D	Origin Only
96	ORLANDO FL	MCO	A	D
97	PALM BEACH FL	PBI	D	D (T-F) / G (Sat)
98	PASCO WA	PSC	D	Origin Only
99	PEORIA MPO IL	PIA	D	D
100	PHILADELPHIA PA	PHL	D	D
101	PHOENIX AZ	PHX	D	D
102	PITTSBURGH PA	PIT	D/E	D
103	POCATELLO ID	PIH	D	Origin Only
104	PORTLAND ME	PWM	D	D
105	PORTLAND OR	PDX	D	D
106	PRESQUE ISLE ME	PQI	D	D
107	PROVIDENCE RI	PVD	D	D
108	RALEIGH NC	RDU	D	D
109	RAPID CITY SD	RAP	D	Origin Only
110	RENO NV	RNO	D	D
111	RICHMOND VA	RIC	D	D
112	ROANOKE VA	ROA	D	D
113	ROCHESTER MN	RST	D	D
114	ROCHESTER NY	ROC	D	D
115	ROCK SPRINGS WY	RKS	D	Origin Only
116	SACRAMENTO CA	SMF	D	D
117	SALT LAKE CITY UT	SLC	E	F
118	SAN ANTONIO TX	SAT	D	D
119	SAN DIEGO CA	SAN	D	D
120	SAN FRANCISCO CA	SFO	E/D	F/D
121	SAN JOSE CA	SJC	D	D
122	SAN JUAN PR	SJU	D	D
123	SAVANNAH P&DF GA	SAV	D	D
124	SEATTLE WA	SEA	D	D
125	SHREVEPORT LA	SHV	D	D
126	SIOUX CITY IA	SUX	D	Origin Only
127	SOUIX FALLS SD	FSD	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
128	SOUTH BEND IN P&DC	SBN	D	D
129	SPOKANE WA	GEG	D	D
130	SPRINGFIELD MO	SGF	D	D
131	ST CLOUD MN	STC	D	Origin Only
132	ST LOUIS MO	STL	D	D
133	STEWART NY 125	SWF	D	D
134	SYRACUSE NY	SYR	D	D
135	TALLAHASSEE P&DF FL	TLH	D	D
136	TAMPA FL	TPA	A	D
137	TRAVERSE CITY MI	TVC	D	D
138	TUCSON AZ	TUS	D	D
139	TULSA OK	TUL	D	D
140	TWIN FALLS ID	TWF	D	Origin Only
141	WATERLOO IA	ALO	D	Origin Only
142	WAUSAU WI	CWA	D	D
143	WENATCHEE WA	EAT	D	Origin Only
144	WICHITA KS	ICT	D	D
145	YAKIMA WA	YKM	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

Option 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

Option 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday*	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday*	Required Delivery Time to Postal Service Sunday
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR**	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

** 75% of the volume capture will be delivered on Day Zero with the balance delivered on Day +1

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

Option 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A      Postal Service Builds ULDs	F       Aviation Supplier Unloads ULD into MTE
B      Postal Service Transports ULDs to Ramp	G      Aviation Supplier Builds ULDs
C      Postal Service Tenders in MTE	H      Aviation Supplier Delivers ULDs to Ramp
D      Postal Service Picks Up MTE	I        Aviation Supplier Picks Up ULDs from Plant
E       Postal Service Deck Loads	J        Aviation Supplier Delivers ULDs to Plant

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	A , B	H
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	A , B	H
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	A , B	H
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	A , B	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	A , B	Origin Only
75	SPRINGFIELD IL	SPI	A , B	Origin Only
76	ST. LOUIS MO	STL	A , B	H
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

Option 1 and 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

Option 1 and 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR**	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

** 75% of the volume capture will be delivered on Day Zero with the balance delivered on Day +1

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

Option 1 and 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A      Postal Service Builds ULDs	F       Aviation Supplier Unloads ULD into MTE
B      Postal Service Transports ULDs to Ramp	G      Aviation Supplier Builds ULDs
C      Postal Service Tenders in MTE	H      Aviation Supplier Delivers ULDs to Ramp
D      Postal Service Picks Up MTE	I        Aviation Supplier Picks Up ULDs from Plant
E       Postal Service Deck Loads	J        Aviation Supplier Delivers ULDs to Plant
	K      Aviation Supplier Deck Loads

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	E	K
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	E	K
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	E	K
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	E	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	E	Origin Only
75	SPRINGFIELD IL	SPI	E	Origin Only
76	ST. LOUIS MO	STL	E	K
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

Option 1 and 2

Attachment 4

Operating Plan, Night Network

April 22, 2013

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
1	ALBANY NY	ALB	[ * ]	[ * ]	[ * ]
2	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
3	ALLENTOWN PA	ABE	[ * ]	[ * ]	[ * ]
4	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
5	APPLETON WI	ATW	[ * ]	[ * ]	[ * ]
6	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
7	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
8	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
9	BANGOR ME	BGR	[ * ]	[ * ]	[ * ]
10	BATON ROUGE LA	BTR	[ * ]	[ * ]	[ * ]
11	BEND OR	RDM	[ * ]	[ * ]	[ * ]
12	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
13	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
14	BISMARK ND	BIS	[ * ]	[ * ]	[ * ]
15	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
16	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
17	BOZEMAN MT	BZN	[ * ]	[ * ]	[ * ]
18	BRISTOL TN / VA	TRI	[ * ]	[ * ]	[ * ]
19	BUFFALO NY	BUF	[ * ]	[ * ]	[ * ]
20	BURBANK CA	BUR	[ * ]	[ * ]	[ * ]
21	BURLINGTON VT	BTV	[ * ]	[ * ]	[ * ]
22	BUTTE MT	BTM	[ * ]	[ * ]	[ * ]
23	CASPER WY	CPR	[ * ]	[ * ]	[ * ]
24	CEDAR RAPIDS IA	CID	[ * ]	[ * ]	[ * ]
25	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
26	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
27	CHATTANOOGA TN	CHA	[ * ]	[ * ]	[ * ]
28	CHEYENNE WY	CYS	[ * ]	[ * ]	[ * ]
29	CHICAGO IL (O’Hare)	ORD	[ * ]	[ * ]	[ * ]
30	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
31	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
32	COLORADO SPRINGS CO	COS	[ * ]	[ * ]	[ * ]
33	COLUMBIA SC	CAE	[ * ]	[ * ]	[ * ]
34	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
35	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
36	DAYTON OH	DAY	[ * ]	[ * ]	[ * ]
37	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
38	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
39	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
40	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
41	DULUTH MN	DLH	[ * ]	[ * ]	[ * ]
42	DURANGO CO	DRO	[ * ]	[ * ]	[ * ]
43	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
44	ELMIRA NY	ELM	[ * ]	[ * ]	[ * ]
45	EUGENE OR	EUG	[ * ]	[ * ]	[ * ]
46	FAIRBANKS AK	FAI	[ * ]	[ * ]	[ * ]
47	FLINT MI	FNT	[ * ]	[ * ]	[ * ]
48	FORT MYERS FL	RSW	[ * ]	[ * ]	[ * ]
49	FORT WAYNE IN	FWA	[ * ]	[ * ]	[ * ]
50	FRESNO CA	FAT	[ * ]	[ * ]	[ * ]
51	FT LAUDERDALE FL	FLL	[ * ]	[ * ]	[ * ]
52	GRAND FORKS ND	GFK	[ * ]	[ * ]	[ * ]
53	GRAND JUNCTION CO	GJT	[ * ]	[ * ]	[ * ]
54	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
55	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
56	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
57	GREENVILLE SC	GSP	[ * ]	[ * ]	[ * ]
58	HARRISBURG PA	MDT	[ * ]	[ * ]	[ * ]
59	HARTFORD CT	BDL	[ * ]	[ * ]	[ * ]
60	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
61	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
62	HUNTSVILLE AL	HSV	[ * ]	[ * ]	[ * ]
63	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
64	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
65	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
66	JFK NY	JFK	[ * ]	[ * ]	[ * ]
67	KALISPELL MT	FCA	[ * ]	[ * ]	[ * ]
68	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
69	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
70	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
71	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
72	LONG BEACH CA	LGB	[ * ]	[ * ]	[ * ]
73	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
74	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
75	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
76	MADISON WI	MSN	[ * ]	[ * ]	[ * ]
77	MANCHESTER NH	MHT	[ * ]	[ * ]	[ * ]
78	MCALLEN TX	MFE	[ * ]	[ * ]	[ * ]
79	MEDFORD OR	MFR	[ * ]	[ * ]	[ * ]
80	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
81	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
82	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
83	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
84	MINOT ND	MOT	[ * ]	[ * ]	[ * ]
85	MISSOULA MT	MSO	[ * ]	[ * ]	[ * ]
86	MOBILE AL	MOB	[ * ]	[ * ]	[ * ]
87	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
88	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
89	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
90	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
91	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
92	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
93	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
94	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
95	ORANGE CNTY AIRPORT	SNA	[ * ]	[ * ]	[ * ]
96	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
97	PALM BEACH FL	PBI	[ * ]	[ * ]	[ * ]
98	PASCO WA	PSC	[ * ]	[ * ]	[ * ]
99	PEORIA IL	PIA	[ * ]	[ * ]	[ * ]
100	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
101	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
102	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
103	POCATELLO ID	PIH	[ * ]	[ * ]	[ * ]
104	PORTLAND ME	PWM	[ * ]	[ * ]	[ * ]
105	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
106	PRESQUE ISLE ME	PQI	[ * ]	[ * ]	[ * ]
107	PROVIDENCE RI	PVD	[ * ]	[ * ]	[ * ]
108	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
109	RAPID CITY SD	RAP	[ * ]	[ * ]	[ * ]
110	RENO NV	RNO	[ * ]	[ * ]	[ * ]
111	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
112	ROANOKE VA	ROA	[ * ]	[ * ]	[ * ]
113	ROCHESTER MN	RST	[ * ]	[ * ]	[ * ]
114	ROCHESTER NY	ROC	[ * ]	[ * ]	[ * ]
115	ROCK SPRINGS WY	RKS	[ * ]	[ * ]	[ * ]
116	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
117	SALT LAKE CITY UT	SLC	[ * ]	[ * ]	[ * ]
118	SAN ANTONIO TX	SAT	[ * ]	[ * ]	[ * ]
119	SAN DIEGO CA	SAN	[ * ]	[ * ]	[ * ]
120	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
121	SAN JOSE CA	SJC	[ * ]	[ * ]	[ * ]
122	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
123	SAVANNAH GA	SAV	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
124	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
125	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
126	SIOUX CITY IA	SUX	[ * ]	[ * ]	[ * ]
127	SOUIX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
128	SOUTH BEND IN	SBN	[ * ]	[ * ]	[ * ]
129	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
130	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
131	ST CLOUD MN	STC	[ * ]	[ * ]	[ * ]
132	ST LOUIS MO	STL	[ * ]	[ * ]	[ * ]
133	STEWART NY	SWF	[ * ]	[ * ]	[ * ]
134	SYRACUSE NY	SYR	[ * ]	[ * ]	[ * ]
135	TALLAHASSEE FL	TLH	[ * ]	[ * ]	[ * ]
136	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
137	TRAVERSE CITY MI	TVC	[ * ]	[ * ]	[ * ]
138	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
139	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
140	TWIN FALLS ID	TWF	[ * ]	[ * ]	[ * ]
141	WATERLOO IA	ALO	[ * ]	[ * ]	[ * ]
142	WAUSAU WI	CWA	[ * ]	[ * ]	[ * ]
143	WENATCHEE WA	EAT	[ * ]	[ * ]	[ * ]
144	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]
145	YAKIMA WA	YKM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

Option 1 and 2

Attachment 4

Operating Plan, Night Network

April 22, 2013

Tender and Delivery Process Codes

A Postal Service Builds ULDs

B Postal Service Transports ULDs to Ramp

C Postal Service Transports Loose Volume to and from Aviation Supplier Location other than Airport Ramp

D Postal Service Transports Loose Volumes to and from Aviation Supplier Ramp

E Aviation Supplier Picks Up ULDs

F Aviation Supplier Delivers in ULDs

G Aviation Supplier Delivers Volume Loose to a Postal Service Designated Location

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBANY NY	ALB	D	D
2	ALBURQUERQUE NM	ABQ	D	D
3	ALLENTOWN PA	ABE	D	Origin Only
4	ANCHORAGE AK	ANC	D	D
5	APPLETON WI	ATW	D	D
6	ATLANTA GA	ATL	E	D
7	AUSTIN (Air Stop) TX	AUS	D	D
8	BALTIMORE MD	BWI	D	D
9	BANGOR ME	BGR	D	D
10	BATON ROUGE LA	BTR	D	D
11	BEND OR	RDM	D	Origin Only
12	BILLINGS MT	BIL	D	D
13	BIRMINGHAM AL	BHM	D	D
14	BISMARK ND	BIS	D	Origin Only
15	BOISE ID	BOI	E	F
16	BOSTON MA	BOS	D	D
17	BOZEMAN MT	BZN	D	Origin Only
18	BRISTOL TN / VA	TRI	D	Origin Only
19	BUFFALO NY	BUF	D	D
20	BURBANK CA	BUR	D	D
21	BURLINGTON VT	BTV	D	D
22	BUTTE MT	BTM	D	Origin Only
23	CASPER WY	CPR	D	Origin Only
24	CEDAR RAPIDS IA	CID	D	D
25	CHARLESTON WV	CRW	D	D
26	CHARLOTTE NC	CLT	D	D
27	CHATTANOOGA P&DC TN	CHA	D	D
28	CHEYENNE WY	CYS	D	Origin Only
29	CHICAGO IL	ORD	D	D
30	CINCINNATI OH	CVG	D	D
31	CLEVELAND OH	CLE	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
32	COLORADO SPRINGS CO	COS	D	D
33	COLUMBIA SC	CAE	D	D
34	COLUMBUS OH	CMH	D	D
35	DALLAS TX	DFW	D	D
36	DAYTON OH	DAY	D	D
37	DENVER CO	DEN	D	D
38	DES MOINES IA	DSM	D	D
39	DETROIT MI	DTW	D	D
40	DULLES VA	IAD	D	D
41	DULUTH MN	DLH	D	D
42	DURANGO CO	DRO	D	Origin Only
43	EL PASO TX	ELP	D	D
44	ELM NY	ELM	D	D
45	EUGENE OR	EUG	D	Origin Only
46	FAIRBANKS AK	FAI	D	Origin Only
47	FLINT P&DC MI	FNT	D	D
48	FORT MYERS P&DC FL	RSW	E	F
49	FORT WAYNE IN P&DC	FWA	D	D
50	FRESNO CA	FAT	D	D
51	FT LAUDERDALE FL	FLL	D	F
52	GRAND FORKS ND	GFK	D	D
53	GRAND JUNCTION CO	GJT	D	Origin Only
54	GRAND RAPIDS MI	GRR	D	D
55	GREAT FALLS MT	GTF	D	D
56	GREENSBORO NC	GSO	D	D
57	GREENVILLE SC	GSP	D	D
58	HARRISBURG PA	MDT	D	D
59	HARTFORD CT	BDL	D	D
60	HONOLULU HI	HNL	D	D
61	HOUSTON TX	IAH	D	D
62	HUNTSVILLE P&DF AL	HSV	D	D
63	INDIANAPOLIS IN	IND	D	D
64	JACKSON MS	JAN	C	C
65	JACKSONVILLE FL	JAX	E	F
66	JFK NY	JFK	BD	D
67	KALISPELL MT	FCA	D	Origin Only
68	KANSAS CITY MO	MCI	D	D
69	KNOXVILLE TN	TYS	D	D
70	LAS VEGAS NV	LAS	D	D
71	LITTLE ROCK AR	LIT	C	C
72	LONG BEACH CA	LGB	D	Origin Only
73	LOS ANGELES CA	LAX	D	D
74	LOUISVILLE KY	SDF	D	D
75	LUBBOCK TX	LBB	D	D
76	MADISON WI	MSN	D	D
77	MANCHESTER NH	MHT	D	D
78	MCALLEN TX	MFE	D	Origin Only
79	MEDFORD OR	MFR	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
80	MEMPHIS TN	MEM	D	D
81	MIAMI FL	MIA	D	F/D
82	MILWAUKEE WI	MKE	D	D
83	MINNEAPOLIS MN	MSP	D	D
84	MINOT ND	MOT	D	Origin Only
85	MISSOULA MT	MSO	D	Origin Only
86	MOBILE AL	MOB	D	D
87	NASHVILLE TN	BNA	D	D
88	NEW ORLEANS LA	MSY	D	D
89	NEWARK NJ	EWR	E	F
90	NORFOLK VA	ORF	D	D
91	OAKLAND CA	OAK	D	D
92	OKLAHOMA CITY OK	OKC	D	D
93	OMAHA NE	OMA	D	D
94	ONTARIO CA	ONT	D	D
95	ORANGE COUNTY AIRPORT	SNA	D	Origin Only
96	ORLANDO FL	MCO	A	D
97	PALM BEACH FL	PBI	D	D (T-F) /G (Sat)
98	PASCO WA	PSC	D	Origin Only
99	PEORIA MPO IL	PIA	D	D
100	PHILADELPHIA PA	PHL	D	D
101	PHOENIX AZ	PHX	D	D
102	PITTSBURGH PA	PIT	D/E	D
103	POCATELLO ID	PIH	D	Origin Only
104	PORTLAND ME	PWM	D	D
105	PORTLAND OR	PDX	D	D
106	PRESQUE ISLE ME	PQI	D	D
107	PROVIDENCE RI	PVD	D	D
108	RALEIGH NC	RDU	D	D
109	RAPID CITY SD	RAP	D	Origin Only
110	RENO NV	RNO	D	D
111	RICHMOND VA	RIC	D	D
112	ROANOKE VA	ROA	D	D
113	ROCHESTER MN	RST	D	D
114	ROCHESTER NY	ROC	D	D
115	ROCK SPRINGS WY	RKS	D	Origin Only
116	SACRAMENTO CA	SMF	D	D
117	SALT LAKE CITY UT	SLC	E	F
118	SAN ANTONIO TX	SAT	D	D
119	SAN DIEGO CA	SAN	D	D
120	SAN FRANCISCO CA	SFO	E/D	F/D
121	SAN JOSE CA	SJC	D	D
122	SAN JUAN PR	SJU	D	D
123	SAVANNAH P&DF GA	SAV	D	D
124	SEATTLE WA	SEA	D	D
125	SHREVEPORT LA	SHV	D	D
126	SIOUX CITY IA	SUX	D	Origin Only
127	SOUIX FALLS SD	FSD	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
128	SOUTH BEND IN P&DC	SBN	D	D
129	SPOKANE WA	GEG	D	D
130	SPRINGFIELD MO	SGF	D	D
131	ST CLOUD MN	STC	D	Origin Only
132	ST LOUIS MO	STL	D	D
133	STEWART NY 125	SWF	D	D
134	SYRACUSE NY	SYR	D	D
135	TALLAHASSEE P&DF FL	TLH	D	D
136	TAMPA FL	TPA	A	D
137	TRAVERSE CITY MI	TVC	D	D
138	TUCSON AZ	TUS	D	D
139	TULSA OK	TUL	D	D
140	TWIN FALLS ID	TWF	D	Origin Only
141	WATERLOO IA	ALO	D	Origin Only
142	WAUSAU WI	CWA	D	D
143	WENATCHEE WA	EAT	D	Origin Only
144	WICHITA KS	ICT	D	D
145	YAKIMA WA	YKM	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

			Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A	Postal Service Builds ULDs	F	Aviation Supplier Unloads ULD into MTE
B	Postal Service Transports ULDs to Ramp	G	Aviation Supplier Builds ULDs
C	Postal Service Tenders in MTE	H	Aviation Supplier Delivers ULDs to Ramp
D	Postal Service Picks Up MTE	I	Aviation Supplier Picks Up ULDs from Plant
E	Postal Service Deck Loads	J	Aviation Supplier Delivers ULDs to Plant
		K	Aviation Supplier Deck Loads

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	E	K
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	E	K
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	E	K
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	E	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	E	Origin Only
75	SPRINGFIELD IL	SPI	E	Origin Only
76	ST. LOUIS MO	STL	E	K
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

Option 1

Attachment 4

Operating Plan, Night Network

April 22, 2013

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
1	ALBANY NY	ALB	[ * ]	[ * ]	[ * ]
2	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
3	ALLENTOWN PA	ABE	[ * ]	[ * ]	[ * ]
4	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
5	APPLETON WI	ATW	[ * ]	[ * ]	[ * ]
6	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
7	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
8	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
9	BANGOR ME	BGR	[ * ]	[ * ]	[ * ]
10	BATON ROUGE LA	BTR	[ * ]	[ * ]	[ * ]
11	BEND OR	RDM	[ * ]	[ * ]	[ * ]
12	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
13	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
14	BISMARK ND	BIS	[ * ]	[ * ]	[ * ]
15	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
16	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
17	BOZEMAN MT	BZN	[ * ]	[ * ]	[ * ]
18	BRISTOL TN / VA	TRI	[ * ]	[ * ]	[ * ]
19	BUFFALO NY	BUF	[ * ]	[ * ]	[ * ]
20	BURBANK CA	BUR	[ * ]	[ * ]	[ * ]
21	BURLINGTON VT	BTV	[ * ]	[ * ]	[ * ]
22	BUTTE MT	BTM	[ * ]	[ * ]	[ * ]
23	CASPER WY	CPR	[ * ]	[ * ]	[ * ]
24	CEDAR RAPIDS IA	CID	[ * ]	[ * ]	[ * ]
25	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
26	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
27	CHATTANOOGA TN	CHA	[ * ]	[ * ]	[ * ]
28	CHEYENNE WY	CYS	[ * ]	[ * ]	[ * ]
29	CHICAGO IL (O’Hare)	ORD	[ * ]	[ * ]	[ * ]
30	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
31	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
32	COLORADO SPRINGS CO	COS	[ * ]	[ * ]	[ * ]
33	COLUMBIA SC	CAE	[ * ]	[ * ]	[ * ]
34	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
35	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
36	DAYTON OH	DAY	[ * ]	[ * ]	[ * ]
37	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
38	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
39	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
40	DULLES VA	IAD	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
41	DULUTH MN	DLH	[ * ]	[ * ]	[ * ]
42	DURANGO CO	DRO	[ * ]	[ * ]	[ * ]
43	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
44	ELMIRA NY	ELM	[ * ]	[ * ]	[ * ]
45	EUGENE OR	EUG	[ * ]	[ * ]	[ * ]
46	FAIRBANKS AK	FAI	[ * ]	[ * ]	[ * ]
47	FLINT MI	FNT	[ * ]	[ * ]	[ * ]
48	FORT MYERS FL	RSW	[ * ]	[ * ]	[ * ]
49	FORT WAYNE IN	FWA	[ * ]	[ * ]	[ * ]
50	FRESNO CA	FAT	[ * ]	[ * ]	[ * ]
51	FT LAUDERDALE FL	FLL	[ * ]	[ * ]	[ * ]
52	GRAND FORKS ND	GFK	[ * ]	[ * ]	[ * ]
53	GRAND JUNCTION CO	GJT	[ * ]	[ * ]	[ * ]
54	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
55	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
56	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
57	GREENVILLE SC	GSP	[ * ]	[ * ]	[ * ]
58	HARRISBURG PA	MDT	[ * ]	[ * ]	[ * ]
59	HARTFORD CT	BDL	[ * ]	[ * ]	[ * ]
60	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
61	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
62	HUNTSVILLE AL	HSV	[ * ]	[ * ]	[ * ]
63	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
64	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
65	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
66	JFK NY	JFK	[ * ]	[ * ]	[ * ]
67	KALISPELL MT	FCA	[ * ]	[ * ]	[ * ]
68	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
69	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
70	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
71	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
72	LONG BEACH CA	LGB	[ * ]	[ * ]	[ * ]
73	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
74	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
75	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
76	MADISON WI	MSN	[ * ]	[ * ]	[ * ]
77	MANCHESTER NH	MHT	[ * ]	[ * ]	[ * ]
78	MCALLEN TX	MFE	[ * ]	[ * ]	[ * ]
79	MEDFORD OR	MFR	[ * ]	[ * ]	[ * ]
80	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
81	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
82	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
83	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
84	MINOT ND	MOT	[ * ]	[ * ]	[ * ]
85	MISSOULA MT	MSO	[ * ]	[ * ]	[ * ]
86	MOBILE AL	MOB	[ * ]	[ * ]	[ * ]
87	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
88	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
89	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
90	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
91	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
92	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
93	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
94	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
95	ORANGE COUNTY AIRPORT	SNA	[ * ]	[ * ]	[ * ]
96	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
97	PALM BEACH FL	PBI	[ * ]	[ * ]	[ * ]
98	PASCO WA	PSC	[ * ]	[ * ]	[ * ]
99	PEORIA IL	PIA	[ * ]	[ * ]	[ * ]
100	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
101	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
102	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
103	POCATELLO ID	PIH	[ * ]	[ * ]	[ * ]
104	PORTLAND ME	PWM	[ * ]	[ * ]	[ * ]
105	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
106	PRESQUE ISLE ME	PQI	[ * ]	[ * ]	[ * ]
107	PROVIDENCE RI	PVD	[ * ]	[ * ]	[ * ]
108	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
109	RAPID CITY SD	RAP	[ * ]	[ * ]	[ * ]
110	RENO NV	RNO	[ * ]	[ * ]	[ * ]
111	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
112	ROANOKE VA	ROA	[ * ]	[ * ]	[ * ]
113	ROCHESTER MN	RST	[ * ]	[ * ]	[ * ]
114	ROCHESTER NY	ROC	[ * ]	[ * ]	[ * ]
115	ROCK SPRINGS WY	RKS	[ * ]	[ * ]	[ * ]
116	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
117	SALT LAKE CITY UT	SLC	[ * ]	[ * ]	[ * ]
118	SAN ANTONIO TX	SAT	[ * ]	[ * ]	[ * ]
119	SAN DIEGO CA	SAN	[ * ]	[ * ]	[ * ]
120	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
121	SAN JOSE CA	SJC	[ * ]	[ * ]	[ * ]
122	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
123	SAVANNAH GA	SAV	[ * ]	[ * ]	[ * ]
124	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
125	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
126	SIOUX CITY IA	SUX	[ * ]	[ * ]	[ * ]
127	SOUIX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
128	SOUTH BEND IN	SBN	[ * ]	[ * ]	[ * ]
129	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
130	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
131	ST CLOUD MN	STC	[ * ]	[ * ]	[ * ]
132	ST LOUIS MO	STL	[ * ]	[ * ]	[ * ]
133	STEWART NY	SWF	[ * ]	[ * ]	[ * ]
134	SYRACUSE NY	SYR	[ * ]	[ * ]	[ * ]
135	TALLAHASSEE FL	TLH	[ * ]	[ * ]	[ * ]
136	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
137	TRAVERSE CITY MI	TVC	[ * ]	[ * ]	[ * ]
138	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
139	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
140	TWIN FALLS ID	TWF	[ * ]	[ * ]	[ * ]
141	WATERLOO IA	ALO	[ * ]	[ * ]	[ * ]
142	WAUSAU WI	CWA	[ * ]	[ * ]	[ * ]
143	WENATCHEE WA	EAT	[ * ]	[ * ]	[ * ]
144	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]
145	YAKIMA WA	YKM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

Option 1

Attachment 4

Operating Plan, Night Network

April 22, 2013

Tender and Delivery Process Codes

A Postal Service Builds ULDs

B Postal Service Transports ULDs to Ramp

C Postal Service Transports Loose Volume to and from Aviation Supplier Location other than Airport Ramp

D Postal Service Transports Loose Volumes to and from Aviation Supplier Ramp

E Aviation Supplier Picks Up ULDs

F Aviation Supplier Delivers in ULDs

G Aviation Supplier Delivers Volume Loose to a Postal Service Designated Location

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBANY NY	ALB	D	D
2	ALBURQUERQUE NM	ABQ	D	D
3	ALLENTOWN PA	ABE	D	Origin Only
4	ANCHORAGE AK	ANC	D	D
5	APPLETON WI	ATW	D	D
6	ATLANTA GA	ATL	E	D
7	AUSTIN (Air Stop) TX	AUS	D	D
8	BALTIMORE MD	BWI	D	D
9	BANGOR ME	BGR	D	D
10	BATON ROUGE LA	BTR	D	D
11	BEND OR	RDM	D	Origin Only
12	BILLINGS MT	BIL	D	D
13	BIRMINGHAM AL	BHM	D	D
14	BISMARK ND	BIS	D	Origin Only
15	BOISE ID	BOI	E	F
16	BOSTON MA	BOS	D	D
17	BOZEMAN MT	BZN	D	Origin Only
18	BRISTOL TN / VA	TRI	D	Origin Only
19	BUFFALO NY	BUF	D	D
20	BURBANK CA	BUR	D	D
21	BURLINGTON VT	BTV	D	D
22	BUTTE MT	BTM	D	Origin Only
23	CASPER WY	CPR	D	Origin Only
24	CEDAR RAPIDS IA	CID	D	D
25	CHARLESTON WV	CRW	D	D
26	CHARLOTTE NC	CLT	D	D
27	CHATTANOOGA P&DC TN	CHA	D	D
28	CHEYENNE WY	CYS	D	Origin Only
29	CHICAGO IL	ORD	D	D
30	CINCINNATI OH	CVG	D	D
31	CLEVELAND OH	CLE	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
32	COLORADO SPRINGS CO	COS	D	D
33	COLUMBIA SC	CAE	D	D
34	COLUMBUS OH	CMH	D	D
35	DALLAS TX	DFW	D	D
36	DAYTON OH	DAY	D	D
37	DENVER CO	DEN	D	D
38	DES MOINES IA	DSM	D	D
39	DETROIT MI	DTW	D	D
40	DULLES VA	IAD	D	D
41	DULUTH MN	DLH	D	D
42	DURANGO CO	DRO	D	Origin Only
43	EL PASO TX	ELP	D	D
44	ELM NY	ELM	D	D
45	EUGENE OR	EUG	D	Origin Only
46	FAIRBANKS AK	FAI	D	Origin Only
47	FLINT P&DC MI	FNT	D	D
48	FORT MYERS P&DC FL	RSW	E	F
49	FORT WAYNE IN P&DC	FWA	D	D
50	FRESNO CA	FAT	D	D
51	FT LAUDERDALE FL	FLL	D	F
52	GRAND FORKS ND	GFK	D	D
53	GRAND JUNCTION CO	GJT	D	Origin Only
54	GRAND RAPIDS MI	GRR	D	D
55	GREAT FALLS MT	GTF	D	D
56	GREENSBORO NC	GSO	D	D
57	GREENVILLE SC	GSP	D	D
58	HARRISBURG PA	MDT	D	D
59	HARTFORD CT	BDL	D	D
60	HONOLULU HI	HNL	D	D
61	HOUSTON TX	IAH	D	D
62	HUNTSVILLE P&DF AL	HSV	D	D
63	INDIANAPOLIS IN	IND	D	D
64	JACKSON MS	JAN	C	C
65	JACKSONVILLE FL	JAX	E	F
66	JFK NY	JFK	BD	D
67	KALISPELL MT	FCA	D	Origin Only
68	KANSAS CITY MO	MCI	D	D
69	KNOXVILLE TN	TYS	D	D
70	LAS VEGAS NV	LAS	D	D
71	LITTLE ROCK AR	LIT	C	C
72	LONG BEACH CA	LGB	D	Origin Only
73	LOS ANGELES CA	LAX	D	D
74	LOUISVILLE KY	SDF	D	D
75	LUBBOCK TX	LBB	D	D
76	MADISON WI	MSN	D	D
77	MANCHESTER NH	MHT	D	D
78	MCALLEN TX	MFE	D	Origin Only
79	MEDFORD OR	MFR	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
80	MEMPHIS TN	MEM	D	D
81	MIAMI FL	MIA	D	F/D
82	MILWAUKEE WI	MKE	D	D
83	MINNEAPOLIS MN	MSP	D	D
84	MINOT ND	MOT	D	Origin Only
85	MISSOULA MT	MSO	D	Origin Only
86	MOBILE AL	MOB	D	D
87	NASHVILLE TN	BNA	D	D
88	NEW ORLEANS LA	MSY	D	D
89	NEWARK NJ	EWR	E	F
90	NORFOLK VA	ORF	D	D
91	OAKLAND CA	OAK	D	D
92	OKLAHOMA CITY OK	OKC	D	D
93	OMAHA NE	OMA	D	D
94	ONTARIO CA	ONT	D	D
95	ORANGE COUNTY AIRPORT	SNA	D	Origin Only
96	ORLANDO FL	MCO	A	D
97	PALM BEACH FL	PBI	D	D (T-F) /G (Sat)
98	PASCO WA	PSC	D	Origin Only
99	PEORIA MPO IL	PIA	D	D
100	PHILADELPHIA PA	PHL	D	D
101	PHOENIX AZ	PHX	D	D
102	PITTSBURGH PA	PIT	D/E	D
103	POCATELLO ID	PIH	D	Origin Only
104	PORTLAND ME	PWM	D	D
105	PORTLAND OR	PDX	D	D
106	PRESQUE ISLE ME	PQI	D	D
107	PROVIDENCE RI	PVD	D	D
108	RALEIGH NC	RDU	D	D
109	RAPID CITY SD	RAP	D	Origin Only
110	RENO NV	RNO	D	D
111	RICHMOND VA	RIC	D	D
112	ROANOKE VA	ROA	D	D
113	ROCHESTER MN	RST	D	D
114	ROCHESTER NY	ROC	D	D
115	ROCK SPRINGS WY	RKS	D	Origin Only
116	SACRAMENTO CA	SMF	D	D
117	SALT LAKE CITY UT	SLC	E	F
118	SAN ANTONIO TX	SAT	D	D
119	SAN DIEGO CA	SAN	D	D
120	SAN FRANCISCO CA	SFO	E/D	F/D
121	SAN JOSE CA	SJC	D	D
122	SAN JUAN PR	SJU	D	D
123	SAVANNAH P&DF GA	SAV	D	D
124	SEATTLE WA	SEA	D	D
125	SHREVEPORT LA	SHV	D	D
126	SIOUX CITY IA	SUX	D	Origin Only
127	SOUIX FALLS SD	FSD	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
128	SOUTH BEND IN P&DC	SBN	D	D
129	SPOKANE WA	GEG	D	D
130	SPRINGFIELD MO	SGF	D	D
131	ST CLOUD MN	STC	D	Origin Only
132	ST LOUIS MO	STL	D	D
133	STEWART NY 125	SWF	D	D
134	SYRACUSE NY	SYR	D	D
135	TALLAHASSEE P&DF FL	TLH	D	D
136	TAMPA FL	TPA	A	D
137	TRAVERSE CITY MI	TVC	D	D
138	TUCSON AZ	TUS	D	D
139	TULSA OK	TUL	D	D
140	TWIN FALLS ID	TWF	D	Origin Only
141	WATERLOO IA	ALO	D	Origin Only
142	WAUSAU WI	CWA	D	D
143	WENATCHEE WA	EAT	D	Origin Only
144	WICHITA KS	ICT	D	D
145	YAKIMA WA	YKM	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

Option 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

Option 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday*	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday*	Required Delivery Time to Postal Service Sunday
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR**	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

** 75% of the volume capture will be delivered on Day Zero with the balance delivered on Day +1

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

Option 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A      Postal Service Builds ULDs	F       Aviation Supplier Unloads ULD into MTE
B      Postal Service Transports ULDs to Ramp	G      Aviation Supplier Builds ULDs
C      Postal Service Tenders in MTE	H      Aviation Supplier Delivers ULDs to Ramp
D      Postal Service Picks Up MTE	I        Aviation Supplier Picks Up ULDs from Plant
E       Postal Service Deck Loads	J        Aviation Supplier Delivers ULDs to Plant

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	A , B	H
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	A , B	H
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	A , B	H
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	A , B	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	A , B	Origin Only
75	SPRINGFIELD IL	SPI	A , B	Origin Only
76	ST. LOUIS MO	STL	A , B	H
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

Option 1 and 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
39	MIAMI FL	MIA	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

Option 1 and 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR**	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

** 75% of the volume capture will be delivered on Day Zero with the balance delivered on Day +1

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

Option 1 and 2

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A	Postal Service Builds ULDs	F	Aviation Supplier Unloads ULD into MTE
B	Postal Service Transports ULDs to Ramp	G	Aviation Supplier Builds ULDs
C	Postal Service Tenders in MTE	H	Aviation Supplier Delivers ULDs to Ramp
D	Postal Service Picks Up MTE	I	Aviation Supplier Picks Up ULDs from Plant
E	Postal Service Deck Loads	J	Aviation Supplier Delivers ULDs to Plant
		K	Aviation Supplier Deck Loads

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	E	K
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	E	K
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 3: Operating Plan, Day Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	E	K
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	E	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	E	Origin Only
75	SPRINGFIELD IL	SPI	E	Origin Only
76	ST. LOUIS MO	STL	E	K
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

Option 1 and 2

Attachment 4

Operating Plan, Night Network

April 22, 2013

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
1	ALBANY NY	ALB	[ * ]	[ * ]	[ * ]
2	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
3	ALLENTOWN PA	ABE	[ * ]	[ * ]	[ * ]
4	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
5	APPLETON WI	ATW	[ * ]	[ * ]	[ * ]
6	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
7	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
8	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
9	BANGOR ME	BGR	[ * ]	[ * ]	[ * ]
10	BATON ROUGE LA	BTR	[ * ]	[ * ]	[ * ]
11	BEND OR	RDM	[ * ]	[ * ]	[ * ]
12	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
13	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
14	BISMARK ND	BIS	[ * ]	[ * ]	[ * ]
15	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
16	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
17	BOZEMAN MT	BZN	[ * ]	[ * ]	[ * ]
18	BRISTOL TN / VA	TRI	[ * ]	[ * ]	[ * ]
19	BUFFALO NY	BUF	[ * ]	[ * ]	[ * ]
20	BURBANK CA	BUR	[ * ]	[ * ]	[ * ]
21	BURLINGTON VT	BTV	[ * ]	[ * ]	[ * ]
22	BUTTE MT	BTM	[ * ]	[ * ]	[ * ]
23	CASPER WY	CPR	[ * ]	[ * ]	[ * ]
24	CEDAR RAPIDS IA	CID	[ * ]	[ * ]	[ * ]
25	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
26	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
27	CHATTANOOGA TN	CHA	[ * ]	[ * ]	[ * ]
28	CHEYENNE WY	CYS	[ * ]	[ * ]	[ * ]
29	CHICAGO IL (O’Hare)	ORD	[ * ]	[ * ]	[ * ]
30	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
31	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
32	COLORADO SPRINGS CO	COS	[ * ]	[ * ]	[ * ]
33	COLUMBIA SC	CAE	[ * ]	[ * ]	[ * ]
34	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
35	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
36	DAYTON OH	DAY	[ * ]	[ * ]	[ * ]
37	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
38	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
39	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
40	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
41	DULUTH MN	DLH	[ * ]	[ * ]	[ * ]
42	DURANGO CO	DRO	[ * ]	[ * ]	[ * ]
43	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
44	ELMIRA NY	ELM	[ * ]	[ * ]	[ * ]
45	EUGENE OR	EUG	[ * ]	[ * ]	[ * ]
46	FAIRBANKS AK	FAI	[ * ]	[ * ]	[ * ]
47	FLINT MI	FNT	[ * ]	[ * ]	[ * ]
48	FORT MYERS FL	RSW	[ * ]	[ * ]	[ * ]
49	FORT WAYNE IN	FWA	[ * ]	[ * ]	[ * ]
50	FRESNO CA	FAT	[ * ]	[ * ]	[ * ]
51	FT LAUDERDALE FL	FLL	[ * ]	[ * ]	[ * ]
52	GRAND FORKS ND	GFK	[ * ]	[ * ]	[ * ]
53	GRAND JUNCTION CO	GJT	[ * ]	[ * ]	[ * ]
54	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
55	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
56	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
57	GREENVILLE SC	GSP	[ * ]	[ * ]	[ * ]
58	HARRISBURG PA	MDT	[ * ]	[ * ]	[ * ]
59	HARTFORD CT	BDL	[ * ]	[ * ]	[ * ]
60	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
61	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
62	HUNTSVILLE AL	HSV	[ * ]	[ * ]	[ * ]
63	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
64	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
65	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
66	JFK NY	JFK	[ * ]	[ * ]	[ * ]
67	KALISPELL MT	FCA	[ * ]	[ * ]	[ * ]
68	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
69	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
70	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
71	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
72	LONG BEACH CA	LGB	[ * ]	[ * ]	[ * ]
73	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
74	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
75	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
76	MADISON WI	MSN	[ * ]	[ * ]	[ * ]
77	MANCHESTER NH	MHT	[ * ]	[ * ]	[ * ]
78	MCALLEN TX	MFE	[ * ]	[ * ]	[ * ]
79	MEDFORD OR	MFR	[ * ]	[ * ]	[ * ]
80	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
81	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
82	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
83	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
84	MINOT ND	MOT	[ * ]	[ * ]	[ * ]
85	MISSOULA MT	MSO	[ * ]	[ * ]	[ * ]
86	MOBILE AL	MOB	[ * ]	[ * ]	[ * ]
87	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
88	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
89	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
90	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
91	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
92	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
93	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
94	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
95	ORANGE CNTY AIRPORT	SNA	[ * ]	[ * ]	[ * ]
96	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
97	PALM BEACH FL	PBI	[ * ]	[ * ]	[ * ]
98	PASCO WA	PSC	[ * ]	[ * ]	[ * ]
99	PEORIA IL	PIA	[ * ]	[ * ]	[ * ]
100	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
101	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
102	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
103	POCATELLO ID	PIH	[ * ]	[ * ]	[ * ]
104	PORTLAND ME	PWM	[ * ]	[ * ]	[ * ]
105	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
106	PRESQUE ISLE ME	PQI	[ * ]	[ * ]	[ * ]
107	PROVIDENCE RI	PVD	[ * ]	[ * ]	[ * ]
108	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
109	RAPID CITY SD	RAP	[ * ]	[ * ]	[ * ]
110	RENO NV	RNO	[ * ]	[ * ]	[ * ]
111	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
112	ROANOKE VA	ROA	[ * ]	[ * ]	[ * ]
113	ROCHESTER MN	RST	[ * ]	[ * ]	[ * ]
114	ROCHESTER NY	ROC	[ * ]	[ * ]	[ * ]
115	ROCK SPRINGS WY	RKS	[ * ]	[ * ]	[ * ]
116	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
117	SALT LAKE CITY UT	SLC	[ * ]	[ * ]	[ * ]
118	SAN ANTONIO TX	SAT	[ * ]	[ * ]	[ * ]
119	SAN DIEGO CA	SAN	[ * ]	[ * ]	[ * ]
120	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
121	SAN JOSE CA	SJC	[ * ]	[ * ]	[ * ]
122	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
123	SAVANNAH GA	SAV	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
124	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
125	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
126	SIOUX CITY IA	SUX	[ * ]	[ * ]	[ * ]
127	SOUIX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
128	SOUTH BEND IN	SBN	[ * ]	[ * ]	[ * ]
129	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
130	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
131	ST CLOUD MN	STC	[ * ]	[ * ]	[ * ]
132	ST LOUIS MO	STL	[ * ]	[ * ]	[ * ]
133	STEWART NY	SWF	[ * ]	[ * ]	[ * ]
134	SYRACUSE NY	SYR	[ * ]	[ * ]	[ * ]
135	TALLAHASSEE FL	TLH	[ * ]	[ * ]	[ * ]
136	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
137	TRAVERSE CITY MI	TVC	[ * ]	[ * ]	[ * ]
138	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
139	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
140	TWIN FALLS ID	TWF	[ * ]	[ * ]	[ * ]
141	WATERLOO IA	ALO	[ * ]	[ * ]	[ * ]
142	WAUSAU WI	CWA	[ * ]	[ * ]	[ * ]
143	WENATCHEE WA	EAT	[ * ]	[ * ]	[ * ]
144	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]
145	YAKIMA WA	YKM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

Option 1 and 2

Attachment 4

Operating Plan, Night Network

April 22, 2013

Tender and Delivery Process Codes

A Postal Service Builds ULDs

B Postal Service Transports ULDs to Ramp

C Postal Service Transports Loose Volume to and from Aviation Supplier Location other than Airport Ramp

D Postal Service Transports Loose Volumes to and from Aviation Supplier Ramp

E Aviation Supplier Picks Up ULDs

F Aviation Supplier Delivers in ULDs

G Aviation Supplier Delivers Volume Loose to a Postal Service Designated Location

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBANY NY	ALB	D	D
2	ALBURQUERQUE NM	ABQ	D	D
3	ALLENTOWN PA	ABE	D	Origin Only
4	ANCHORAGE AK	ANC	D	D
5	APPLETON WI	ATW	D	D
6	ATLANTA GA	ATL	E	D
7	AUSTIN (Air Stop) TX	AUS	D	D
8	BALTIMORE MD	BWI	D	D
9	BANGOR ME	BGR	D	D
10	BATON ROUGE LA	BTR	D	D
11	BEND OR	RDM	D	Origin Only
12	BILLINGS MT	BIL	D	D
13	BIRMINGHAM AL	BHM	D	D
14	BISMARK ND	BIS	D	Origin Only
15	BOISE ID	BOI	E	F
16	BOSTON MA	BOS	D	D
17	BOZEMAN MT	BZN	D	Origin Only
18	BRISTOL TN / VA	TRI	D	Origin Only
19	BUFFALO NY	BUF	D	D
20	BURBANK CA	BUR	D	D
21	BURLINGTON VT	BTV	D	D
22	BUTTE MT	BTM	D	Origin Only
23	CASPER WY	CPR	D	Origin Only
24	CEDAR RAPIDS IA	CID	D	D
25	CHARLESTON WV	CRW	D	D
26	CHARLOTTE NC	CLT	D	D
27	CHATTANOOGA P&DC TN	CHA	D	D
28	CHEYENNE WY	CYS	D	Origin Only
29	CHICAGO IL	ORD	D	D
30	CINCINNATI OH	CVG	D	D
31	CLEVELAND OH	CLE	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
32	COLORADO SPRINGS CO	COS	D	D
33	COLUMBIA SC	CAE	D	D
34	COLUMBUS OH	CMH	D	D
35	DALLAS TX	DFW	D	D
36	DAYTON OH	DAY	D	D
37	DENVER CO	DEN	D	D
38	DES MOINES IA	DSM	D	D
39	DETROIT MI	DTW	D	D
40	DULLES VA	IAD	D	D
41	DULUTH MN	DLH	D	D
42	DURANGO CO	DRO	D	Origin Only
43	EL PASO TX	ELP	D	D
44	ELM NY	ELM	D	D
45	EUGENE OR	EUG	D	Origin Only
46	FAIRBANKS AK	FAI	D	Origin Only
47	FLINT P&DC MI	FNT	D	D
48	FORT MYERS P&DC FL	RSW	E	F
49	FORT WAYNE IN P&DC	FWA	D	D
50	FRESNO CA	FAT	D	D
51	FT LAUDERDALE FL	FLL	D	F
52	GRAND FORKS ND	GFK	D	D
53	GRAND JUNCTION CO	GJT	D	Origin Only
54	GRAND RAPIDS MI	GRR	D	D
55	GREAT FALLS MT	GTF	D	D
56	GREENSBORO NC	GSO	D	D
57	GREENVILLE SC	GSP	D	D
58	HARRISBURG PA	MDT	D	D
59	HARTFORD CT	BDL	D	D
60	HONOLULU HI	HNL	D	D
61	HOUSTON TX	IAH	D	D
62	HUNTSVILLE P&DF AL	HSV	D	D
63	INDIANAPOLIS IN	IND	D	D
64	JACKSON MS	JAN	C	C
65	JACKSONVILLE FL	JAX	E	F
66	JFK NY	JFK	BD	D
67	KALISPELL MT	FCA	D	Origin Only
68	KANSAS CITY MO	MCI	D	D
69	KNOXVILLE TN	TYS	D	D
70	LAS VEGAS NV	LAS	D	D
71	LITTLE ROCK AR	LIT	C	C
72	LONG BEACH CA	LGB	D	Origin Only
73	LOS ANGELES CA	LAX	D	D
74	LOUISVILLE KY	SDF	D	D
75	LUBBOCK TX	LBB	D	D
76	MADISON WI	MSN	D	D
77	MANCHESTER NH	MHT	D	D
78	MCALLEN TX	MFE	D	Origin Only
79	MEDFORD OR	MFR	D	Origin Only

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
80	MEMPHIS TN	MEM	D	D
81	MIAMI FL	MIA	D	F/D
82	MILWAUKEE WI	MKE	D	D
83	MINNEAPOLIS MN	MSP	D	D
84	MINOT ND	MOT	D	Origin Only
85	MISSOULA MT	MSO	D	Origin Only
86	MOBILE AL	MOB	D	D
87	NASHVILLE TN	BNA	D	D
88	NEW ORLEANS LA	MSY	D	D
89	NEWARK NJ	EWR	E	F
90	NORFOLK VA	ORF	D	D
91	OAKLAND CA	OAK	D	D
92	OKLAHOMA CITY OK	OKC	D	D
93	OMAHA NE	OMA	D	D
94	ONTARIO CA	ONT	D	D
95	ORANGE COUNTY AIRPORT	SNA	D	Origin Only
96	ORLANDO FL	MCO	A	D
97	PALM BEACH FL	PBI	D	D (T-F) / G (Sat)
98	PASCO WA	PSC	D	Origin Only
99	PEORIA MPO IL	PIA	D	D
100	PHILADELPHIA PA	PHL	D	D
101	PHOENIX AZ	PHX	D	D
102	PITTSBURGH PA	PIT	D/E	D
103	POCATELLO ID	PIH	D	Origin Only
104	PORTLAND ME	PWM	D	D
105	PORTLAND OR	PDX	D	D
106	PRESQUE ISLE ME	PQI	D	D
107	PROVIDENCE RI	PVD	D	D
108	RALEIGH NC	RDU	D	D
109	RAPID CITY SD	RAP	D	Origin Only
110	RENO NV	RNO	D	D
111	RICHMOND VA	RIC	D	D
112	ROANOKE VA	ROA	D	D
113	ROCHESTER MN	RST	D	D
114	ROCHESTER NY	ROC	D	D
115	ROCK SPRINGS WY	RKS	D	Origin Only
116	SACRAMENTO CA	SMF	D	D
117	SALT LAKE CITY UT	SLC	E	F
118	SAN ANTONIO TX	SAT	D	D
119	SAN DIEGO CA	SAN	D	D
120	SAN FRANCISCO CA	SFO	E/D	F/D
121	SAN JOSE CA	SJC	D	D
122	SAN JUAN PR	SJU	D	D
123	SAVANNAH P&DF GA	SAV	D	D
124	SEATTLE WA	SEA	D	D
125	SHREVEPORT LA	SHV	D	D
126	SIOUX CITY IA	SUX	D	Origin Only
127	SOUIX FALLS SD	FSD	D	D

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Option 1 and 2

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
128	SOUTH BEND IN P&DC	SBN	D	D
129	SPOKANE WA	GEG	D	D
130	SPRINGFIELD MO	SGF	D	D
131	ST CLOUD MN	STC	D	Origin Only
132	ST LOUIS MO	STL	D	D
133	STEWART NY 125	SWF	D	D
134	SYRACUSE NY	SYR	D	D
135	TALLAHASSEE P&DF FL	TLH	D	D
136	TAMPA FL	TPA	A	D
137	TRAVERSE CITY MI	TVC	D	D
138	TUCSON AZ	TUS	D	D
139	TULSA OK	TUL	D	D
140	TWIN FALLS ID	TWF	D	Origin Only
141	WATERLOO IA	ALO	D	Origin Only
142	WAUSAU WI	CWA	D	D
143	WENATCHEE WA	EAT	D	Origin Only
144	WICHITA KS	ICT	D	D
145	YAKIMA WA	YKM	D	Origin Only

United States Postal Service

Air Cargo Network

Volume 1

Solicitation Number: 5A-12-A-0024

November 6, 2012

Issued By:

Air Transportation CMC

Transportation Portfolio

Supply Management

475 L’Enfant Plaza SW

Room 1P650

Washington DC 20260-0650

This proposal includes data that may not be duplicated, used, or disclosed outside the Postal Service – in whole or in part – for any purpose other than to evaluate this proposal. If, however, a contract is awarded to this offeror as a result of – or in connection with – the submission of such data, the Postal Service will have the right to duplicate, use, or disclose the data to the extent provided in the resulting contract. This restriction does not limit the Postal Service’s right to use information contained in the data if it is obtained from another source without restriction. The data subject to this restriction are contained in all sheets as marked.

United States Postal Service Air Cargo Network Volume 1 November 6, 2012

Table of Contents

1.0	SUPPLIER ELIGIBILITY	1
1.1	14 CFR PART 121 AIR CARRIER CERTIFICATION	1
1.2	FLIGHT ORIGINS AND DESTINATIONS (ATTACHMENTS 2, 3, 4)	3
1.3	TRANSPORT OF LIVE ANIMALS (DMM 601.9.3)	3
1.4	TRANSPORT OF HAZARDOUS MATERIAL (DMM 601.10.0)	3
1.5	TRANSPORT OF PERISHABLES (DMM 601.9.0)	3
1.6	SCANNING AND DATA EXCHANGE (ATTACHMENT 7)	3
1.7	ELIGIBILITY STATUS	4
2.0	SUPPLIER CAPABILITY	5
2.1	ABILITY TO MEET REQUIRED DELIVERY SCHEDULE	6
2.2	AIR FLEET EQUIPMENT DESCRIPTION	7
2.2.1	Age of Air Fleet	8
2.2.2	Fuel Efficiency of Air Fleet	8
2.2.3	Aircraft Modernization Plan	8
2.3	GROUND HANDLING AND SORTING OPERATIONS	9
2.4	INTEGRITY AND BUSINESS ETHICS RECORD	10
2.5	ORGANIZATION	11
2.5.1	Organization Structure	11
2.5.2	Experience	12
2.5.3	Accounting and Operational Controls	12
2.5.4	Technical Skills	12
2.5.5	Production and Property Controls	13
2.6	FINANCIAL CONDITION	13
3.0	MANAGEMENT PLAN	14
3.1	DAILY OPERATIONS MANAGEMENT PLAN	14
3.1.1	Late Arriving Aircraft and Trucks (Originating and Destinating)	14
3.1.2	Early Arriving Aircraft and Trucks	14
3.1.3	Mail Arriving Out of Normal Sequence	14
3.1.4	Trucks Not On-Site for Dispatch	14
3.1.5	Inclement Weather During Operations	15
3.1.6	Protection of Mail During Inclement Weather	15
3.1.7	Labor Actions	15
3.1.8	Inadequate Staffing	15
3.1.9	Inability to Complete All Loading	16
3.1.10	Overflow Mail	16
3.1.11	Less Mail Transportation Equipment (MTE) Than Required	16
3.1.12	Damaged/Non Airworthy Containers	16
3.1.13	Damaged Surface Containers	16
3.1.14	Damaged or Non-Labeled Mail	16

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3.1.15	Plan and Schedule Changes	17
3.1.16	Loose Load Mail	17
3.1.17	HAZMAT – Acceptable and Non-acceptable Pieces	17
3.1.18	Handling and Staging of Live Animals	18
3.1.19	Assisting Aviation Supplier in Container Positioning	18
3.1.20	Assisting Aviation Supplier in Maintaining Open Lines of Communication	18
3.1.21	Supplies Maintenance	18
3.1.22	Power Losses	18
3.1.23	Natural Disasters	18
3.1.24	Equipment Breakdowns	18
3.1.25	Airport Closings	19
3.1.26	Air Traffic Control (ATC) Impact Mitigation Plan	19
3.1.27	Not Listed But of Equal Importance – Other Factors Impacting FedEx	19
3.2	KEY PERSONNEL	19
3.3	TRAINING OF PERSONNEL	19
3.4	UPDATES TO MANAGEMENT PLAN	19
4.0	PAST PERFORMANCE	20
4.1	RECORD OF CONFORMANCE TO CONTRACT REQUIREMENTS	21
4.2	RECORD OF FEDEX ON-TIME PERFORMANCE	21
4.3	ESTABLISHED PRODUCTIVE BUSINESS RELATIONS	21
4.3.1	Cooperation and Commitment to Customer Satisfaction	22
4.3.2	Governance and Code of Business Conduct and Ethics	22
4.4	CURRENT OR RECENT POSTAL SERVICE CONTRACTS AND ON-TIME PERFORMANCE RATES	23
4.5	NON-POSTAL CONTRACTS OF SIMILAR SIZE, SCOPE, AND NATURE AS IN THIS SOLICITATION	23
5.0	SECURITY PLAN	24
5.1	ESTABLISH COORDINATION	24
5.2	IMPLEMENTATION, ADMINISTRATION, AND MAINTENANCE ACTIVITIES	25
5.2.1	Communication	25
5.2.2	Investigations	25
5.2.3	Criminal and Administrative Proceedings	25
5.2.4	Access to FedEx Operations, Facilities, Personnel and Loss Data	26
5.2.5	Surveillance Operations	26
5.2.6	Undercover Operations	26
5.2.7	Contingency Planning and Notification	26
5.2.8	Overgoods Operations	26
5.2.9	Protection and Disclosure of Information from Investigations	26
5.2.10	Noninterference	27
5.2.11	Modifications	27
5.3	CONFORMANCE WITH FEDERAL AVIATION ADMINISTRATION (FAA), TRANSPORTATION SECURITY ADMINISTRATION (TSA), AND LOCAL AIRPORT AUTHORITY	27
5.4	PROTECTION AND SAFEGUARD OF U.S. MAILS	27

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5.5	PERSONNEL SCREENING PROCEDURES	28
5.6	PERSONNEL SECURITY TRAINING	28
5.7	SECURITY BREACH PROCEDURES	28
6.0	SUSTAINABILITY PLAN	29
6.1	ENVIRONMENTAL INITIATIVES	29
6.1.1	Collaborative Efforts with Postal Service	29
6.2	CURRENT SUSTAINABILITY INITIATIVES AND METRICS	29
6.2.1	Greenhouse Gas Emission Estimates Via Air and Ground Transport	32
6.3	INDEPENDENT VERIFICATION	32
6.4	EMISSIONS REPORTING AND FREQUENCY	32
6.4.1	Reporting	32
6.4.2	Meetings	32
6.5	SUSTAINABILITY REPORTS	32
7.0	SUBCONTRACTING PLAN (PROVISIONS 3-1, 4-1, 4-2, CLAUSES 3-1, 3-2)	33
7.1	SUBCONTRACTING GOALS	33
7.2	TOTAL DOLLARS SUBCONTRACTED BY TYPE	33
7.3	DESCRIPTION OF SUBCONTRACTED SUPPLIES AND SERVICES	33
7.4	METHOD USED TO DEVELOP SUBCONTRACTING GOALS	34
7.5	METHOD USED TO IDENTIFY POTENTIAL SOURCES	34
7.6	INDIRECT COST STATEMENT	34
7.7	SUBCONTRACTING PROGRAM ADMINISTRATOR	34
7.8	SUBCONTRACTING PLAN FLOWDOWN	36
7.9	RECORDKEEPING	36
7.10	REPORTS	36
SUSTAINABILITY REPORT		1

List of Figures

FIGURE 1-1. AIR CARRIER CERTIFICATE	2
FIGURE 1-2. SAMPLE D&R TAG	3
FIGURE 1-3. POSTAL SERVICE–ACCEPTED EDI STANDARDS FOR SCANNING AND DATA TRANSMISSIONS	4
FIGURE 1-4. POSTAL SERVICE-FEDEX EDI NETWORK HIGHLIGHTS	4
FIGURE 2-1. FEDEX HAS RECEIVED MANY AWARDS	5
FIGURE 2-2. FEDEX KEY DIFFERENTIATORS	6
FIGURE 2-3. CURRENT FEDEX AIR FLEET TOTALS AND PAYLOAD	7
FIGURE 2-4. TOTALS OF FEDEX AIR FLEET MODELS AND AVERAGE AGE OF EACH MODEL (AS OF OCT. 28, 2012)	8
FIGURE 2-5. FUEL EFFICIENCY OF AIR FLEET (AS OF OCT. 28, 2012)	8
FIGURE 2-6. FEDEX AIRCRAFT MODERNIZATION SCHEDULE	9
FIGURE 2-7. FEDEX AIR TRANSPORT MAIL DELIVERY SERVICE PROCESS	10
FIGURE 2-8. THE CUSTOMER-FOCUSED FEDEX MAIL SERVICE DELIVERY TEAM	11
FIGURE 3-1. FEDEX EXPERIENCE TRANSPORTING LIVES	18

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FIGURE 3-2. OMAHA AIRPORT UNDER WATER
FIGURE 4-1. PAST PERFORMANCE CONTRACT HIGHLIGHTS	21
FIGURE 4-2. FEDEX AVERAGE DAY DELIVERY
FIGURE 4-3. FEDEX AVERAGE DAY DELIVERY
FIGURE 4-4. FEDEX HIERARCHY OF HORRORS
FIGURE 5-1. FEDEX POSTAL TRANSPORTATION MANAGEMENT SECURITY ORGANIZATION	25
FIGURE 5-2. SECURITY PROCESS, PROCEDURES, AND POLICIES
FIGURE 6-1. FEDEX COMMITMENT – RECYCLED MATERIAL	31
FIGURE 7-1. FEDEX SUBCONTRACTING GOALS FOR FY 13	33
FIGURE 7-2. SUBCONTRACTING PROGRAM ADMINISTRATOR	35

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United States Postal Service Air Cargo Network Volume 1 November 6, 2012

1.0 Supplier Eligibility

FedEx views the Postal Service Transportation Agreement – the current contract between FedEx and the Postal Service – as a strategic alliance providing the Postal Service with cost effective and reliable service while providing FedEx increased asset utilization.

Federal Express Corporation (FedEx), a wholly owned subsidiary of FedEx Corporation, submits this proposal in support of the United States Postal Service’s (Postal Service) request for proposal (RFP) number 5A-12-A-0024. This solicitation is for the purchase of air transportation and ancillary services for mail to and from destinations within the contiguous 48 states, and non-contiguous areas, including Alaska, Hawaii, Puerto Rico, and the Virgin Islands. We have had the privilege of providing the same services over the past 12 years. As this proposal volume demonstrates, FedEx is fully capable of providing continued reliable service and is committed to continuing our history as a supportive business partner of the Postal Service going forward. Since 2001, the Postal Service has benefited from the operational efficiencies of our nationwide service in improving its on-time performance record.

Our proposal proves that we are the reliable, most cost effective, and dependable business partner for the Postal Service in support of this contract. FedEx was founded as an airline and operates the world’s largest, most capable fleet of cargo aircraft. This fleet amply meets the Postal Service’s aviation requirements with reliable and dependable service.

As PricewaterhouseCoopers (PwC) noted and the Postal Service presented in its January 7, 2001 “Justification for Noncompetitive Purchase with Federal Express Corporation” (“Justification”), FedEx “is uniquely” qualified to support the Postal Service as a sole source contractor for air transportation services of U.S. Mail. We remain uniquely qualified to provide the required Air Cargo Network (ACN) services going forward for the next 7 years.

1.1 14 CFR Part 121 Air Carrier Certification

Figure 1-1 provides proof that FedEx meets the 14 CFR Part 121 Air Carrier Certification requirements. We are authorized to operate as an air carrier and conduct common carriage operations in accordance with the Federal Aviation Act of 1958.

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United States Postal Service Air Cargo Network Volume 1 November 6, 2012

Air Carrier Certificate

This certifies that

Federal Express Corporation

d/b/a FedEx Express

3620 Hacks Cross Road

Building B, Third Floor

Memphis, TN 38125

has met the requirements of the Federal Aviation Act of 1958, as amended, and the rules, regulations, and standards prescribed thereunder for the issuance of this certificate and is hereby authorized to operate as an air carrier and conduct common carriage operations in accordance with said Act and the rules, regulations, and standards prescribed thereunder and the terms, conditions, and limitations contained in the approved operations specifications.

This certificate is not transferable and, unless sooner surrendered, suspended, or revoked, shall continue in effect indefinitely.

By Direction of the Administrator.

Certificate number: FDEA 140A	/s/ Larry Richards
	Larry Richards
	(Signature)
Effective date: March 7, 1972	Division Manager
Amended Date: October 18, 2010	(Title)
Issued at: Memphis, Tennessee	ACE-200
	(Region/Office)

FAA Form 8430-18 (6-87)

Figure 1-1. Air Carrier Certificate

FedEx has been a certified air carrier since 1973, when we began service as an airline.

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1.2 Flight Origins and Destinations (Attachments 2, 3, 4)

FedEx will meet the Postal Service’s flight origin and destination requirements requested in Attachments 2, 3, and 4 of the RFP to transport mail on all flights and between all origins and destinations. Our response is included in Attachment 12, Tender and Delivery Time Commitment. As we have consistently shown in our 12 years of outstanding performance, we are fully capable of meeting the requirements.

1.3 Transport of Live Animals (DMM 601.9.3)

FedEx’s policy for transporting live animals is in accordance with the requirements set forth in the Domestic Mail Manual (DMM) 601.9.3, Live Animals. We have transported more than [ * ] pieces of live and perishable items over the past 12 months. We have a proven record of successfully handling the challenges of transporting “lives” ranging from baby chicks, to bees, to pandas.

1.4 Transport of Hazardous Material (DMM 601.10.0)

FedEx will transport hazardous materials (HAZMAT) for parcels that meet the air transportation requirements established in DMM 601.10.0 and other Department of Transportation (DOT) regulations. FedEx has accepted Postal Service Inaccessible Dangerous Goods (IDG) since October 2006.

Planned dangerous goods shipments from the Postal Service are IDG shipments only. Current acceptance procedures for all dangerous goods must be followed when receiving dangerous goods (DG) shipments from the Postal Service. All dangerous goods will be inspected by a dangerous goods specialist before the shipment can be accepted into the FedEx system. Operations will ensure that a dangerous goods specialist is available at the tender locations to inspect and accept dangerous goods tendered by the Postal Service.

1.5 Transport of Perishables (DMM 601.9.0)

FedEx will transport perishables in accordance with the provisions of DMM 601.9.0. Transporting perishables presents multiple challenges because of the special packaging and handling required. The packaging, handling, and transport equipment for perishable foods varies considerably, and this complicates loading decisions. The length of time a product will be in transit also affects loading decisions. FedEx will take every precaution to ensure that all of the transit requirements for the individual commodity are met for maximum shelf life.

1.6 Scanning and Data Exchange (Attachment 7)

Dispatch and Routing Tags

FedEx certifies that it is capable of scanning Postal Service bar-coded Dispatch & Routing (D&R) tags (Figure 1-2) that are Electronic Data Interchange (EDI)-compliant (pursuant to the guidelines set forth in Attachment 7 of the RFP) to facilitate the exchange of data with the Postal Service. Under the current contract, we scan on average more than [ * ] tags per day.

Figure 1-2. Sample

D&R Tag

Bar codes ensure accurate

and timely data capture.

EDI Compliance

FedEx will transmit and receive status and operational data according to the EDI standards specified in the solicitation, Attachment 7, Electronic Data Interchange Service Requirements. Additionally, we will transmit payment information using the Attachment 7 standards for financial data. We will use the standards shown in Figure 1-3 for transactions of volume and relevant scans with the Postal Service.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Figure 1-3. Postal Service–Accepted EDI Standards for Scanning and Data Transmissions

FedEx will use the EDI standards for status and operational data as well as payment information transmission with the Postal Service.

Standard	Purpose
CARDIT	To convey detailed information about domestic shipments.
RESDIT	To receive status information at the handling unit level for domestic mail shipments.
INVOIC ADV	Message claiming payment for goods and services supplied under agreed upon conditions; serves also as specification for Debit Note and Credit Note messages. Postal Service implementation is to provide invoice advice to its transport providers of the items, which comprise amounts payable for transportation services.
CLAIMS	Message claiming payment for goods and services supplied under agreed-upon conditions; serves also as specification for Debit Note and Credit Note messages. Postal Service implementation is to provide mechanism for its transport providers to report claims for the mail handling items which comprise amounts payable for transportation services.

EDI based on UN/EDIFACT format is technology that is ideal for the high volume of transactions that will be processed on this contract. FedEx owns the world’s largest private digitized network, FedExNet^®, that allows us to easily accommodate large data streams. We will use FedExNet^®, a proprietary private value-added network (VAN) for business-to-business data exchange. We have successfully used the FedExNet^® VAN for the Postal Service since 2001 to transmit and receive operational and status data, as well as payment data. We are familiar with the Attachment 7 EDI requirements and standards as we have used CARDIT and RESDIT protocols extensively since 2005 for international postal customers.

We will transmit the status and operational data, as well as payment data, over the VAN, as shown in Figure 1-4. Primary files on the FedEx side reside in the Scanning Database which stores and transmits scans and service files (shown as SRS, Summary Reporting System) and the Transportation Agreement Revenue Database which stores invoice and reconciliation files (shown as REV). With EDI, Postal Service will receive the invoice and reconciliation data from FedEx via a secure mailbox on FedEx Net^®.

Figure 1-4. Postal Service-FedEx EDI Network Highlights

FedEx has the experience and infrastructure to fully execute Postal Service–accepted EDI standards.

FedEx will transmit and receive status and operational data according to the EDI standards as required in the solicitation, Attachment 7, Electronic Data Interchange Service Requirements. Additionally, we will transmit payment information using the Attachment 7 standards for financial data. Available data will be transmitted at 15-minute intervals in the appropriate EDI format.

1.7 Eligibility Status

FedEx is qualified and eligible to receive an award under applicable laws and regulations. FedEx has not been suspended, debarred, or otherwise declared ineligible to receive an award of business. Additionally, we are registered on the System for Award Management (SAM) as a qualified and eligible Federal Contractor.

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2.0 Supplier Capability

As one of the most reliable, dependable airlines, FedEx has the largest air cargo fleet in the world, with a record of successfully supporting the Postal Service since 2001. We have ample capabilities and resources to meet or exceed the requirements of this contract.

FedEx will continue to offer the Postal Service best-in-class mail solutions that include reliable service, advanced technology, operational strength, and network efficiency. As the world’s largest express transportation company, FedEx offers transportation solutions to 100% of the U.S. population. Within the FedEx corporate culture, our main focus is on each customer’s requirements and how we can help improve customer operational efficiencies. Our services and programs help the Postal Service optimize and streamline U.S. domestic transportation processes in the short term and long term through cooperative continuous improvement projects.

FedEx’s highest priority is to focus on our customers. Our founder, Frederick W. Smith, began FedEx in 1973 with several concepts relatively new to the business world. One of these concepts introduced a corporate culture that embraced and focused – one hundred percent – on the unique needs of each of our customers. This corporate culture is still embedded in each activity that every FedEx employee performs and for which they are trained. In the same way, innovation, performance, and customer satisfaction are at the forefront of the Postal Service’s objectives. FedEx has also embraced these strategic objectives and has demonstrated an ongoing determination to assist the Postal Service in optimizing and streamlining its network. A few of our industry-recognized awards are highlighted in Figure 2-1. Our record of reliability has earned FedEx the reputation as one of the “World’s Most Admired Companies” (Fortune magazine). In 2012, FedEx ranked 6th in the Fortune list – the 11th consecutive year that we have been ranked in the top 20 on the list.

Figure 2-1. FedEx Has Received Many Awards

We have consistently won awards across all areas of our company’s performance.

FedEx has all the resources required to more than adequately perform the work required under the Postal Service’s ACN solicitation. As the long-time contractor of similar services for the Postal Service, FedEx has the capability to continue operations on the effective date of award as required by the delivery schedule.

The FedEx outstanding differentiators for the Postal Service are summarized in Figure 2-2. Our superior capabilities are further validated and supported by the certification of our Quality Management System to the International Organization for Standards (ISO) 9001:2008 standard and our recognition as a recipient of the prestigious Malcolm Baldrige Quality Award – we were the first service organization to win this award.

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Figure 2-2. FedEx Key Differentiators

FedEx has a number of key differentiators for operation of the Postal Service Air Cargo Network.

FedEx Key Services	Differentiators
Air Cargo Network: FedEx has the world’s largest cargo aircraft fleet to meet the Postal Service’s aviation requirements with reliable and dependable service.	•   With more than 634 aircraft, FedEx has the world’s largest fleet of cargo aircraft. •   We are the only company with proven experience supporting requirements of size, scope, and scale of the Postal Service ACN procurement. •   FedEx is the only aviation supplier with staffed operating bases at all ACN Day Network airports. •   FedEx is the only aviation supplier to the Postal Service that operates 24/7 with no exclusion for holiday surge and weekend support. •   Our ISO 9001:2008 Certification was renewed for 2012. •   The FedEx fleet includes more than 26 trunk and more than 31 feeder spare aircraft that are strategically placed throughout North America to protect service.
Management: FedEx possesses the skill, financial depth, and management tools required to engage and deliver on cost, schedule, and performance expectations.	•   FedEx uses our Quality Driven Management (QDM) approach. Our methods are built on the proven premise that higher quality lowers costs, improves service levels, and enhances the customer experience. •   Over time, QDM has contributed to FedEx being the 6th most admired company on Fortune’s World’s Most Admired Companies list and No. 7 on the Reputation Institute’s list of socially responsible firms in the United States. •   FedEx’s leading edge technologies (scanning, data transmission, and communications) will deliver superior aviation support to the Postal Service. •   FedEx was the first service company to win the Malcolm Baldrige Quality award, demonstrating our long-standing commitment to service quality.
Past Performance: FedEx has operated with the Postal Service for 12 years.	•   We have successfully met Service Level Requirements for the Postal Service throughout our 12-year service history, as shown in Figure 1.3.
Transition: An award to FedEx ensures the Postal Service a no-risk, no-cost contract transition.	•   Our knowledge and understanding of the Postal Service mission, operations, culture, and technology, and our business partner approach means a non-disruptive, no-risk transition to the ACN contract.
Innovation and Investment: FedEx is an innovation leader in air cargo logistics.	•   FedEx is ahead of plan to increase the fuel efficiency of our pickup and delivery fleet by 20% between 2005 and 2020. •   In FY12, approximately half of our $4 billion in capital expenditures is related to modernizing our air fleet. •   FedEx and the Postal Service invented the Transportation Agreement network design, significantly improving the performance and reducing the cost of the air transport service, proving that our vendor-customer team excels in innovative practices.

2.1 Ability to Meet Required Delivery Schedule

FedEx will meet the Postal Service delivery schedule with the world’s largest cargo aircraft fleet, more than [ * ] pilots, operating facilities and equipment across the nation, and support staff in place to maintain the services as described in the following sections. FedEx has a proven record of providing superior service to the Postal Service for the 82 Day Network locations and 146 Night Network locations, carrying volumes at levels ranging from a low of [ * ] cubic feet to a high of [ * ] cubic feet.

FedEx strengthened our competitive advantage by adding larger, more fuel-efficient 777s. We have already deployed more 777s than any other U.S.-based express cargo carrier.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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FedEx is recognized for the ability of our network to adapt to changing Postal Service needs and global trends. We perform ongoing evaluation of our extensive flight and route schedules at all times of the year to achieve flexibility to meet the needs of the Postal Service and to address the changing needs of the marketplace. The FedEx Postal Transportation Management Department (PTM) coordinates with FedEx’s Air Ground Freight Service (AGFS), which operates the air cargo network, and with our Global Network Planning (GNP) and Global Operations Control Center (GOCC), which plan and manage flight operations, including the movement of Postal Service cargo. The FedEx aviation network also has extensive redundancy and contingency planning that draws on our aviation resources of jet aircraft, feeder aircraft, 3 U.S. domestic major sort locations (5 domestic major sort locations for the Night Network), [ * ] FedEx-staffed ramp locations furnished with appropriate cargo handling equipment, and multiple data centers.

FedEx has an in-house Meteorology Department with a current staff of [ * ] whose average experience is more than [ * ] years. This department monitors terminal forecasts for domestic destinations and alternate airports to support flight operations to meet Postal Service operational needs. The Meteorology Department, created in 1986, has issued guidance on en-route hazardous weather conditions, such as the potential for icing, turbulence, and other meteorological conditions that may adversely impact daily operations. This accurate, timely data provides an advantage that enables FedEx to anticipate routing changes and make adjustments, thereby avoiding or minimizing impacts on flight schedules.

2.2 Air Fleet Equipment Description

FedEx has the world’s largest cargo air fleet. Figure 2-3 describes the current FedEx air fleet available to meet the Postal Service requirements as of October 8, 2012.

Figure 2-3. Current FedEx Air Fleet Totals and Payload

FedEx has ample capacity to service each air stop.

FedEx Aircraft Fleet
Description	Owned		Leased		Total		Maximum Operational Revenue Payload (pounds per aircraft) (1)
Jet (Trunk) Aircraft
Airbus A300-600		35		36		71		85,600
Airbus A310-200		18		0		18		61,900
Airbus A310-300		17		0		17		67,500
Boeing B727-200		29		0		29		38,200
Boeing B757-200		60		0		60		45,800
Boeing 767-300F(2)		0		0		0		98,856
Boeing B777F		22		0		22		178,000
McDonnell Douglas MD10-10		52		0		52		108,700
McDonnell Douglas MD10-30		12		5		17		114,200
McDonnell Douglas MD11		38		26		64		164,200
Non-Jet (Feeder) Aircraft
ATR 42-300/320		26		0		26		10,880
ATR 72-202/212		21		0		21		14,660
Cessna 208B		237		0		237		2,500
Total All Aircraft		567		67		634

1. Maximum Operational Revenue Payload is the lesser of the net volume-limited payload and the net maximum structural payload.

2. This aircraft model will be introduced in 2013 and is included here to show its contribution over the life of the contract.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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United States Postal Service Air Cargo Network Volume 1 November 6, 2012

2.2.1 Age of Air Fleet

The age of our aircraft is shown in Figure 2-4. The aircraft we use are proven, highly reliable “work horses.” Our aircraft mechanics are experienced in troubleshooting and routine maintenance of the aircraft to ensure the safety of our pilots and the mail. Additionally, we have an ongoing fleet modernization plan, provided in Section 2.2.3, outlining the retirement of our oldest aircraft and introduction of newer, more efficient aircraft. Our modernization plan is aligned with our corporate initiatives under our Sustainability Plan (Section 6.0).

Figure 2-4. Totals of FedEx Air Fleet Models and Average Age of Each Model (as of Oct. 28, 2012)

We depend on our proven aircraft to provide reliable service.

Aircraft Models	Total Number		Average Age (years)  (1)
Jet (Trunk) Aircraft
Airbus A300-600		71	[ * ]
Airbus 310-200		18	[ * ]
Airbus 310-300		17	[ * ]
Boeing 727-200		29	[ * ]
Boeing 757-200		60	[ * ]
Boeing 777F		22	[ * ]
McDonnell Douglas MD10-10		52	[ * ]
McDonnell Douglas MD10-30		17	[ * ]
McDonnell Douglas MD-11		64	[ * ]
Non-Jet (Feeder) Aircraft
ATR 42-300/320		26	[ * ]
ATR 72-202/212		21	[ * ]
Cessna 208B		237	[ * ]
Total		634	[ * ]

1. Total is derived by weighting each of the aircraft averages in terms of number of aircraft.

2.2.2 Fuel Efficiency of Air Fleet

Our fuel efficiency, shown in Figure 2-5, will continue to improve as a result of our aircraft modernization plan and strategic utilization of the air transport fleets.

2.2.3 Aircraft Modernization Plan

Our plan to replace our older aircraft in the current fleet with 20% more fuel-efficient and green airplanes by 2020 is ahead of schedule. After only 6 years of a 15-year plan, we have completed 69% of our goal to reduce aircraft emissions intensity by 20% by 2020. Because we are ahead of the schedule, we have raised the standards so that our goal is to now reduce aircraft emissions intensity by 30% by 2020. Because we are committed to reducing aircraft emissions and increasing fuel efficiency, we invested $4 billion in capital expenditures, about half related to modernizing the air fleet during FY 12.

Figure 2-5. Fuel Efficiency of Air Fleet (as of Oct. 28, 2012)

Our modernization efforts are yielding improved fuel usage.

Aircraft Models	Fuel Usage (gal/hr)
Jet (Trunk) Aircraft
Airbus A300-600	[ * ]
Airbus 310-200	[ * ]
Airbus 310-300	[ * ]
Boeing 727-200	[ * ]
Boeing 757-200	[ * ]
Boeing 767-300F (1)	[ * ]
Boeing 777F	[ * ]
McDonnell Douglas MD10-10	[ * ]
McDonnell Douglas MD10-30	[ * ]
McDonnell Douglas MD-11	[ * ]
Non-Jet (Feeder) Aircraft
ATR 42-300/320	[ * ]
ATR 72-202/212	[ * ]
Cessna 208B	[ * ]

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Our strategy to “compete collectively, operate independently, manage collaboratively” provides flexibility in sizing our operating companies to align with varying macro-economic conditions and customer demand for the market segments in which they operate, allowing us to leverage and manage change. We use our flexibility to accommodate changing conditions in the domestic and global economy. For example, in May 2012, we decided to retire from service 24 aircraft and related engines. The decision to retire these aircraft will better align our U.S. domestic air network capacity to match current and anticipated shipment volumes. FedEx is also shortening the depreciable lives of additional aircraft and related engines to accelerate the retirement of selected aircraft models.

Figure 2-6 presents our projections of each aircraft type at the end of our fiscal year over the next 7 years. We have agreed to purchase 46 new B767F aircraft, with the first three arriving in FY 14. The B767Fs were selected to reduce fuel and maintenance costs, as we continue to improve the efficiency and technology of our aircraft fleet.

[ * ]

Figure 2-6. FedEx Aircraft Modernization Schedule

FedEx has an aggressive schedule to upgrade our aircraft fleet for improved reliability, faster transit time, reduced maintenance, and better fuel performance.

Aircraft Models	FY 12: May 2012		FY 13: May 2013		FY 14: May 2014		FY 15: May 2015		FY 16: May 2016		FY 17: May 2017		FY 18: May 2018
Jet (Trunk) Aircraft
Airbus A300		71		71		71		71		71		71		71
Airbus A310-200		18		18		16		12		4		0		0
Airbus A310-300		17		17		17		17		17		17		17
Boeing 727-200		40		20		7		0		0		0		0
Boeing 757-200		53		71		90		106		124		142		143
Boeing 767-300F		0		0		4		11		22		31		41
Boeing 777F		18		23		25		27		27		27		27
McDonnell Douglas MD10-10		52		52		52		44		32		24		15
McDonnell Douglas MD10-30		17		17		17		17		17		17		17
McDonnell Douglas MD-11		64		64		64		64		64		64		64

2.3 Ground Handling and Sorting Operations

Our ground handling and sorting operations are fully capable of meeting the requirements of this solicitation. FedEx can process mail for movement via aircraft, tug and dolly, containerized trucks, and bulk trucks from our facility to the Postal Service facility. This includes Priority Mail (PML), Express Mail (EML), First Class Mail (FCM), and Registered Mail (RML). Our team members will take great care in handling all packages that enter our sorting system, to be sure that they are scanned and then secured in the appropriate containers, trailers, or aircraft. In Figure 2-7, we present the highlights of these operations, and additional details are provided in Volume 2 of this proposal.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Figure 2-7. FedEx Air Transport Mail Delivery Service Process

FedEx has developed a series of mature processes to move air cargo from origin to destination, meeting

the contractual tender times.

FedEx leads the industry in scanning and tracking technology. Packages typically are scanned during our pickup, sort, and delivery processes by trained handlers and by automated overhead scanners and scanning systems. Scanning enables FedEx and the Postal Service to track the movement of packages from pickup to delivery for an added level of security. Using a variety of wireless data collection devices, we scan package bar codes at each hand-off point, capturing a variety of shipment information:

• Dispatch and routing number   • Origin/destination location information • Ship date   • Exception scans • Type of service   • Proof of delivery.

2.4 Integrity and Business Ethics Record

FedEx has a longstanding commitment to compliance with applicable laws and regulations wherever we operate, striving to maintain a high standard of business and personal ethics. Every FedEx employee, officer, and director is required to comply with the policies set forth in our Code of Business Conduct and Ethics. FedEx contractors and global service participants performing services on behalf of FedEx or operating under the FedEx brand name also comply with those portions of the code that apply to them. Our officers, directors, and managers have the additional responsibility of promoting the principles set forth in this code and fostering a culture in which ethical conduct is recognized, valued, and exhibited by all team members. Our commitment to doing the right thing depends on the ability to set the proper tone and to address suspected violations promptly with care and respect. All senior managers and all members of management above senior manager have to annually recertify under our Code of Business Conduct Questionnaire.

We also have an independent Board of Directors committed to the highest quality of corporate governance. During the past few years, we have added a number of highly qualified, independent directors to the Board, including R. Brad Martin, the former CEO of Saks Incorporated, and Joshua Cooper Ramo, Vice Chairman of Kissinger Associates, Inc. The Board has taken significant steps to enhance its accountability to stockholders in recent years. For example, in 2012, stockholders approved our proposal to amend the FedEx certificate of incorporation to allow holders of 20 percent or more of FedEx common stock the right to call special meetings of stockholders. The Board also recently adopted a “lead independent director” governance structure.

Our Board of Directors periodically reviews all aspects of our governance policies and practices, including our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, in light of best practices, and makes whatever changes are necessary to further our longstanding commitment to the highest standards of corporate governance. The Guidelines and the Code, which apply to all of our directors, officers, and employees, including our principal executive officer and senior financial officers, are available in the Corporate Governance section of the Investor Relations page of our website at investors.fedex.com. We post any amendment to, or waiver from, the provisions of the Code to the extent that such disclosure is required, on our website in the corporate governance section of the Investor Relations page.

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2.5 Organization

This section discusses the FedEx organization, experience, accounting and operational controls, technical skills, and production and property controls. FedEx will abide by Clauses 1-11 and 1-12 of the solicitation. To demonstrate this compliance, FedEx has been following similar provisions in our current Postal Service contracts.

2.5.1 Organization Structure

FedEx PTM, as depicted in Figure 2-8, describes our organizational structure and the two key personnel for managing this contract. Our Managing Director, Ron Stevens, has been directing PTM since the inception of the FedEx–Postal Service contract relationship in 2001. This organization is a dedicated Program Management Office (PMO) whose single mission is serving our Postal Service customer.

PTM is supported by the extensive FedEx corporate capabilities and operations. PTM closely coordinates with AGFS headquarters in Memphis, TN and all hub and ramp locations. AGFS has an extensive management team to oversee the actual flight and logistic operations. PTM also coordinates with the Global Network Planning (GNP) and the Global Operations Control Center (GOCC) for Postal Service mail scheduling, as well as cargo flight operations during the execution of network operations.

Figure 2-8. The Customer-Focused FedEx Mail Service Delivery Team

PTM coordinates with AGFS and GOCC to meet Postal Service performance requirements.

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2.5.2 Experience

In 2000 the Postal Service approached FedEx to help design a solution to the problems in its Transportation Network. Rising cost and unacceptable service levels were impairing the growth of Priority and Express Mail. Over the following year, FedEx and the Postal Service jointly designed and developed a Shared Network system. The system was implemented in August 2001 and was projected to save the Postal Service in excess of [ * ] dollars over the [ * ] and drastically improve service. The network increased the number of locations served on both Day and Night Networks. [ * ].

2.5.3 Accounting and Operational Controls

FedEx has developed a proprietary system for tracking volume and invoicing specifically for the Postal Service. FedEx also has an online communication system for reporting operational updates and status, providing accurate and timely data. Additional information for operational controls can be found in Section 3.0 of this volume. During the course of our current Postal Service Transportation Agreement Contract, we have never had an accounting irregularity.

As a publicly traded corporation, FedEx’s internal controls over financial reporting are audited annually by Ernst & Young to ensure compliance with all applicable regulations and accounting standards. Our latest audit was completed on May 31, 2012. FedEx’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. The results of the annual audit can be found in our 2012 Annual Report; no exceptions were noted. PTM has also gone through several internal audits and has received an Exceptional rating from our Internal Audit Department.

2.5.4 Technical Skills

FedEx employs staff with varying skills and qualifications from IT analysts, to industrial and mechanical engineers, to on-site maintenance mechanics, to package handlers. Each of our ramp and hub locations operates as a “mini-hub” in that it has all the required IT infrastructure and staff to run the facility, which requires a vast number of skills. The following are a few areas of expertise necessary for successful execution of this contract:

• Pilots. We have more than [ * ] pilots, each with a minimum of [ * ] hours total fixed-wing time as pilot-in-command (PIC). All of our pilots possess the Commercial Pilot Certificate and Multi-Engine and Instrument ratings as required by the FAA. Many are also retired military pilots with honorable discharge from their respective military branches. FedEx pilots are required to possess knowledge of theory of flight, air navigation, meteorology, flying directives, and aircraft operating procedures.

• Aircraft Mechanics. More than [ * ] mechanics who maintain the Boeing, Airbus, and McDonnell Douglas aircraft fleets. Their duties include performing standard safety checks, reviewing the aircraft’s maintenance logbook for any planned maintenance to be done that day, and performing engine repair.

• Package Handlers. More than [ * ] handlers and support staff in AGFS who sort, load, and unload aircraft containers in a safe and efficient manner. FedEx handlers must work under stringent time schedules, process potentially high volume of mail, and properly load and unload containers.

• IT Analysts. More than [ * ] IT professionals who operate one of the world’s largest computer and telecommunications networks. The network includes more than [ * ] networked computers and tens of thousands of hand-held computers that record shipments. Our data center processes more than [ * ] information management system transactions daily. Our IT analysts hold industry-recognized certifications, including Microsoft Certified IT Professional (MCITP), Cisco Certified Internetwork Expert (CCIE), Project Management Institute’s Project Management Professional (PMP), and Certified Information Systems Security Professional (CISSP).

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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• Engineers. PTM primarily consists of engineers dedicated to support the day-to-day needs of the Postal Service. These engineers are strategically placed around the country and assigned to specific Postal Areas.

2.5.5 Production and Property Controls

FedEx has the capability of handling Day Network and Night Network deliveries. FedEx has used Surface Air Management System (SAMS) equipment at our hubs since 2002 and has successfully maintained and controlled this equipment. We will abide by the Clause 2-11 of the solicitation in the acceptance, maintenance, tracking, and reporting of Postal Service property.

2.6 Financial Condition

FedEx Corporation, of which FedEx Express is a wholly owned subsidiary, has been in operation since 1973. For FY 12, FedEx Corporation reported the following results:

• Revenue of $42.6 billion, up 9% from $39.3 billion the previous year

• Operating income of $3.19 billion, up 34% from $2.38 billion last year

• Net income of $2.03 billion, up 40% from last year’s $1.45 billion

• Earnings per share of $6.41, up from $4.57 per share a year ago.

FedEx has demonstrated a disciplined approach to financial performance. We have been, and will continue to be responsive to changing economic and business conditions. Capital spending for FY 12 was $4.0 billion, of which $1.9 billion was for investments in aircraft and related equipment.

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3.0 Management Plan

FedEx will successfully manage the ACN contract by leveraging its knowledge and understanding of the Postal Service’s mission, operations, culture, and technology requirements.

FedEx recognizes that to be successful we must have a management plan that addresses normal daily operations and is capable of handling unscheduled and unexpected events. Updates to this plan will be provided to the Contracting Officer within 10 days of any changes made by the Vice President of PTM. At least annually, FedEx will review and verify for the Postal Service that it has a current management plan. In addition to the day-to-day key personnel, FedEx has and will train all employees to a level of knowledge and familiarity to ensure that normal operations and all contingency plans will be exercised without delay to address the unexpected or unscheduled events in accordance with the training plan.

3.1 Daily Operations Management Plan

FedEx is one of the 5 largest airlines in the world and it is one of the most reliable. This means that we have the resources to meet all Postal Service aviation requirements. We have the people, processes, and tools to meet all the management requirements of this solicitation. Volume 2 of this response discusses the contingency plans in place to meet any issues.

3.1.1 Late Arriving Aircraft and Trucks (Originating and Destinating)

Ability to Conduct Two Operations – Originating and Destinating

In the event of late arriving aircraft and trucks, FedEx will have the ability to perform origin and destination services simultaneously, if necessary. FedEx conducts and will continue, 2 daily operations, the day (Tuesday–Saturday) and the night (Monday–Friday). The day service is primarily for deferred services, Priority Mail, and First Class Mail. The night service is primarily for expedited services and Express Mail. Since FedEx has the largest overnight network in the world, we have available capacity that can be utilized for the movement of Postal Service shipments as necessary during the day, and we have the ability to alter the movement and distribution of services within our multi-hub network. We build redundancy into our operations to provide maximum flexibility. FedEx has the manpower and equipment at our ramps and hubs to recover late arriving aircraft and trucks. We can also divert aircraft to alternate hub locations, if that contingency proves necessary.

3.1.2 Early Arriving Aircraft and Trucks

For any aircraft or truck that arrives early, FedEx will offload, stage, and secure the freight, and then notify the Terminal Handling Service (THS). We will manage the entire network to operate on time.

3.1.3 Mail Arriving Out of Normal Sequence

For mail arriving out of sequence, we will make adjustments to accommodate it. This involves alerting the Postal Service of abnormal or delayed arrivals. FedEx can adjust work schedules according to operational requirements to maximize service to our customers.

3.1.4 Trucks Not On-Site for Dispatch

FedEx Express operates approximately 52,400 ground transport vehicles including pickup and delivery vans, larger trucks called container transport vehicles, and over-the-road tractors and trailers. These vehicles are strategically located at service points across the network to support volumes and service delivery requirements and are repositioned to meet mail service delivery schedules.

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3.1.5 Inclement Weather During Operations

FedEx has a superior record in meeting delivery schedules during inclement weather. To proactively address disruptions caused by weather, FedEx employs on-staff meteorologists whose function is to monitor weather conditions. The FedEx Meteorology Department has been an in-house function since 1986 with a current staff of [ * ] whose average experience is more than [ * ] years. Our staff has been certified and approved by the FAA to use the Enhanced Weather Information Systems (EWINS) as the primary source of forecasts in support of trunk aircraft operations worldwide. The staff’s experiences range from various military branches, the National Weather Service, and the private sector to provide a well-rounded understanding of all types of weather disruptions that could impact the FedEx operating system.

FedEx Meteorology supports flight operations, primarily by issuing and monitoring terminal forecasts for domestic destinations, alternate airports, and key international locations. Meteorologists also provide guidance on en-route hazardous weather conditions such as the potential for icing, turbulence, and other meteorological conditions, which may adversely impact daily operations. Personnel also provide weather support and briefings to FedEx senior management in support of contingency operations worldwide including hurricanes and typhoons, winter weather events, the spread of hazardous volcanic ash, widespread flooding that affects ground operations and FedEx locations or assets, and solar weather events that could be harmful to crews flying long-haul routes at high latitudes. Additional information is provided in Volume 2, Section 2.2.1.

3.1.6 Protection of Mail During Inclement Weather

FedEx protects each shipment from the weather by using containers to transport small packages to the hubs and during loading and unloading of the aircraft. Plastic covers are used on the skidded freight to protect packages against weather damage. FedEx also uses plastic covers for containers as needed in inclement weather.

FedEx believes preparation is the key to success in irregular operations. Our Business Continuity and Disaster Recovery (BCDR) preparation is well known and respected in the BCDR community. FedEx is a member of the Supply Chain Risk Leadership Counsel and is an integral part of many local, state, and Federal BCDR planning groups around the United States. We lend our expertise in disaster preparation and contingency execution to many of our customers and suppliers to assist them in designing the best business resiliency plans possible.

3.1.7 Labor Actions

[ * ]

3.1.8 Inadequate Staffing

FedEx will meet surge demands of all of our customers including the Postal Service, particularly during peak periods or periods of inclement weather, natural disasters, or when customers demand increases. We have a reserve pool of employees who are on standby to cover all positions. We have more than [ * ] pilots which allows us to meet Peak Week and holiday requirements.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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FedEx has designed a functional organization to matrix across all areas. FedEx will move employees from one location to another as needed to supplement existing staffing loads or requirements within a facility as we have done for the Postal Service over the life of the current contract. Our cross-training programs allow us this flexibility, as one employee can assume the responsibilities of another. The flexibility of our non-union workforce allows FedEx to move employees between functions as the workload demands it.

3.1.9 Inability to Complete All Loading

The FedEx monthly operating plan provides staffing to meet all tender requirements. We will call staff from other shifts and locations to meet all Postal Service loading requirements as necessary. We also maintain reserve equipment for deployment as needed for contingencies. We have always been able to complete all loading for the Postal Service.

3.1.10 Overflow Mail

FedEx has provided the Postal Service with 5% flex under the existing agreement and will continue to do so in our proposed operating plan for the day network and 20% flex for the night network. Volume above these levels is moved on a space-available basis. At the FedEx hub, we will provide adequate lift and will ensure all alternate movements are coordinated between the Postal Service and PTM. FedEx provides priority boarding for all postal products ahead of all FedEx domestic, non-specialty products.

3.1.11 Less Mail Transportation Equipment (MTE) Than Required

Since FedEx is not bidding the Terminal Handling Service function, we will depend upon the Postal Service to provide the THS. FedEx will contact the Postal Service for additional MTEs and will loose-load or palletize as required by the Postal Service’s operation plan.

3.1.12 Damaged/Non Airworthy Containers

FedEx has well-documented procedures for assessing damage and determining the airworthiness of containers (e.g., unit load device, ULD) in our system. ULDs are subject to primary and secondary inspections according to FedEx operating procedures. We use an “Airworthy ULD Inspection Checklist” that has been developed to provide all personnel working with ULDs a set of criteria for determining whether a ULD is airworthy. FedEx will provide these procedures and training support to the THS to minimize the loading of non-airworthy containers.

If a damaged ULD is found before the container is loaded, FedEx will provide a replacement container. If the damaged ULD is found after the container is loaded, FedEx will trans-load shipments to another airworthy container. FedEx also retains a staging lot of ULD reserves at our major sort and ramp locations for use during volume surges within our network (i.e., peak season).

3.1.13 Damaged Surface Containers

If a FedEx surface container is damaged, FedEx will provide a replacement or notify the Postal Service or the THS provider. We routinely have reserve ULDs that we can access as a contingency. FedEx routinely provides emergency use of our equipment when the THS provider has experienced an equipment failure and cannot recover in time. This occurs multiple times per year and FedEx has been able to provide the necessary equipment without disruption.

3.1.14 Damaged or Non-Labeled Mail

If a package is damaged, it will be repackaged according to Postal Service guidelines. When a package is not labeled or the label is damaged, the Postal Service declares a contingency for unassigned mail. This process is followed for any amount of unlabeled mail tendered by the Postal Service to FedEx (even one piece). These procedures are followed to ensure that the mail volume is directed to the proper labeling operation and does not interfere with normal sort operations.

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• The Postal Service will contact FedEx ramp personnel to declare a mail contingency

• The Postal Service will separate labeled from unlabeled mail in the tender process

• FedEx will designate, on flight reports, which position(s) have unlabeled mail in the remarks for each container

• The ULDs containing unlabeled mail will be taken to the exception area and labeled via SAMS

Re-labeling is an example of our commitment to the Postal Service. In August 2002, the Postal Service approached FedEx requesting that we take over the re-labeling function at the Memphis hub. Since FedEx has assumed responsibility for relabeling, most if not all pieces move out the same day that they arrive in the sort. FedEx re-labels approximately [ * ] pieces per day on a non-contingency day. Approximately [ * ] times per month the Postal Service will declare a contingency (e.g., if its SAMS equipment is down in the local market) and the unlabeled handling units are sent to the Memphis hub where FedEx labels the mail. In these situations, we label between [ * ] and [ * ] handling units of mail and reintroduce them back to the network, thereby allowing the Postal Service to meet mail delivery service for their customers.

3.1.15 Plan and Schedule Changes

Plan changes are coordinated through PTM following the planning schedule, which is defined in the Network Operating Plan sections of Volume 2. In addition, FedEx works with the Postal Service to accommodate last minute modifications to the volume requests. Tactical schedule deviations for volume, maintenance, weather-related, or other disruptions to service are handled through the FedEx Global Operations Control Center (GOCC). Please see the Contingency Plan section in Volume 2 for more information.

3.1.16 Loose Load Mail

FedEx handles loose-loaded mail daily per the planning template to meet the local requirements for each Postal Service market. FedEx also accepts loose-loaded trailers.

3.1.17 HAZMAT – Acceptable and Non-acceptable Pieces

FedEx currently accepts HAZMAT in accordance with the DMM 601.10.0 procedures. Details of the FedEx procedures can be found in Volume 2, Section 1.12.4. We have been handling HAZMAT materials since 2006 and work well with the Postal Service in handling a volume of more than [ * ] shipments per year. We also work with the Department of Transportation’s and the International Air Transport Association’s rules and regulations on handling HAZMAT pieces. We have routinely been handling acceptable pieces and have procedures in place to handle any non-acceptable pieces with the Postal Service.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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3.1.18 Handling and Staging of Live Animals

FedEx has transported live animal shipments through the air and truck network for the Postal Service since October 2006. As one example of how live animals are handled through the air network, we developed operating policy R2-55-15-2 – Postal Service Mail Live Animal Handling and exception Procedures – for our aircraft ramp operations. This document establishes the practices currently used by the Postal Service and is the result of our collaboration with the Postal Service. It is available upon request. As shown in Figure 3-1, we are equipped to transport a wide variety of animals from pandas to newly hatched chicks and even bees.

3.1.19 Assisting Aviation Supplier in Container Positioning

FedEx will assist the Postal Service or THS provider in on-loading and off-loading containers to and from dollies and trucks.

3.1.20 Assisting Aviation Supplier in Maintaining Open Lines of Communication

FedEx will maintain open communication with the Postal Service, the THS providers, and other aviation suppliers. Depending on the operations, we will have continual, on-going operational dialogues at the quarterly performance management meetings. We are receptive to additional suggestions to improve our communications. We are committed to continuously improving communications between the Postal Service and FedEx and have demonstrated that commitment in the past.

Figure 3-1. FedEx Experience

Transporting Lives

FedEx is accustomed to transporting

live animals.

3.1.21 Supplies Maintenance

FedEx maintains a reserve of supplies; however, if a shortage occurs, FedEx will procure any necessary supplies such as equipment, maintenance, and material; building maintenance, construction, and repair; repair of machinery; aircraft parts; janitorial services; security guard services; ground transportation; water treatment; and any other services that may be required. FedEx will abide by its subcontracting plan in procuring these services (Section 7).

3.1.22 Power Losses

[ * ]

3.1.23 Natural Disasters

[ * ]

3.1.24 Equipment Breakdowns

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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3.1.25 Airport Closings

[ * ]

3.1.26 Air Traffic Control (ATC) Impact Mitigation Plan

[ * ]

3.1.27 Not Listed But of Equal Importance—Other Factors Impacting FedEx

[ * ]

3.2 Key Personnel

The FedEx PTM organization has been in place since the inception of the program. As depicted in Figure 2-8, Paul Herron and Ron Stevens will serve as key personnel for this contract and have been managing our Postal Service contracts since 2001. They routinely communicate with Postal Service stakeholders on all matters pertaining to conformance with contract requirements in order to meet our service delivery performance goals.

Paul Herron, Vice President, Postal Transportation Management

Paul was part of the original FedEx team that, along with the Postal Service, developed the Shared Network Transportation Agreement. He has led the FedEx Postal department since its inception and is responsible for all FedEx Postal alliances. In this role he interfaces with senior postal executives and has presented to the Board of Governors on a number of occasions. Paul is a 24-year FedEx employee with experience in strategic planning, finance, system form, air operations, and customer engineering. Paul holds an MBA from the University of Tennessee.

Ron D. Stevens, Managing Director, Postal Transportation Management

Ron was responsible for establishing the PTM in 2001. Ron was a member of the negotiating team for the original contract, the current contract negotiated in 2006, five addenda since 2001, and the Drop Box program renewal in 2006. Ron was responsible for the rollout of Global Express Guaranteed (GXG) (our co-branded international product with the Postal Service) which included developing a process to address all service and billing issues related to GXG.

Ron has 26 years of experience with FedEx and has worked in operations and engineering. Ron earned a B.A. Degree in business administration from Columbia State University. Ron has served as a member of the IATA Airmail Panel since 2007 representing FedEx on issues related to the movement of international mail.

FedEx believes that our ongoing operational partnership with the U.S. Postal Service brings significant advantages to a renewal contract for the Air Cargo Network. These FedEx key personnel demonstrate their dedication to both FedEx and the Postal Service through their long-term involvement and continued commitment to supporting the Postal Service.

3.3 Training of Personnel

As we state in Volume 2 of this response, contingency situations such as challenges from blizzards to hurricanes are a way of life for FedEx employees. At any given moment, our staff has to be prepared to respond to contingencies, implement proven plans, and continue service delivery to our customers. Our employees, from the GOCC contingency planners and managers to the PTM management team to the ramp staff at each FedEx airport location, are trained in dealing with events and circumstances outside of their control. Besides initial and annual recurring training on the contingency plan and specific planning and response actions of each FedEx airport location, employees also receive additional training when the contingency plan is revised or local procedures are updated. Training is required for all employees ranging from aircraft pilots, mechanics, general support, IT, environmental health and safety, and logistical staff.

Training records are maintained in employee personnel records and include training received, test scores, and certifications. For example, training for handlers includes safety, dangerous goods, proper T-stacking methods/container loading, ULD inspection, re-wrap of damaged packages, and container close-out slips.

3.4 Updates to Management Plan

The Vice President of PTM will submit any changes to this plan to the Postal Service Contracting Officer within 10 calendar days. Any changes which impact delivery will be made as well. We will also review any major changes to this plan that are impacted by the Contingency Plan in Volume 2. FedEx will update the management plan as required and incorporate any appropriate changes into our training program that will be sent to our key personnel. At least annually, we will review and verify with the Postal Service to keep our management plan current.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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4.0 Past Performance

FedEx is the only company that can show past performance examples demonstrating our proven capabilities to support a contract of this size, scope, and complexity.

FedEx has the largest air cargo fleet and a long history of past performance with the Postal Service. We reach all points and will meet tender and delivery times contained in Attachment 12. This history is steeped in many collaboration efforts to meet the Postal Service mission that can be found in Section 101(a) of Title 39 of the U.S. Code, also known as the Postal Reorganization Act, which states:

“The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities.”

It is through an understanding of this mission that FedEx has worked tirelessly in collaboration with the Postal Service to meet all delivery requirements. No other cargo air carrier has the benefit of this long and efficient operational experience with the Postal Service, where schedules and tender times were optimized and excessive costs were eliminated from the program. We currently hold two Postal Service contracts: the FedEx–Postal Service Transportation Agreement and the Global Express Guaranteed Agreement. Summaries of these contracts are found in Section 4.4 of this volume.

FedEx services Fortune 500 companies and worldwide industry leaders with high-volume shipping and delivery requirements. However, our Postal Service Agreement contracts dwarf all other customers’ requirements due to the extremely high volume of mail. We provide transportation solutions to the world’s top companies in more than 220 countries and territories. We also hold several Department of Defense (DoD) contracts for similar mail transport through both air and ground methods. For most of our commercial clients, we hold confidentiality agreements to protect the sensitive nature of our business relationships, so we are not able to disclose their names and the details of their products or services. Our customers consider the use of FedEx services to be a competitive advantage and have not granted legal permission to disclose details about our relationship; however, a summary of our past performance on non-Postal Service clients is shown in Section 4.5 of this volume. Figure 4-1 provides a snapshot of our project summaries for evaluation.

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Figure 4-1. Past Performance Contract Highlights

FedEx provides on-time services to customers with many challenging demands.

Past Performance Conformance with Contract Requirements
Customer	Air	Ground	Avg. On-Time Performance	Avg. Annual Volume (cubic feet or packages)
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]	[ * ]

4.1 Record of Conformance to Contract Requirements

FedEx has met all contractual requirements for meeting Service Level Agreements (SLAs), delivery, schedule, reporting, and communication on all of our contracts for both Postal Service and non-Postal customers. FedEx was the Postal Service’s largest supplier for FY 11, as it has been for 9 straight years. FedEx has not been suspended, debarred, or otherwise declared ineligible to perform on any Federal contract.

4.2 Record of FedEx On-Time Performance

FedEx has, and will continue to meet and exceed our delivery times for Postal Service and non-Postal customers. We are able to accomplish this through the size of our fleet, but also through technological advances in logistics management and well developed contingency plans that are detailed in Volume 2 of this proposal.

Each of our Postal Service and non-Postal clients has unique performance requirements. While one client may have a requirement for delivery within 3 days of tender, others require delivery by 10:30 the following morning. The differences between delivery commitments make it impossible to directly compare service performance between customers. The Postal Service is the only customer for whom delivery expectation is on the same day as tender for its deferred product. When possible, we have included our on-time delivery performance for these contracts in our summaries in Section 4.5.

Figure 4-2 and Figure 4-3 show our on-time performance rates for the current Transportation Agreement and the Global Express Guaranteed (GXG) Agreement.

[ * ]

4.3 Established Productive Business Relations

One of the key success factors in any business relationship is communication. With all of our customers, we have set up a range of processes to ensure the most effective communication, reporting, and exchange of operational, financial, performance, and administrative information. For our Postal Service contracts, FedEx communicates daily via electronic reports, face-to-face meetings, and with Postal Service on-site personnel. FedEx uses EDI 214, Version 4010, for the electronic transmission of information.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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We are continually evaluating and improving our processes and service offerings to meet client needs. FedEx is a leading innovator in the overnight delivery business because we reward and motivate our team members to deliver on time. We also encourage and implement recommendations from our clients on how to improve our service delivery through routine collection of customer satisfaction data.

Since our founding in 1973, we have operated with a goal of 100% customer satisfaction. Due to our rigorous continuous process improvement program, we are constantly assessing the root cause and reason when we miss this delivery performance metric. That is why we created the Hierarchy of Horrors and the Service Quality Index (SQI). This is a system of weighted performance indicators that measure the functions of critical importance to the customer based on the degree of customer aggravation. Figure 4-4 shows the item description and its associated weight. The total number of “average daily failure points” is multiplied by that component’s weight to calculate the SQI.

4.3.1 Cooperation and Commitment to Customer Satisfaction

[ * ]

4.3.2 Governance and Code of Business Conduct and Ethics

FedEx operates under the tenets of our mission statement, which focuses on our customer service:

FedEx Corporation will produce superior financial returns for its shareowners by providing high value-added logistics, transportation and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx Corporation will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.

Our Board of Directors oversees our corporate governance to ensure our policies and practices, including our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, in light of best practices, and makes whatever changes are necessary to further our longstanding commitment to the highest standards of corporate governance. FedEx policies, manuals, and handbooks are important components of our overall compliance and ethics program, and they work in conjunction with the Code of Business Conduct and Ethics. If an employee has reason to believe that a legal or ethical violation has occurred, it is his or her duty to report it, and our policies forbid any form of retaliation. Our commitment to doing the right thing depends on our ability to set the proper tone and to address suspected violations promptly with care and respect.

The unique FedEx operating strategy works seamlessly – and simultaneously – on three levels:

• Operate independently by focusing on our independent networks to meet distinct customer needs.

• Compete collectively by standing as one brand worldwide and speaking with one voice.

• Manage collaboratively by working together to sustain loyal relationships with our workforce, customers, and investors.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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4.4 Current or Recent Postal Service Contracts and On-Time Performance Rates

[ * ]

4.5 Non-Postal Contracts of Similar Size, Scope, and Nature as in this Solicitation

[ * ]

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5.0 Security Plan

Through FedEx’s extensive human-intelligence network, we are keenly qualified not only to recognize, but to be proactive in addressing potentially dangerous activity.

FedEx has a very robust security organization that takes every reasonable precaution to protect the mail. This security starts when we take possession of the mail and ends when the mail is tendered to the Postal Service or THS. Our security organization (Section 5.1) helps to ensure the security of physical mail, information, and persons. Upon contract award, FedEx will work with the Postal Service to review and approve the security plan for implementation across the FedEx Regions as required by the contract. This plan, in compliance with Provision 4-10 of the RFP, will replace our current security plan from Section F of our Postal Contract Number 07-0454, which addresses all current points in addition to security training procedures for employees (Section 5.6).

This security plan will include a statement of principles that will be used by the U.S. Postal Inspection Service (“Inspection Service”) and FedEx to address U.S. Mail investigations and security matters related to this contract (“the Agreement”) between FedEx and the Postal Service. The statement of principles is not intended to be all-inclusive, but is designed to provide a broad framework that will allow flexibility for the parties to accomplish their respective security and investigative missions. In no event will the statement of principles be construed as an expansion of FedEx’s obligations or the Inspection Service’s authority under any applicable law or regulation, or expand either party’s rights or obligations under the Agreement. For purposes of the statement of principles, the term “mail” shall mean any item that is tendered to the aviation supplier by the Postal Service for transportation. The statement of principles is based on open communication and cooperation between the parties at each organizational level, to the fullest extent possible in postal-related matters.

5.1 Establish Coordination

FedEx Vice President of Security US, D. [ * ], is responsible for all Postal Service security matters under the cognizance of our team, which includes maintaining and updating this plan as required and meeting Postal Service security and contractual requirements or changes per Attachment J of the RFP. [ * ] will work directly with FedEx Regional Directors and the Postal Service Inspection Service, Deputy Chief Inspector, Headquarters’ Operation, Kenneth W. Newman to address all policy issues and any investigative or operational issues not resolved at the local level.

FedEx Regional Directors are familiar with Postal Service security requirements and procedures. They will be responsible for the implementation, monitoring, reporting, and training the security staff on Postal Service–specific security requirements. Figure 5-1 shows FedEx-designated Regional Directors who are currently performing, and will continue to perform security management.

[ * ] will work directly with [ * ], FedEx Managing Director of PTM, on all security matters related to this contract. Security’s flat organization and direct approach establishes clear lines of communication, with minimal bureaucracy in coordinating and managing security actions.

FedEx Customer Security Services (CSS) is responsible for security at FedEx. CSS provides comprehensive, strategic security programs that are based on proactive analysis of potential threats, innovative technology solutions, and aggressive investigations. CSS develops and implements coordinated contingency plans throughout FedEx that are focused on universal consequence management for catastrophic events.

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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5.2 Implementation, Administration, and Maintenance Activities

The FedEx security plan combines our stringent corporate policies with the Postal Service security policies to ensure the highest levels of security for all mail transported under this contract. Our security plan (Figure 5-2) encompasses the right people, processes, and tools to accomplish the required security activities.

5.2.1 Communication

FedEx Security will notify the appropriate Inspection Service division of any known theft, vandalism, or criminal activity involving the mail while in the custody of FedEx, by written notification. The Inspection Service division will notify the appropriate FedEx Security Director of any criminal activity or security issues related to FedEx or Postal Service customers and employees occurring on Postal Service owned or leased property. Both parties will cooperate and assist, subject to the terms and conditions hereof and on a commercially reasonable basis, with relevant security and investigative information related to the transportation and handling of the mail on Postal Service owned or leased property.

The security of the U.S. Mails is discussed in Volume 2, Section 1.3.18 of our proposal.

Figure 5-1. Security Process, Procedures, and Policies

FedEx security plan complies with Postal Service requirements.

5.2.2 Investigations

FedEx Security will notify the Inspection Service of all investigative and security issues involving the mail in the custody of FedEx by written notification. The Inspection Service is responsible for conducting all criminal investigations of the mail while in the FedEx system and for criminal activities directed at FedEx customers, or employees on Postal Service owned or leased property. The dedicated resources referenced in the coordination elements of this Agreement will be responsible for ensuring timely notification of, and cooperation with the Inspection Service for all matters related to investigations and other requirements of the Postal Service Inspection Service.

5.2.3 Criminal and Administrative Proceedings

FedEx Security (subject to the receipt of a properly issued subpoena or other similar “compulsions to appear”) and Inspection Service personnel will serve as witnesses in criminal and administrative proceedings that result from these investigations. We will comply with all Federal, state, and local authorities.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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5.2.4 Access to FedEx Operations, Facilities, Personnel and Loss Data

Subject to Noninterference (Section 5.2.10), FedEx Security will provide the Inspection Service access to our facilities, operations, and records when necessary for investigations involving the mail. We understand that the Inspection Service will provide reasonable advance notice to FedEx Express for access for its investigative or security purposes.

FedEx Security will coordinate interviews of its employees with the Inspection Service relevant to their investigations involving the mail, as required. FedEx Security will be present at any non-custodial or witness interviews of any FedEx employee conducted by Postal Inspectors, but not at custodial interviews.

Investigative reports prepared by FedEx Express Security may be provided to the Inspection Service in response to a validly issued subpoena after the FedEx investigation has been completed. FedEx management will make independent determinations about the discipline or discharge of any FedEx employee. The Inspection Service will not attempt to dictate, direct, or carry out such actions.

5.2.5 Surveillance Operations

FedEx Security will provide access to, and the information obtained from our close circuit television (CCTV) systems for investigation purposes. We will assist the Inspection Service with the installation of temporary CCTVs for investigations in compliance with Federal and state laws governing video surveillance investigations and reasonable expectations of privacy in the workplace.

5.2.6 Undercover Operations

FedEx Security may, subject to Section 5.2.10, Noninterference, authorize the placement of Inspection Service undercover personnel in its facilities where deemed necessary for investigations involving the mail. The Postal Service will defend and indemnify FedEx for any loss, damage, or other liability arising from the use of undercover personnel in FedEx facilities.

5.2.7 Contingency Planning and Notification

FedEx Security will ensure that the Inspection Service is listed as a party to be notified in its critical incident or contingency plans related to the loss, destruction, or delay of the mail caused by catastrophic losses of an aircraft or other vehicle transporting the mail, or a FedEx facility. FedEx Security will cooperate with the Inspection Service in the recovery of the mail where necessary.

5.2.8 Overgoods Operations

FedEx Security will provide security to any identified mail or mail contents processed in its overgoods operations and will ensure its transfer to the Postal Service in accordance with local operating plans. When directly relevant to mail security and investigations, FedEx Security may, at our sole discretion, provide information to the Inspection Service regarding related losses of FedEx product identified in our overgoods operations.

5.2.9 Protection and Disclosure of Information from Investigations

FedEx Security and the Inspection Service agree to protect all information obtained in the course of their respective investigations from unauthorized disclosure. All information related to investigations involving mail in the FedEx system or investigations of FedEx employees will be maintained in the Inspection Service Investigative File System as prescribed by the Privacy Act of 1974, 5 U.S.C. 552a. Any requests

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by third parties for records maintained in this system will be processed in accordance with requirements of the Privacy Act. All public disclosures of investigations information, including media requests or press releases, will be coordinated between the Inspection Service and FedEx Media Relations in accordance with a mutually agreed communications plan.

5.2.10 Noninterference

It is our understanding that the Inspection Service agrees that in the exercise of its rights under this protocol it will not disrupt or interfere with FedEx operations.

5.2.11 Modifications

FedEx will review this plan annually and will make modifications based on the mutual agreement of FedEx and the Inspection Service.

5.3 Conformance with Federal Aviation Administration (FAA), Transportation Security Administration (TSA), and Local Airport Authority

FedEx complies with all security requirements for personnel, facilities, and program security as stated in the RFP. We are cognizant of the FAA, TSA, and local airport authority rules and will continually work with these organizations to ensure compliance with the regulations. Our security plan follows the vision of TSA’s Office of Security Policy and Industry Engagement Air Cargo Division for a layered solution designed to protect against security breaches, by using a combination of process along with information and technology-based solutions, while preserving the integrity of the mail supply chain against threats to air cargo security.

FedEx will continue to meet with FAA and TSA on security matters that affect our aircraft when not at the airport. In March 2011, we met with TSA to discuss new security protocols developed in conjunction with U.S. intelligence authorities and other air carriers on rules specifically for cargo planes carrying only mail, as requested by shippers such as the Postal Service. These new protocols were issued based on TSA Security Directive and Emergency Amendment in the wake of the plot to attack U.S. air cargo originating from Yemen in October 2010.

5.4 Protection and Safeguard of U.S. Mails

Except as otherwise permitted by law or provided herein, mail, while in the custody of FedEx, or our employees or agents, will not be opened, searched, or seized unless expressly authorized by a Postal Inspector. In situations where other law enforcement agencies request access to the mail, a properly executed Federal search warrant is required. FedEx shall attempt to notify a Postal Inspector of any warrants served for mail in the custody of FedEx before coordinating the warrant execution.

Address information from the mail in the custody and control of FedEx may only be recorded or disclosed to another law enforcement or government agency upon expressed approval by a Postal Service Inspector, except as required for operational purposes regarding the sorts and transportation of the mail. FedEx shall notify a Postal Inspector of all requests from law enforcement for such information.

In situations where FedEx has reason to believe that mail contains dangerous and injurious contents that pose potential danger to FedEx employees, equipment, products, or facilities, FedEx will take actions necessary to secure the item and minimize the risk. The Inspection Service will be immediately notified and FedEx and the Inspection Service will coordinate the disposition of the item.

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5.5 Personnel Screening Procedures

FedEx is committed to providing the Postal Service with qualified staff that has passed our stringent screening process. To ensure that we comply with Postal Service Security Investigations Service Center (SISC) and Office of Personnel Management (OPM) personnel security screening and reporting requirements, FedEx conducts a thorough screening (Section 5.5.1) of all candidates for employment.

We will provide the Postal Service with exceptional data protection based on security measures implemented in a proactive and planned manner. Our security best practices mandate an integrated approach to the protection of assets. Administrative, operations, personnel, physical, and technical security solutions must interact to achieve the overall goal of protecting Postal Service data and all other information assets that come under our control. Our successful data security approach addresses both deliberate and inadvertent data loss, compromise, corruption, and denial of use.

5.6 Personnel Security Training

FedEx will train all support staff in the Postal Service Security Policies and Procedures, the use and support of security tools and products, security compliance requirements, and the penalties of noncompliance. We will conduct random, unannounced security audits of our facilities to ensure compliance with security procedures. We maintain an extensive Security Awareness, Training, and Education (SATE) program to ensure that all employees are aware of their responsibilities, the sensitivity of the information to which they will have access, and the standards of conduct required of each employee. Mandatory annual and semi-annual training courses are accessible online.

5.7 Security Breach Procedures

Our approach to security breach management is based on our extensive experience in industry best practices, which is focused on:

• Incident Recording. All incidents will be recorded.

• Categorization and Prioritization. Security breaches will be matched against existing problems or known errors in an attempt to identify previous solutions or workarounds that expedite resolution. Failing that, breaches will be prioritized to ensure assignment of adequate resources for investigation and diagnosis.

• Investigation and Diagnostics. Security breach details and checks will be assessed against existing intelligence to identify an approved resolution.

• Escalation. If escalation is required, subject matter experts (SMEs) will work to develop workarounds or solutions.

• Workaround and Incident Closure. The security breach knowledge base will be updated and customers will be contacted via surveys to gauge satisfaction.

• Restoration of Service. Communication will be maintained between the customer and security personnel through all phases of security breach management to restore service to normal Postal Service operations.

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6.0 Sustainability Plan

FedEx is committed to operating and innovating in new ways that not only benefit our Postal Service customer, but our industry.

This FedEx Sustainability Plan presents the details of our corporate sustainability initiatives and supporting metrics. We will work collaboratively with the Postal Service to develop initiatives to improve services and meet their guidelines. As shown in our attached corporate sustainability plan, FedEx is concerned for the environment, has proactively taken steps to mitigate our fleet footprint, and reports periodically on our environmental efficiency.

FedEx is familiar with the Postal Service sustainability goals and implementation initiatives, and our Sustainability Plan is responsive to the Postal Service plan. The Postal Service produces an annual Strategic Sustainability Performance Plan, including key performance indicators (KPI) on greenhouse gas emissions, facility energy use, transportation fuel use, and solid waste recycled. We collect and report on those KPIs annually. As a self-funded Federal agency, the Postal Service is not required to meet all of the Federal sustainability requirements in Executive Orders 13423 and 13514 or Presidential Memoranda for fleet management and bio-based purchasing, but where possible, the Postal Service voluntarily sets specific objectives that follow the Federal goals. Our Sustainability Plan also follows this guidance. The Postal Service reports annually on the following goals:

• Reduce greenhouse gas emissions by 20% by FY 20

• Reduce facility energy intensity by 30% by FY 15

• Reduce potable water intensity by 26% by FY 20

• Reduce total postal vehicle petroleum fuel use by 20% by FY 15.

6.1 Environmental Initiatives

FedEx is a symbol for leadership in global sustainability efforts. We think this sets us apart from other companies. FedEx actively works with government agencies, non-governmental organizations (NGOs), manufacturers, suppliers, and other fleet operators to introduce fuel-efficient and low-carbon, alternative-fuel technologies, and to promote the transformation of transportation through our advocacy for electrification. FedEx is a leader among U.S.-based logistics and transportation companies in this regard. We welcome the opportunity to provide consultative services to, and benchmarking opportunities for the Postal Service to share best practices and information about our most successful projects. The Postal Service has benchmarked with FedEx previously on this issue and FedEx will continue to work with the Postal Service in the future. FedEx will follow all Department of Transportation, International Air Transport Association and Environmental Protection Agency (EPA) guidance for fleet modernization recommendations, fuel efficiency, and other climate change criteria.

6.1.1 Collaborative Efforts with Postal Service

As part of this solicitation, FedEx proposes the following efforts to meet or exceed the goals that it has established for itself. It will also be able to meet or exceed all Postal Service objectives.

6.2 Current Sustainability Initiatives and Metrics

FedEx is committed to sustainability efforts and has a number of efforts in progress. The FedEx annual Global Citizenship Report (GCR) presents our initiatives and metrics. EarthSmart@Work, a program in the FedEx key focus area of Environment and Efficiency, is responsible for setting, implementing, and achieving goals to minimize our impact on the environment.

INITIATIVES. Through FedEx’s EarthSmart@Work Program, we have the following initiatives, which are highlighted from the 2011 GCR:

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• Greenhouse Gas Emissions. Our current emissions goals include:

• Reducing aircraft emissions intensity by 30% by 2020, on an emissions per available-ton-mile basis, from a baseline year of 2005. This represents an increase in our global aircraft emissions intensity goal by 50% from the original target established in 2005.

• Increasing FedEx Express vehicle efficiency by 20% by 2020, including by supporting new technology, from a baseline year of 2005.

• Getting 30% of our jet fuel from alternative fuels by the year 2030 and expanding on-site generation of, and continuing procurement of renewable energy for our facilities.

• Aircraft. Decreasing aircraft CO₂ emissions intensity by 30% by 2020, on an emissions per available-ton-mile basis from a baseline year of 2005. This represents an increase in our global aircraft emissions intensity goal of 50% from the original target established in 2005.

• Fuel Sense – Optimization of flight planning, aircraft weight reduction, and flight efficiencies are a few of the 30 Fuel Sense programs. Fuel Sense helped cut our jet fuel consumption by 40.5 million gallons and CO₂ emissions by nearly 388,000 metric tons in FY 11.

• By 2015, we will have replaced all of our less efficient 727s with more fuel-efficient and greater payload 757 aircraft.

• We are also introducing Boeing 777F aircraft, which use 18% less fuel than the MD-11 aircraft and provide greater payload capacity. In addition, we are planning to introduce the new Boeing 767 aircraft into our fleet in FY 13, which will further contribute to our ability to meet our newly revised aircraft emissions intensity reduction target.

• Vehicles. Improving vehicle fuel efficiency of the FedEx Express surface delivery vehicle fleet by 20% by 2020 – including support of new technology – using 2005 as the baseline year.

• Zero-emission, all-electric vehicles – The FedEx zero-emission, all-electric fleet of vehicles reduces emissions and fuel usage in major metropolitan areas. Coupled with the restructuring of routes and right-sizing of our fleet, these FedEx vehicles have helped us save 75 million gallons of fuel to date and have reduced our fuel consumption in North America, Europe, and Asia by more than 25%.

• Alternative fuel vehicles (hybrid-electric and all-electric) – FedEx Express has increased the size of its alternative-fuel fleet by 18% in FY 12, with a total of 364 hybrid-electric vehicles (HEVs) and 118 electric vehicles (EVs) in service by the end of FY 12. These vehicles have saved 345,000 gallons of fuel and logged 12.1 million miles since being introduced into our fleet. We also continue to retrofit conventional internal combustion engine vehicles to make our local delivery vehicles more fuel efficient through our Vehicle Refresh Plan.

• Alternative Aviation Fuel. Getting 30% of our jet fuel from alternative fuels by 2030 – FedEx is collaborating with the aviation industry to develop alternative fuel for long-distance transport. Working with The Nature Conservancy, we have brought together leading experts to help us consider every angle of the issue. We are consulting with the FAA and the Departments of Agriculture, Defense, and Energy. We are collaborating with specialists from the emerging alternative fuels industry, airplane manufacturers, airlines, and conservation organizations. Emissions reduction, energy conservation, affordability, and the preservation of land and the world’s food supply — all these factor into the selection process. Our goal is to source 30% of our aviation fuel from alternatives by 2030.

• Solar Facilities. Greening our facilities through the generation and continuing procurement of renewable and alternate energy – Currently, we have 6 solar energy facilities – 5 in the U.S. and one in Europe – which together have reduced CO₂ emissions by an estimated 6,858 metric tons.

Environmental Management System. Implementing an Environmental Management System to provide a formal process to improve environmental efficiency and performance to achieve ISO 14001 certification. Currently 51 of our facilities have achieved this certification.

Recycling. Through our EarthSmart@Work programs, we are finding ways to responsibly recycle everything from paper to motor oil. FedEx Ground is leading the charge to reduce landfill waste through Ground Green, an EarthSmart@Work initiative. We are working in conjunction with the EPA Waste Wise program on this comprehensive campaign that encourages team members to recycle everything from paper to cardboard to wood pallets. Since the program’s inception in 2006, waste removal costs are down 25% in one district alone, and millions of pounds of goods have been saved from the landfill.

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Carbon-Neutral Envelope Shipping. For every FedEx Express envelope shipped, we will offset the carbon emissions related to our transport, no matter where we travel, at no cost to the customer. The annual estimated carbon offset through this program is equivalent to planting 2,179,487 seedlings and letting them grow for 10 years.

Paper and Packaging. For more than a decade, FedEx has worked to minimize the environmental impact of our packaging wherever possible, by using recycled content and maximizing recyclability. Today, most FedEx packaging is recyclable and contains recycled materials. For example, the FedEx Express Overnight Envelope is composed of 100% recycled cardboard. Changes in the recycled content of our legal-sized reusable FedEx Envelope, which uses dual tear strips to extend its usefulness, resulted in an annual paperboard reduction of 100,000 pounds. Figure 6-1 presents our progress in this area.

Products

Figure 6-1. FedEx Commitment – Recycled Material

FedEx Express commits to using recycled material in our packaging products and envelopes.

Noise Abatement. FedEx founder and CEO Frederick W. Smith says, “Concerning noise control, FedEx and many carriers have worked for years to reduce noise through quieter aircraft and better abatement procedures such as reduced power climbs and improved descent patterns.”

METRICS. FedEx tracks the following metrics and reports on the progress through in annual GCR. The following are highlights:

• Enterprise CO₂ Emissions (in metric tons). We report on total direct greenhouse-gas emissions which are directly proportional to economic growth.

• Aircraft Emissions (in metric tons). We increased our global aircraft CO₂ emissions intensity reduction goal by 50% to a 30% intensity reduction by 2020, still using FY 05 as the baseline year.

• Vehicle Fuel Efficiency. Our goal for 2020 is to improve the fuel efficiency of the FedEx Express surface delivery vehicle fleet by 20%, using 2005 as the baseline year.

• Electric and Hybrid Electric Fleet. We increased our global EV and HEV fleet to 482 vehicles, an increase of nearly 18%. The fleet has logged almost 12.1 million miles, saving approximately 345,000 gallons of fuel.

• Solar Electricity. We have generated more than 18 GWh of solar electricity since we built our first solar facility. We now have 6 solar energy facilities, 5 in the U.S. and 1 in Europe. These 6 facilities alone have reduced our CO₂ emissions by an estimated 6,858 metric tons.

• Renewable Energy Credits. In FY 11, FedEx Office^® purchased 33,333 Renewable Energy Credits (REC) to offset emissions associated with the electricity we used in FY 11 and to support efforts to generate electricity from renewable sources. Each REC purchased represents 1,000 kWh of electricity produced by a renewable energy facility.

• Waste Streams. In FY 11, the majority of our waste (95.32%) consisted of nonhazardous and municipal solid waste, much like regular household garbage. The remaining waste streams included hazardous waste, which is dangerous or potentially harmful to human health or the environment; “universal waste,” which includes batteries, pesticides, mercury-containing equipment, and light bulbs; and e-waste.

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• Recycling (in millions of pounds and percentages). We recycle and reuse a significant amount of waste, and we look for new technologies to help us increase this amount. In FY 11, we recycled 6.4 million more pounds of the waste generated at our facilities and increased the percentage of waste recycled to 36%.

• ISO 14001 Certification. ISO 14001 provides a framework for a holistic, strategic approach to an organization’s environmental policy, plans, and actions. FedEx is evaluating the feasibility of obtaining ISO 14001 certification in additional facilities as 51 of our facilities in Europe meet those requirements.

• FSC Certified Paper. We seek to buy paper for our FedEx Office Print and Ship Centers from suppliers that have been certified by the Forest Stewardship Council (FSC), which helps ensure responsible forest management. In FY 11, we increased the percentage of FSC-certified paper used in our FedEx facilities to 80%.

6.2.1 Greenhouse Gas Emission Estimates Via Air and Ground Transport

[ * ].

6.3 Independent Verification

[ * ]

6.4 Emissions Reporting and Frequency

[ * ]

6.4.1 Reporting

[ * ]

6.4.2 Meetings

FedEx will convene a meeting with the Postal Service no later than thirty (30) days after contract award to discuss high level greenhouse gas emissions estimation methodologies and network boundaries FedEx will hold quarterly meetings with the Postal Service to discuss reporting methodology developments, boundaries, and notification of estimation methodology or boundary changes. These meetings will be scheduled in accordance with the contract terms. Ron Stevens, Managing Director of PTM, will be our FedEx representative at these meetings.

6.5 Sustainability Reports

As presented in this section, FedEx has a comprehensive sustainability program, with an infrastructure of goals, milestones, and reporting features. FedEx has not been required under our current Postal Service contract to submit sustainability reports, [ * ]. We will coordinate with the Postal Service to develop reports that deliver the information to make informed decisions, which will include the following statistics as stated in Section 6.2.1 of this volume:

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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7.0 Subcontracting Plan (Provisions 3-1, 4-1, 4-2, Clauses 3-1, 3-2)

FedEx provides the Postal Service with the best value for every dollar we spend on subcontracted goods and services.

The FedEx subcontracting plan for the Postal Service ACN contract is compliant with Clauses 3-1 and 3-2 of the RFP. It also fulfills the requirements of the Postal Service’s Supplying Principles and Practices (SP&Ps). We are committed to ensure that small, minority, or small woman-owned businesses (SMWOB) are fairly represented under this contract. We will provide subcontracting activity reports under this contract on a calendar-quarter basis as described in Clause 3-2 of this solicitation within 15 calendar days after the end of the quarter, or more frequently, if the Postal Service Contracting Officer (CO) requires.

We understand that this plan must be approved by both the Postal Service and FedEx prior to the award of a contract. Additionally, all subcontracts regardless of type will include the clauses required by the Postal Service. FedEx understands that it cannot enter into any first-tier subcontract to a Postal Service ACN contract for an estimated or actual amount of [ * ] or more without obtaining written clearance from the Postal Service CO that the proposed subcontractor is in compliance with the equal opportunity requirements and is eligible for award.

7.1 Subcontracting Goals

Figure 7-1 shows the proposed subcontracting goals across the FedEx enterprise during FY 13, including SMWOBs.

Figure 7-1. FedEx Subcontracting Goals for FY 13

We are committed to the SMWOB subcontractor goals.

Subcontractor Business Type	Total Dollar Amount
All		[	* ]
Minority and woman-owned		[	* ]
Veteran-owned (VOB) including service-disabled veteran-owned business (SDVOB)		[	* ]
Service-disabled veteran-owned business (SDVOB)		[	* ]
HUBZone business		[	* ]
Small disadvantaged business		[	* ]

7.2 Total Dollars Subcontracted by Type

FedEx’s goal for the total dollars to be subcontracted across the enterprise during FY 13 is [ * ]. The specific dollar goals for SMWOBs are shown in Figure 7-1 above.

7.3 Description of Subcontracted Supplies and Services

FedEx will consider subcontracts for services for any non-flight or aircraft related commodities and services when possible. FedEx has subcontracted and will continue to use subcontractors for supplies and services across all applicable commodity categories including:

• Equipment, maintenance, and material

• Building maintenance, construction, and repair

• Repair of machinery

• Aircraft parts

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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United States Postal Service Air Cargo Network Volume 1 November 6, 2012

• Janitorial services

• Security guard services

• Service and safety awards

• Employee screening services

• Ground transportation

• Call center/help desk management.

7.4 Method Used to Develop Subcontracting Goals

FedEx has a disciplined and logical process and methodology to develop our subcontracting goals. Our purchasing agents develop, on an annual basis, a sourcing plan that identifies the commodities and services that are under contract with projections for bid during the following calendar year. We will consider factors such as volume by service type, subcontractor performance, and customer ordering projections. Based on the calculated dollar amounts, we compare our current budgeted subcontract dollars to the projected spending, and arrive at our average percentages for the next year. Our subcontractor goals are consistent with, and accurately reflect FedEx’s actual subcontracting report for the electronic Subcontracting Reporting System (eSRS).

7.5 Method Used to Identify Potential Sources

FedEx uses several proven methods to advertise to potential sources. We monitor Web sites to meet our subcontracting goals, including those of the National Minority Supplier Development Council, SBA Matchmaking Sessions, SBA.gov, Mid-South Minority Business Council, FedEx Supplier Contact Management System, and System for Award Management (SAM) which is formerly the Central Contractor Registration (CCR). Outreach efforts include involvement with trade associations, business development organizations, conferences, and trade fairs to locate small, minority, and woman-owned business sources. We provide encouragement to subcontractors through workshops, seminars, and training, and monitoring performance to evaluate compliance with the program’s requirements. These efforts demonstrate FedEx’s commitment to ensuring that businesses, other than large businesses, have an equitable opportunity to compete and participate in subcontracts.

7.6 Indirect Cost Statement

Indirect costs have been included in the dollar and percentage subcontracting goals stated above in Figure 7-1, in Section 7.1. The method used to determine the proportionate share of indirect costs to be incurred with small business concerns is calculated based on the previous year’s subcontractor spend, factored with estimates for the coming year.

We require that our supply chain specialists include at least one SMWOB concern in all RFPs for indirect costs. If a small business concern is not included, an exception form detailing why one was not included must be submitted and signed by the Vice President for the applicable engagement.

7.7 Subcontracting Program Administrator

Our subcontracting program administrator and alternate are presented in Figure 7-2.

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Figure 7-2. Subcontracting Program Administrator

	Subcontracting  Program Administrator	Alternate Subcontracting  Program Administrator
Name:	Tina Thornton	Conrad “Deke” Crawford
Title/Position:	Senior Supply Chain Specialist	Supply Chain Specialist
Address:	30 FedEx Parkway	30 FedEx Parkway
City/State/Zip Code:	Collierville, TN 38107	Collierville, TN 38107
Telephone Number:	901.263.6848	901.263.5037
Fax Number:	901.263.6449	901.263.6449
Email:	tina.thornton@fedex.com	cecrawford2@fedex.com

To effectively implement this plan for efficient contract performance, the subcontracting program administrator will perform the following functions:

• Assist with SMWOB concerns, by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules, to facilitate participation by such concerns. Where FedEx’s lists of potential small subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time.

• Provide adequate and timely consideration of the potentialities of small concerns in all “make-or-buy” decisions.

• Counsel and discuss subcontracting opportunities with representatives of small firms.

• Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small, for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the contractor’s subcontracting plan.

• Develop and promote company/division policy statements that demonstrate the company’s or division’s support for awarding contracts and subcontracts to small concerns.

• Develop and maintain bidders’ lists of small concerns from all possible sources.

• Ensure periodic rotation of potential subcontractors on bidders’ lists.

• Ensure that small concerns are included on the bidders’ list for every subcontract solicitation for products and services that they are capable of providing.

• Ensure that subcontract procurement packages are designed to permit the maximum possible participation of small concerns.

• Review subcontract solicitations to remove statements or clauses that might tend to restrict or prohibit small concerns.

• Ensure that the subcontract bid proposal review board documents its reasons for not selecting any low bids submitted by small concerns.

• Oversee the establishment and maintenance of contract and subcontract award records.

• Attend or arrange for the attendance of company counselors at business opportunity workshops, minority business enterprise seminars, and trade fairs.

• Directly or indirectly counsel small concerns on subcontracting opportunities and how to prepare bids to the company.

• Conduct or arrange training for purchasing personnel regarding the intent and impact of Section 8(d) of the Small Business Act on purchasing procedures.

• Develop and maintain an incentive program for buyers that support the subcontracting program.

• Monitor the company’s performance and make any adjustments necessary to achieve the subcontract plan goals.

• Prepare and submit timely reports.

• Coordinate the company’s activities during compliance reviews by Federal agencies.

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7.8 Subcontracting Plan Flowdown

FedEx agrees to require all subcontractors (except small business concerns) that receive subcontracts under any Postal Service ACN contract in excess of [ * ] to adopt a plan that complies with the requirements of the FedEx Subcontracting Plan.

7.9 Recordkeeping

FedEx will maintain records concerning procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists and a description of efforts to locate small concerns and award subcontracts to them. The records will include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated):

i. Source lists (e.g., CCR), guides, and other data that identify small concerns

ii Organizations contacted in an attempt to locate sources that are small concerns

iii. Records on each subcontract solicitation resulting in an award of more than [ * ] indicating:

(1) Whether small business concerns were solicited, and if not, why not

(2) Whether woman-owned small business concerns were solicited, and if not, why not

(3) If applicable, the reason award was not made to a small business concern

iv. On a contract-by-contract basis, records to support award data submitted by FedEx to the Government, including the name, address, and business size of each subcontractor. Contractors having commercial plans need not comply with this requirement.

7.10 Reports

FedEx will submit periodic reports on a calendar-quarter basis so that the Postal Service can determine the extent of our compliance with this subcontracting plan. The reports will be in compliance with Clause 3-2 of the RFP. Additionally, we agree to cooperate in any studies or surveys that may be required. We are familiar with the subcontracting portal through the use of eSRS. Reports are to be submitted within 30 days after the close of each calendar period.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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United States Postal Service Air Cargo Network Volume 1 November 6, 2012 Sustainability Report SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 1

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 ENVIRONMENT & EFFICIENCY 2011 Global Citizenship Goals & Progress Update SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 2

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 ENVIRONMENT & EFFICIENCY Table of Contents Introduction 3 EarthSmart®. FedEx solutions for a more sustainable world. 4 Annual estimated carbon offset 4 Greenhouse gas emissions 5 Enterprise CO2 emissions 5 Greening our fleet 5 Aircraft emissions 5 Vehicle fuel efficiency 6 Electric and hybrid-electric fleet 6 Greening our facilities 8 Solar electricity 8 Renewable energy credits 8 ISO 14001 certification 9 Waste streams and recycling 9 Waste streams 9 Recycling totals 10 Recycling percentages 10 Paper and packaging 11 FSC-certified paper 11 Fines and penalties 12 Awards and recognition 13 All currencies are translated in U.S. dollars. 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE | 2 SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 3

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 Environment & Efficiency FEDEX DOESN’T JUST WANT TO PLAY AN IMPORTANT ROLE IN HOW THE WORLD IS CONNECTED We want to connect the world responsibly and resourcefully. The commercial transportation industry has no single solution for reducing its environmental footprint. But FedEx is committed to operating and innovating in new ways that can help our business as well as our industry. Environment and Efficiency is one of four specific areas where we document our progress each year. Along with Economics and Access, Community and Disaster Relief, and People and Workplace, we offer data, information, and examples in our annual Global Citizenship Report of how we live up to our responsibilities. FedEx team members contribute to our progress in these four important areas, their actions speaking just as loudly as the numbers that mark our progress. FedEx was the first U.S. transportation-logistics company to set long-term goals to reduce aircraft emissions. In 2005, we set goals to reduce aircraft emissions 20 percent by 2020, to increase FedEx Express vehicle efficiency by 20 percent by 2020, and to expand on-site renewable energy generation and the procurement of renewable energy credits. FedEx was the first company in the U.S. transportation-logistics industry to establish a Citizenship Blog, to report global Scope 1 (direct) greenhouse-gas emissions in 2008, and to disclose climate risks to the Securities and Exchange Commission. For more information on risks reported, see pages 19 and 71 of our Securities and Exchange Commission Form 10-K 2012. Our current emissions goals include: Reducing aircraft emissions intensity 30 percent by 2020, on an emissions per available-ton-mile basis, from a baseline year of 2005— this represents an increase in our global aircraft emissions intensity goal by 50 percent from the original target established in 2005. Increasing FedEx Express vehicle efficiency by 20 percent by 2020, including via support of new technology, from a baseline year of 2005. Getting 30 percent of our jet fuel from alternative fuels by the year 2030. Expanding on-site generation of and continuing procurement of renewable energy for our facilities. Seeking LEED (Leadership in Energy & Environmental Design) certification on all new FedEx Express buildings in the U.S. Our strategy for reaching these goals includes: Minimizing our environmental footprint while serving our customers and growing our business. Maximizing efficiencies. Supporting innovation for eco-technologies. Providing leadership in responsible environmental stewardship. Helping connect the world in responsible and resourceful ways. We continue to look at and identify our areas of exposure with regard to greenhouse-gas emissions and other environmental factors. We then determine the level of potential impact and set appropriate plans and goals needed to shrink our environmental footprint. Finally, we continually monitor our progress toward minimizing our impact and achieving our goals. Many departments are involved in issues of environmental stewardship. Their collective efforts are led by Mitch Jackson, Vice President for Environmental Affairs and Sustainability. In 2011, we reconstituted our governance oversight with the FedEx Enterprise Sustainability Council (FESC), a senior officer-level council that develops and guides implementation of our sustainability strategy. Sustainability Impact Teams were also established under the FESC management structure to ensure that our various operating companies can discuss, plan, and act in harmony on our sustainability strategy. We also actively work with government agencies, NGOs, manufacturers, suppliers, and other fleet operators to introduce fuel-efficient and low-carbon, alternative-fuel technologies, and to promote the transformation of transportation through our advocacy for electrification. FedEx has done more than any other U.S.-based logistics and transportation company in this regard. FedEx was the first company in the U.S. transportation-logistics industry to push for commercial-vehicle, fuel-economy legislation, which was enacted in the Energy Independence & Security Act of 2007. And we helped create a set of principles to inform and support this first-ever national greenhouse-gas/fuel-efficiency program for medium- and heavy-duty vehicles—the only company in our industry to do so. FOR MORE INFORMATION ON OUR APPROACH TO CARBON LEGISLATION, SEE THE FOLLOWING: FedEx addresses the feasibility of the concept of a price on carbon emissions— blog.fedex.designcdt.com/node/810. Frederick W. Smith addresses the carbon tax debate while speaking at the Global Green Initiative Conference— mediacenter.fedex.designcdt.com/node/347. FedEx has also participated in studies that advocated such legislation. See the Commission for Environmental Cooperation’s “Destination Sustainability: Reducing Greenhouse Gas Emissions from Freight Transportation in North America” report— http://www.coc.org/Storage/99/9783_CEC-FreightTransport-finalweb_en.pdf. 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE | 3 SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 4

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 Environment & Efficiency EARTHSMART®. FEDEX SOLUTIONS FOR A MORE SUSTAINABLE WORLD. FedEx works to achieve our ambitious goals through EarthSmart, the FedEx roadmap fat operating in an increasingly sustainable way and engaging our team members, customers, suppliers, vendors, and the communities where we operate to help us reduce the environmental impact of our daily business operations. We introduced EarthSmart in 2009 as a way to underscore our commitment to minimize our impact on the environment. Our aim is to find or create new ways not only to improve our own company’s environmental performance, but also to point the way for other companies in our own industry and beyond. EarthSmart includes three pillars: EarthSmart Innovations: Customer and FedEx solutions related to services and assets. EarthSmart © Work: Workplace employee-engagement programs. EarthSmart Outreach: Philanthropic and volunteer efforts. INTRODUCING FEDEX CARBON-NEUTHAL ENVELOPE SHIPPING In April 2012, FedEx introduced our latest EarthSmart innovation—FedEx carbon-neutral envelope shipping. For every FedEx Express18 envelope shipped, FedEx will offset the carbon emissions related to its transport, no matter where it travels. The program helps improve the carbon footprint not only at FedEx, but also for our customers’ businesses. But unlike our competitors, we won’t charge customers a fee to offset the carbon produced when they ship an envelope. Annual Estimated Carbon Offset We calculate the emissions it takes to transport an envelope to its destination, and we pay an offset provider to offset those emissions for every envelope we carry. The annual estimated carbon offset by this program is equivalent to planting 2,179,487 seedlings and letting them grow for 10 years. We work with BP Target Neutral, a not-for-profit offset provider whose projects reduce, replace, and neutralize carbon. Currently, BP Target Neutral invests in six large carbon-offset projects, which will offset the carbon FedEx emits transporting envelopes. Projects are located in: China-micro hydro; The Netherlands—biogas; Tanzania-reforestation; Thailand-landfill-to-gas, Turkey-wind power; and U.S.-landfill-to-gas. For more information on this exciting new initiative, go to niews.van.fedeX.com/carbonriGutralenveloDe EARTHMART INNOVATIONS CUSTOMER AND FEDEX SOLUTIONS RELATED TO SERVICES AND ASSETS FedEx carbon-neutral envelope shipping. FedEx seeks to transport documents around the world in a way that neutralizes carbon emissions-at no extra charge FedEx Express works with BP Target Neutral. a not-for-profit offset provider that helps to reduce, replace, and neutralize carbon by investing in offsets for every envelope shipment EARTHSMART OUTREACH: PHILANTHROPIC AND VOLUNTEER EFFORTS EMBARQ: fedex works with EMBARQ, the World Resources Institute’s Center for Sustainable Transport, to help eliminate congestion, air pollution, and unsafe roads for people living in Mexico, Brazil, and India. National Fish and Wildlife Foundation: FedEx supports the National Fish and Wildlife Foundation in its efforts to preserve and restore U.S. native wildlife species and habitats. To learn more about our EarthSmart programs, go to earthsmart.fedex.com/. 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE | 4 SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 5

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 Environment & Efficiency GREENHOUSE GAS EMISSIONS ENTERPRISE CO2 EMISSIONS Our Scope 1 and 3 CO2 emissions increased slightly in FY11 due to increased shipping volumes, which came with improved global economic conditions and strong demand for our services. However, we have made progress in decoupling economic growth from our direct greenhouse-gas emissions during that time period. Our Scope 1, 2 and 3 CO2 absolute emissions increased by 4 percent in FY11 compared with FY10, while still remaining at 3 percent below FY09 levels. In FY11, we increased out total annual revenue by 13 percent over FY10. Enterprise CO2 Emissions (in metric tons) GREENING OUR FLEET AIRCRAFT EMISSIONS We calculate aircraft emissions intensity metrics by dividing the total CO2 emissions of our company-operated aircraft by the available ton miles (ATM), or the tons of carrying capacity by miles traveled. Aircraft Emissions DEFINING SCOPE EMISSIONS Our Scope 1 emissions include those generated by our company-operated aircraft and surface vehicle fleets, and on-site combustion of diesel, natural gas, and other fuels used at our hub, station, and office locations. Our Scope 2 emissions are indirectly generated through our consumption of purchased electricity, heat, and steam at our facilities and FedEx Office Print and Ship Centers In FY11, our Scope 2 emissions decreased slightly due to ongoing energy efficiency initiatives at our facilities (see “Greening Our Facilities” for more information). Our Scope 3 emissions comprise other indirect emissions, including those from FedEx Express feeder aircraft contract operators and the fuel we sell to FedEx Ground independent contractors. We compiled our greenhouse emissions inventory using data and emissions factors in accordance with WorId Resources Institute technical guidance. In previous years, we tracked and reported this data on a calendar-year basis. However, in order to be consistent with how we report on other data in this report, we are transitioning to a fiscal-year reporting basis for this metric going forward. Our previous goal by 2020 was to reduce our CO2, emissions intensity or emissions per available ton mile by 20 percent as compared with our 2005 performance. We are pleased to announce that FedEx has increased our global aircraft emissions intensity goal by 50 percent to a 30 percent intensity reduction by 2020, still using FY05 as the baseline year. In FY11, we reduced aircraft CO2 omissions intensity by 4 percent, bringing our cumulative reduction to 13.8 percent compared with FY05. The majority of this reduction was due to replacement of older, more-inefficient aircraft. By 2015, we will have replaced all our less-efficient 727s with more fuel-efficient and greater payload 757 aircraft. We are also introducing Boeing 777 aircraft, which use 18 percent less fuel than the MD-11 aircraft and provide greater payload capacity. In addition, we are planning to introduce the new Boeing 767 aircraft to our fleet in FY13, which will further contribute to our ability to meet our newly revised aircraft emissions intensity reduction target. Other operational activities play a significant role, and these advancements are managed under our Fuel Sense program. We have programs to optimize fuel usage from gate to gate, starting with preflight. For example, aircraft auxiliary power unit (APU) usage is managed by providing ground support equipment 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE | 5 SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 6

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 Environment & Efficiency in parking positions. To supplement ground support equipment, gate stands provide power from either a power converter or a portable power unit, and portable air conditioning carts keep the aircraft cool in hot summer months. This equipment is monitored in real time and information is provided to all the stakeholders, from ground support teams that can track the portable units in real time and dispatch them to the required gate to the flight crewmembers so they can determine when to start the APU. We also have gate-to-gate programs to facilitate taxiing with one less engine and for optimized profile descent (also known as continuous descent approach) prior to landing. These procedures provide a repeatable and predictable trajectory that both Air Traffic Control and crewmembers can use to minimize fuel usage. We also have a mechanism for crewmembers to share new ideas and provide feedback on their individual contributions to the program. Whether on the ground or in the air in every phase of the flight, preflight, taxi, takeoff, climb, cruise, descent, landing, and taxi, we look for programs to optimize fuel usage and reduce emissions. At FedEx, small changes through individual contributions a mount to a big impact in emission reductions over many daily operations worldwide. VEHICLE FUEL EFFICIENCY Our goal for 2020 is to improve the fuel efficiency of the FedEx Express surface/delivery vehicle fleet by 20 percent, using 2005 as the baseline year. We are happy to announce that we are still on track to meet that target, having achieved a 16.6 percent improvement in the FedEx Express vehicle fleet between FY05 and FY11. Vehicle Fuel Efficiency The FedEx Express pickup and delivery vehicle fleet follows a three-tired approach to improve vehicle fuel efficiency: Reduce, Replace, and Revolutionize. This means we develop vehicle technologies for the future while making the best use of the conventional vehicles we operate today. FedEx Express has increased the size of its alternative-fuel fleet by 18 percent in FY12, with a total of 364 hybrid-electric vehicles (HEVs) and 118 electric vehicles (EVs) in service by the end of FY12. These vehicles seved 345,000 gallons of fuel and logged 12.1 million miles since being introduced to our fleet. We also continue to retrofit conventional internal-combustion-engine vehicles to make our local delivery vehicles more fuel efficient through our “Vehicle Refresh Plan” Our engineers use detailed analysis techniques to understand the power and torque requirements of our various route profiles. Matching the right vehicle to each respective route yield significant economic and environmental returns. This program has saved over 75 million gallons of fuel since its inception. Electric and Hybrid-Electric Fleet EARTHSMART @ WORK: WORKPLACE EMPLOYEE-ENGAGEMENT PROGRAMS Fuel Sence: Optimization of flight planning, aircraft weight reduction, and flight efficiencies are a few of the 30 different Fuel Sense programs. Fuel Sense helped cut our jet fuel consumption by 40.5 million gallons and CO emissions by nearly 388,000 metric tons in FY11. Reduce, Replace and Revolutionize: Includes restructuring FedEx Express routes to reduce miles driven and vehicles needed, matching vehicles to routes by energy requirements, and using smart changing algorithms to control the impact on the electric grid. To learn more about our EarthSmart programs, go to earthsmart_fedex.com/. 2011 GLOBAL CITIZENS HI? GOALS & PROGRESS UPDATE I6 SN#:5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 7

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 FedEx Express also expanded its Eco-Drive program to 10 Asia-Pacific markets’ Australia, China, Hong Kong, Japan, South Korea, Malaysia, Now Zealand, Singapore, Taiwan, and Thailand Experts from Isuzu Motors teach FedEx drivers how to operate vehicles mere efficiently, increasing their awareness of energy conservation, environmental protection, and general road safety FedEx Office has adopted technology from our other operating companies to help make touting of our local delivery vehicle fleet more efficient This includes creating a national centralized dispatch facility and testing all electric vans in Washington, D C, and hybrid vehicles in other markets FedEx continues to he actively engaged in a variety of cross sector and public private collaborations In identity and pilot now technologies to remove the fuel efficiency of the- global logistics industry’s vehicle fleet This effort is reducing the entile industry’s greenhouse-gas emissions These technological innovations include making hybrid and electric drivetrains more affordable and scalable, improving the fuel economy of conventional internal-combustion-engine vehicles, and developing an international infrastructure for vehicle electrification. FedEx works with the U.S. Department of Energy, the Environmental protection Agency (EPA), vehicle component manufactures, and other commercial vehicle fleet owners through the CAI START Hybrid Truck Users Forum to promote adoption of hybrid electric and hydraulic commercial delivery trucks in the marketplace Through these relationships, each FedEx operating company focuses on technologies that are specifically relevant to their operations and that will ultimately benefit out other operating companies with FedEx Express exploring advancements in electric vehicle transmissions, FedEx Ground evaluating innovations in hydraulic hybrid technology, and FedEx Freight exploring the feasibility of using Liquefied Natural Gas for Class 8 long haul trucks. FedEx operating companies are also active in the EPA’s SmartWay program and the Department of Energy’s newly established National Clean Fleets Partnership to foster cooperation around fuel-efficiency innovation across the entire commercial vehicle value chain. The LPA SmartWay transport Partnership creates a market mechanism that gives Carries and shippers incentive to improve the efficiency of then operations, increase envy performance, and increase supply chain sustain ability SmartWay partners agree to benchmark and assess freight operations, calculate fuel consumption, and tract fuel efficiency FPA creates reporting tools, calculates emissions, and publici7es partners’ performance on the SmartWay Partner list Four of the FedEx operating companies (Custom Critical, Express, height, and Ground) am currently members of the FPA SmartWay Transport Partnership For more information on the SmartWay program, visit http://www.epa.gov/smartwav/. In addition, FedEx Chairman and CLO Frederick W. Smith’s continued advocacy tor commercial vehicle electrification through Securing America’s future Energy (SAFE), where he serves as co-chair, is helping to drive a more strategic approach to ensuring that the U.S. is at the forefront the alternative-fuel vehicle revolution. Environment & Efficiency EARTHSMART INNOVATIONS: CUSTOMER AND FEDEX SOLUTIONS RELATED TO SERVICES AND ASSETS FedEx low-emission, hybrid-electric vehicles: Our fleet of FedEx Express vehicles has reduced fuel consumption in North America, Europe, and Asia by more than 25 percent 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE 17 SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

Environment & Efficiency GREENING OUR FACILITIES RENEWABLE AND ALTERNATIVE ENERGY FedEx has generated over 18 gigawatt-hours of solar electricity since we built our first solar facility We row have six solar-energy facilities, five in the U S and one in Europe. These six facilities alone have reduced CO, emissions by an estimated 6,858 metric tons This is roughly equivalent to 768,834 gallons of gasoline or 1/5,846 tree seedlings growing for 10 years, based an the EPA’s Greenhouse Gas Equivalence Calculator. Solar Electricity 7,510,000 KWh FedEx Express Oakland, Calif. 1,160,000 kWh FedEx Freight Fontana, Calif. 1,370,000 kWh FedEx Freight Whittier, Calif. 5,160,000 FedEx Ground Woodbridge, NJ. 1.010,000 kWh FedEx Ground Rialto. Calif. 1,790,000 kWh FedEx Express Cologne. Germany The FedEx Express 350,000-square-foot solar-powered facility in Oakland, Calif, was the largest commercial solar rooftop installation at the time it was built in 2005. More than 5,700 solar electric panels cover the 81,000 square feet of roof space, producing 904 kilowatts of power In 2008, FedEx Freight introduced two solar-power installations at facilities in Whittier and Fontana, Calif., both systems providing a substantial portion of the facilities’ annual electricity needs In late 2009, FedEx Ground installed the nation’s then largest rooftop solar-electric system at its distribution huh in Woodbridge, N J Capable of producing approximately 26 million kilowatt-hours of electricity a year, the system provides up to 30 percent of the hub’s annual energy needs. the solar-electric system at the FedEx Express facility in Cologne, Germany, went online in 2010 and has produced nearly 1.8 gigawatt hours of power to dale. In May 2011, the 1.13 megawatt FedEx Ground Railto, Calif., solar electricity system went online and meets approximately 30 percent of that facility’s annual electricity needs. The FedEx Express Oakland, Calif, huh is also using Bloom Energy fuel Cell technology for electric generation. FedEx installed live 100 kilowatt fuel cells at the hub, which can run on almost any hydrocarbon fuel ethonol, biodieseI, methane, and natural gas. These fuel cells require no combustion, producing virtually no NOx, SOx, or other smog forming participates. Dunning on natural gas, the fuel cells provide each facility with MO kilowatts of electricity by Converting natural gas to electricity. They thereby reduce the strain and dependency on the local electrical distribution grid and further our strategic investment in innovative technologies RENEWABLE ENERGY CREDITS In addition In the renewable energy generated on site, FedEx Office purchased 33,333 renewable energy credits (RLC) to offset emissions associate with the electricity user) in FY11 and to support efforts to generate electricity from renewable sources. Each REC purchased represents 1,000 kilowatt-hours of electricity produced by a renewable energy facility. Renewable Energy Credits MWh 33,333 In addition, FedEx Ground recently purchased 1,855 Green E certified, “NewMix” National Wind RECs, equating to an offset of 2,033,433 pounds of CO2 emissions for the associate indirect grid electricity emissions at seven hub and station locations in Pennsylvania. This initial purchase was part of a recent strategically designed energy procurement effort whose ultimate goal is to offset the Scope 2 emissions associated with electricity consumed at more than 500 FedEx Ground facilities in the U S and Canada LEED* CERTIFIED FACILITIES All new, and some existing, FedEx Express U S buildings will seek LEED (Leadership in Energy & Environment Design) certification. These certifications help FedEx to conserve energy, improve the environment, and create a better workplace The FedEx Express I as Vegas facility was the first to earn LEED certification, reducing indoor water use by 19 percent computed with code compliant plumbing, improving energy savings by 42 percent through design elements such as skylights and evaporative cooling, diverting 86 percent of all construction waste through recycling and reclamation of materials, and ensuring that more than ft percent of regularly occupied spaces are sunlit to reduce the need for electric lights and provide better workspaces The FedEx Express World Headquarters in Memphis received LEED Cold certification in January 2011, under the U.S. Green building Council’s LEED) for Existing Buildings Haling System. The FedEx Enterprise Data Center West, in Colorado Springs, Cole., is now certified LEED Gold under the new fating system for new construction and is a winner at International Data Group’s InfoWorld Green 15 Award. Two additional FedEx stations in Houston, Texas, where certified us LEED Silver in the fall of 2011, and the certifications of five other facilities are pending 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE 18

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 Environment & Efficiency • When it comes to green roofs at airports, nothing in the country tops the FedEx Express cargo facility at Chicago’s O’Hare International Airport The new O’Hare FedEx Express package-sorting center conducts opera lions under the largest continuous vegetated roof at an airport in the US It is the size of three football fields FedEx and the Chicago Department of Aviation are also pursuing LEED Gold certification for the facility, extending the company’s intent announced earlier this year of LEED certification for all new U. S. FedEx Express properties For more information on the Chicago O’Hare green roof, go to news, van, fedex.com/OHareGreenRoof. FACILITIES WITH ISO 14001 CERTIFICATION international Organization for Standardization (ISO] 14001 provides a framework for a holistic, strategic approach to an organization’s environmental policy, plans, and actions It outlines requirements for environmental management systems, and 51 of our facilities meet those requirements. In 1999, FedEx Express began implementing an Environ menial Management System (EMS) to provide a formal process to improve environmental efficiency and performance. With the help of Lloyd’s Register Quality Assurance, a gap analysis was completed, and FedEx Express instituted an EMS that is based upon ISO 14001 requirements fonts U S locations Fifty FedEx facilities in the United Kingdom in September 2008 became the first FedEx locations to achieve ISO 14001 certification. This was followed by certification of the FedEx international hub in Paris, France ISO 14001 Certification FY11 51 facilities We continue to deploy the FMS globally, and FedEx is evaluating the feasibility of obtaining ISO 14001 certification in other markets and at other facilities. In the interim, the FedEx corporate EMS will continue to be based upon elements in the ISO 14001 standard. It includes a corporate policy that guides decision making and procedure manuals that provide clear direction to site personnel The FMS includes a website that educates team members on environmental responsibilities, contacts for assistance, environmental stewardship actions by FedEx, and programs in which team members can participate. In addition, the EMS contains extensive computer-based and classroom training for team members and the use of a regulatory tracking system to maintain awareness of changes in applicable laws The EMS also includes an Environmental Management Information System to aid in retaining and analysing key environmental data. WASTE STREAMS AND RECYCLING WASTE STREAMS The majority of our waste is considered nonhajardous and municipal solid waste, much like regular household garbage The remaining waste streams include: hazardous waste, which is dangerous or potentially harmful to human health or the environment; “universal waste,” which includes batteries, pesticides, mercury-con laming equipment, and light bulbs, and e-waste, such as obsolete handheld scanners, computers, and peripheral devices. We are working toward a goal of reporting the total solid-waste generated at our I facilities across our enterprise in the near future. FY11 3.37% hazardous 1.17% e-waste universal Waste Streams mo 2.83% hazardous 1.30% e-waste 0.11% universal 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE 19

United States Postal Service Air Cargo Network Volume 1 Environment & Efficiency November 6, 2012 RECYCLING Recycling Totals (in millions of Ibs.) FY10FY11 41.5 47.9 In FY11, we recycled 6.4 million more pounds of the waste generated at our facilities than we did in FY10) Based on the waste generation we currently track, out recycling rose 10 points, to 30 percent in FY11. Recycling Percentages Al FedEx, we’ve found opportunities to extend the useful life of a number of materials we use at our business through recycling programs These efforts help divert millions of pounds from landfills. For example, our in-store recycling program at FedEx Office allows us to recycle waste in a secure fashion, and in 2011, FedEx Office locations recycled more than five million pounds of paper, saving almost 8,000 cubic yards of landfill space and over 44,000 trees through that program. The EarthSmart @ Work programs Ground Green, Freight Waste Watch, and FedEx Office paper Recycling—are landing ways In responsibly recycle everything from paper to motor oil. And in some cases, we are even reselling our recycled packaging EarthSmart ® Work will continue to challenge our team members to find new ways to recycle and/or reuse a significant percentage of waste, including nonhazardous, hazardous, universal, and e-waste. U.S. domestic e-waste generated by our operating companies is processed by the FedEx TechConnect Repair Service Center (RSC) and then sent to an external domestic e-waste recycler. FedEx has been a leader in using innovative technologies to power our global shipping and information networks. For more than 30 years, FedEx has put a high priority on keeping these technologies in top working older, and our team of highly trained FedEx technology repair specialists has always met this unique challenge. The RSC provides repair and logistics services of equipment used both by FedEx employees and Customers in the field. Through its innovative designs, the RSC delivers fast and flexible quality solutions to satisfy customer needs. In 2007, the RSC relocated to a new 138,000-square-foot facility in Collierville, Tenn. to maintain our commitment to quality and customer satisfaction, the new facility features a highly automated sort system This state-of-the-art electronic repair facility continues 10 provide our customers with our Best Cost Performance and Best in Class repair operations, while providing increased security for the equipment entrusted to us for repair. EARTHSMART @ WORK: WORKPLACE EMPLOYEE-ENGAGEMENT PROGRAMS Ground Green: FedEx Ground and EPA Waste Wise work together to help team members reduce landfill waste by recycling everything from paper to cardboard to wooden pallets. Simplify Your Center: Through simple change like electronic shipping and transitioning to reusable safety deposit bags instead of disposable envelopes. FedEx Office has been able to produce operational efficiencies that benefit our customers and meet our quantifiable environmental standards for sustainability. Waste Watch: FedEx Freight Local Environmental Action Facilitators (LEAFs) monitor waste consumption, recycling efforts, and water usage at our FedEx Freight sites. To learn more about our EarthSmart programs, go to earthsmart.fedex.com/ 2011 GLOBAL CITIZENSHIP GOALS & PROGRESS UPDATE | 10 SN#:5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. 11

United States Postal Service Air Cargo Network Volume 1 November 6, 2012 PAPER AND PACKAGING RFSPONSIBLY SOURCFED PAPER We seek to buy paper for cur FedFx Office* Print and Shin Centers from suppliers that have been certified by the Forest Stewardship Council (FSC), which helps ensure responsible forest management. In FY11, we increased the percentage of FSC certified paper used in our FedEx Office Print and Ship Centers to 80 percent FSC-Certified Paper At our 1,800-plus FedEx Office locations in the U.S. Canada, and internationally, we provide consumers sustainable solutions to choose from through our diverse portfolio of paper product offerings More than 70 percent of our paper products contain recycled content. We also offer tree-free paper selections made from natural plant fivers such as cotton. Through FedEx Office, we provide services to efficiently transmit digitized information, so customers can have document professionally printed and finished closer to where they are needed, reducing the resources required to physically transport shipments – and reducing greenhouse gas emissions. I addition all of the FedEx operating companies are working to increase the amount of responsibly sourced paper used for internal operations. For instance, in FY11 we increased the percentage of paper produced from recycled content that we track to 16 percent from 6 percent, resulting in an overall increase of 141 percent for that type of paper consumed on our offices and facilities. This increase was due both to improved reporting of recycled paper usage by our key supplier as well as enhanced product offerings to meet the demand for recycled paper content across the enterprise. PACKAGING For more than a decade, we have worked to minimize the environmental impact of our packaging wherever possible by using recycled content and maximizing recyclability. At the FedEx Packaging Lab, our engineers use the latest materials and tools to solve shipping challenges, including environmental ones, and today, most FedEx packaging is recyclable and contains recycled materials. The iconic FedEx Express overnight envelope is composed of 100 percent recycled content and are recyclable. FedEx 10-kilogram and 25-kilogram boxes contain a minimum of 70 percent recycled content and recyclable. FedEx boxes sold at our retail locations contain a minimum of 20 percent recycled content and are recyclable. Most FedEx Paks contain 60 percent recycled content and are recyclable at select location. With a continued focus on saving energy and reducing materials, we have made minor changes to our packaging with major results. For example, in 2001 we reduced the amount of plastic in the FedEx envelope pouch by almost 500,000 pounds per year. In 2003, we introduced a legal-size reusable envelope that uses dual tear-strips to extend the usefulness of the product while cutting waste. In 2004, we increased the recycled content of the FedEx Pak from 25 percent to 60 percent. And as recently as this year, we changed the material of the legal-size reusable FedEx Envelope, which resulted in an annual paperboard reduction of 100,000 pounds. EARTHSMART @ WORK:WORKPLACE EMPLOUEE-ENGAGEMENT PROGRAMS LEAF: FedEx Freight LEAFs educate and encourage team members to conserve our resources and track progress. Energy Watch: FedEx Freight LEAFs keep tabs on energy consumption statistics via monthly reports shared with the team. Green Site: As FedEx Freight team members take action to conserve resources, their progress is tracked, moving their site toward Green Site certification. To learn more about our EarthSmart programs, go to earthsmart.fedex.com/

United States Postal Service Air Cargo Network Volume 1 November 6. 2012 In 2009, FedEx Ground started using a special machine that shreds used cardboard packaging into a flexible packing material called “cardboard shred “ This cardboard shred now replaces traditional packing materials such as Styrofoam peanuts and bubble wrap, and it diverts tons of used cardboard from landfills These machines can also cut the cardboard shred into a variety of sizes, allowing for repacking of different size boxes, and are portable enough to fit easily in local sorting stations where space is limited Since 2009, FedEx Ground has placed 40 of these machines at key hubs and stations so far, with an annual estimated rate of return of 13 percent on this investment by eliminating the need to purchase new packing materials. In addition, the boxes used to send paper reams to FedEx Office locations are made of top tier green materials. The paper board utilized for these boxes is a chip paper board that is 100 percent recycled, 101 percent recyclable, and 100 percent made from post-consumer reclaimed fiber. And it is printed with water and soy based inks. This product is certified by the Forestry Stewardship Council, as are the facilities that manufacture the box. for more information on our sustainable solutions, go to solutionsthatmatter.van.fedex.com/standard.php#sustainability/ FINES AND PENALTIES In FY11, environmental inspections resulted in a total of $1,700 in assessments. In addition, FedEx paid a retroactive penalty of $12,000 for an assessment from FY10 that was not included in last year’s reported totals. EARTHSMART INNOVATIONS: CUSTOMER AND FEDEX SOLUTIONS RELATED TO SERVICES AND ASSETS FedEx Paperless Processing: FedEx paperless processing reduces paper waste and improve business efficiencies using tools like FedEx Electronic Trade Documents. FedEx Color Management Program: FedEx office has implemented a new printing technology that optimizes ink usage and creates even better color output from our wide-format printers using Intelligent Color Engine (ICE) software. ‘ FedEx® Reusable Sturdy Pak: The FedEx Express Resuable Sturdy Pak is a 100 percent recycled packaging solution that can be used twice for shipping heavier document, binders, folders, and more. To learn more about our EarthSmart programs, go to earthsmart.fedex.com/

United States Postal Service Volume 1 November 6, 2012 Environment & Efficiency AWARDS AND RECOGNITION sponsored by the Dubai government’s Roads and Transport Authority in the The FedEx Enterprise Data Center- West in Colorado Springs, Cola, was among the winners in International Data Group’s InfoWorld’Green 15 Award” in 2011 in recognition of the many sustainable construction practices that also earned the facility the coveted LLLL) Gold ceitihcalion the 140.000 square Inol facility has a power usage effectiveness rating (a me asm cot how efficiently a computer data center uses its powet) of 1.28. The total project achieved energy cost savings of 12.8 percent. A snarl video showcasing the center ran he found at http://,’wWw.youtube.com/watch?v=4NV puw5Vtl(nature=player embedded renewable energy. In October 2010, FedEx was the only company in its industry to receive The International Charter’s Committed to the Environment Award The Committed to the Environment program has two mam anus. First, it recogmzes and rewards companies that are leading the way in under standing and addressing their environmental impact Second, it establishes a standard for environmental respcrisibility, encouragjng companies through example to make similar efforts and address their Environmental impact in a realistic, forward thinking, and sustainable way in recognition of the work done in transforming a former hrownfield site in FedEx also earned the Corporate Balance Award from the Lindbergh Foundation in 2010, in recognition of the great strides we have taken to become an environmentally responsible corporation. And in 2012, the Lindbergh Foundation announced that FedEx has joined the Aviation Green Alliance as a founding Member The Aviation Green Alliance was established to create multiple platforms for members to share strategies, findings, progress, and ideas related te aviation’s environmental challenges. For more information, visit http://www.lmdberghfooundation.org/docs/index.prip/fedex In 2011, FedEx, along with global public relations vendor Kulchum, was recognized with the Gold SABRE Award for Corporate Social Responsibility for the “FedEx Sea Turtle Rescue From Shell to Shining Sea” campaign that helped save as many as 25,000 logger head sea turtle eggs. FedEx worked with the National Fish and Wildlife Foundation to help transport the sea turtle egg that might have been affected by the Gulf ail spill te safety on Florida’s Atlantic Coast in 2010. Also in 2011, FedEx received a score of 65, an increase of 7 points over 2010, and was classified as “Striding” on the Climate Counts Scnrecard, in recognition of progress toward our greenhouse emissions reduction targets, and our advocacy for comprehensive climate change public policy. More information an our Clinate Counts Scnrecard can he found at http://www.climatecounts.org/scorecard score.php?co=72 In April 2012, FedEx was included in the Maplerott Climate Innovation Indexes, which rate the largest companies in the U.S. on their cimate-related innovation and carbon management programs Tle indexes help to identify the companies best placed to seize opportunities in the low-carhon economy of the future FedEx ranked 37th out of 34G companies analyzed a rise of 150 p laces compared with 2011 In February 2011, FedEx won the Dubai Award for Sustainable Transport “Environmental Protections” category with our submission “EarthSmart -Cleaner Vehicles, Greener Deliveries” Fifty one facilities in our Europe Middle Fast-Africa region are ISO 14001 certified, including Our Paris hub at Roissy-Charles de Gaulle Airport, ihe largest FeriFx huh outsiristhfl U S In 2009 and 7010, FedEx Office received the highest scores in our industry y on the Green Grades report-a report card on the paper practice of the office supply sector. And during that same timerframe, the Environmental Protection Agency ranked FexEx Office No 1 among commercial printers supporting In May 2012, FedEx Fxpress was recognized by Penton Media’s Air Transport World (ATW) in the inaugural ATW 2012 Eco-Aviation Awards with the Silver Eco-Airline of the Year Award for our approach to minimizing impact on the environment and for pointing the way for other companies in the aviation and logistics industries, and beyond, to improve their own environmental performance. In April, 2010, FedEx Ground was awarded the Oregon Brownfield Award Troutdale, Ore., into a $129 million state-of-the-art package sorting hub, which is set to open in late summe of 2012. The new FedEx Ground hub is located on 78 acres within the Port of Portland’s 693-acre Troutdale Reynolds Industrial Park that was once the home of a Heynoldsds Metals aluminum smelter. I ho first occupant in the industrial park, FedEx Ground, is returning a once-contaminated parcel te productive use 2011 GLOBAL CITIZENSHIP Goals & PROGRESS UPDATE i 13 SN#: 5A-12-A-0024 Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

United States Postal Service

Air Cargo Network

Volume 2A - 100% of the Day Network (Required)

Solicitation Number: 5A-12-A-0024

November 6, 2012

Issued By:

Air Transportation CMC

Transportation Portfolio

Supply Management

475 L’Enfant Plaza SW

Room 1P650

Washington DC 20260-0650

This proposal includes data that may not be duplicated, used, or disclosed outside the Postal Service – in whole or in part – for any purpose other than to evaluate this proposal. If, however, a contract is awarded to this offeror as a result of – or in connection with – the submission of such data, the Postal Service will have the right to duplicate, use, or disclose the data to the extent provided in the resulting contract. This restriction does not limit the Postal Service’s right to use information contained in the data if it is obtained from another source without restriction. The data subject to this restriction are contained in all sheets as marked.

United States Postal Service Air Cargo Network Volume 2A - 100% of the Day Network November 6, 2012

Table of Contents

1.0	DAY NETWORK OPERATING PLAN	1
1.1	TENDER AND DELIVERY TIMES BY AIR STOP	5
1.2	OPERATIONAL COMPONENTS OF THE SOW	5
1.3	SERVICES PROVIDED	6
1.3.1	Coordination and Oversight of FedEx Operations	7
1.3.2	Facility Support and Administrative Functions	8
1.3.3	Monitor Performance	8
1.3.4	Provide Feedback to the Postal Service	9
1.3.5	Ensure the Integrity of Data Entry	9
1.3.6	Coordinate the Exchange of Information	9
1.3.7	Provide Notification of Changes or Anticipated Changes	11
1.3.8	Correct Type and Quantity of Equipment	11
1.3.9	Assist in Unloading or Loading ULDs to or from Surface Transportation	11
1.3.10	Scan Material Handling Units (Required) or Postal MTE	11
1.3.11	Process Mail for Dispatch from the Aviation Supplier’s Facility to the Postal Service Facility	12
1.3.12	Close-Out, Receive, and Dispatch All Surface Vehicles	12
1.3.13	Handle Overflow Volumes per Postal Service General Directions	12
1.3.14	Cooperate With All Aviation Suppliers in the Transportation Service Chain	12
1.3.15	Enter Data Timely and Accurately	12
1.3.16	Prepare Required Reports	13
1.3.16.1	Daily Mail Condition Report	13
1.3.16.2	Operational Condition Reports	13
1.3.16.3	Dimensional Weight Reports	13
1.3.17	Perform Verification of Security Seals on Surface Transportation	13
1.3.18	Ensure the Security of All Mail	14
1.4	DESIGNATION (POSTAL SERVICE PERFORMS TERMINAL HANDLING SERVICE (THS) – DAY NETWORK)	14
1.5	DELIVERY AND SPECIFIC DELIVERY INSTRUCTIONS (POSTAL SERVICE PERFORMS THS OPERATION ON DAY NETWORK)	14
1.5.1	Delivery – Day Network	14
1.5.2	Delivery – Night Network	15
1.5.3	Saturday Delivery – Day Network	15
1.6	BOARDING PRIORITY	15
1.6.1	Boarding Priority – Day Network	15
1.6.2	Boarding Priority – Night Network	15
1.7	FREQUENCY	15
1.8	MAIL ASSIGNMENT AND TRANSPORT – DAY NETWORK	16
1.9	MAIL ASSIGNMENT AND TRANSPORT – NIGHT NETWORK	16
1.10	AVIATION PROVIDER PLANNED ACCOMMODATION – DAY NETWORK	16
1.11	AVIATION PROVIDER PLANNED ACCOMMODATION – NIGHT NETWORK	16
1.12	TREATMENT OF EXCEPTIONAL TYPES OF MAIL	16
1.12.1	Treatment of Live Mail	17
1.12.2	Treatment of Perishables	17

  SN#: 5A-12-A-0024   Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.                            i

United States Postal Service Air Cargo Network Volume 2A - 100% of the Day Network November 6, 2012

1.12.3	Treatment of Registered Mail	17
1.12.4	Treatment of Hazardous Material (HAZMAT)	17
1.13	OFFSHORE CAPACITY REQUIREMENT – DAY NETWORK	18
1.14	VOLUME COMMITMENT – GENERAL INFORMATION	18
1.14.1	Volume Commitment – Contract Volume Minimum – Day Network	19
1.14.2	Operating Period Volume Minimum – Day Network	19
1.14.3	Aviation Supplier Performs THS Operation	19
1.14.4	Operating Period Volume Minimum – Night Network	19
1.14.5	Volume Commitment – Holiday – Day Network	19
1.14.6	Volume Commitment – Holiday – Night Network	19
1.15	OPERATING PERIODS	20
1.16	ORDERING PROCESS – INTRODUCTION	20
1.16.1	Ordering Process – Non-Peak – Day Network	20
1.16.2	Ordering Process – Non-Peak – Night Network	20
1.16.3	Ordering Process – Peak – Day Network	21
1.16.4	Ordering Process – Peak – Night Network	21
1.17	ELECTRONIC DATA INTERCHANGE (EDI) INCLUDING SCANNING AND DATA TRANSMISSION	21
1.17.1	Surface Visibility Scanning	22
1.18	REPORTS (SEE SECTION 1.3.16)	22
1.19	PERFORMANCE REQUIREMENTS AND MEASUREMENT	22
1.20	REDUCTION OF PAYMENT	23
1.21	PERFORMANCE MANAGEMENT	24
1.22	PAYMENT PROCEDURES	24
1.22.1	Rates and Payment General	24
1.22.1.1	Scan Requirements	25
1.22.1.2	Night Turn Scan Requirements	25
1.22.1.3	Day Turn Scan Requirements	25
1.22.2	Payment Processing – Day Network – Per Cube	25
1.22.2.1	Invoicing	25
1.22.2.2	Mail Tendered in ULDs	25
1.22.2.3	Mail Tendered from Surface Trucks	25
1.22.2.4	Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub	26
1.22.2.5	Aviation Supplier Surface Transportation – Not Included in Transportation Payment	26
1.22.2.6	Economic Adjustment	26
1.22.2.7	Hub Sort Scan	26
1.22.2.8	Re-Labeling Charge	26
1.22.2.9	Fuel Adjustment	26
1.22.3	Payment Processing – Day Network – Per Pound	26
1.22.4	Payment Processing – Night Network – Per Pound	26
1.22.4.1	Invoicing	27
1.22.4.2	Economic Adjustments	27
1.22.4.3	Re-Labeling Charge	27
1.23	RECONCILIATION PROCESS	27
1.24	MODE OF TRANSPORTATION TO SERVICE EACH AIR STOP – (MAIL ASSIGNMENT AND TRANSPORT) AS IDENTIFIED IN TENDER AND DELIVERY SPECIFICATIONS LISTED IN ATTACHMENT 3 AND ATTACHMENT 4	27
1.25	OTHER COMPONENTS OF THE STATEMENT OF WORK NOT PREVIOUSLY DISCUSSED	28

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1.25.1	Service Points	28
1.25.2	Management Plan	28
1.25.3	Repossession of Mail by the Postal Service	28
1.25.4	Local Agreements	29
1.25.5	Operating Periods	29
1.25.6	Incentive Plan	29
1.25.7	Sustainability	29
1.25.8	Security	29
2.0	CONTINGENCY PLAN	30
2.1	AIRCRAFT MECHANICAL DELAYS OR CANCELLATIONS	33
2.2	A BREAKDOWN OF ANY MAINTENANCE SUPPORT OR GROUND HANDLING EQUIPMENT AND DUTIES AT ANY OUTSTATION	33
2.3	DELAYS, CANCELLATIONS, OR AIRCRAFT WEIGHT LIMITATIONS CAUSED BY WEATHER CONDITIONS	33
2.4	AIRPORT CLOSINGS PER FAA	35
2.5	LABOR DISRUPTIONS INCLUDING, BUT NOT LIMITED TO, WALKOUTS OR STRIKES	35
2.6	STAFFING SHORTAGES RELATING TO MEDICAL OR OTHER EMERGENCIES	35
2.7	DELAYS CAUSED BY ENVIRONMENTAL ISSUES SUCH AS FUEL SPILLS, CHEMICAL SPILLS, OR OTHER HAZMAT	35
2.8	OTHER CONDITIONS THAT MAY AFFECT ON-TIME PERFORMANCE	36
2.9	TRAINING OF EMPLOYEES ON CONTINGENCY PLAN	36
3.0	COMPLETED ATTACHMENT 12: TENDER & DELIVERY TIME COMMITMENT	37

List of Figures

FIGURE 1-1. FEDEX AIR CARGO DAY NETWORK	1
FIGURE 1-2. FEDEX KEY DIFFERENTIATORS	2
FIGURE 1-3. FEDEX ON-TIME DELIVERY HISTORY	3
FIGURE 1-4. CUSTOMER-FOCUSED FEDEX MAIL SERVICE DELIVERY TEAM	4
FIGURE 1-5. FEDEX AIR TRANSPORT MAIL DELIVERY SERVICE PROCESS	5
FIGURE 1-6. PROCESS AREAS OF ACN SOLICITATION MAPPED TO TRANSPORTATION AGREEMENT CURRENT PROCESSES	6
FIGURE 1-7. FEDEX’S GOCC	7
FIGURE 1-8. FEDEX PERFORMANCE MONITORING BENEFITS TO THE POSTAL SERVICE	8
FIGURE 1-9. FINAL RAMP TO RAMP DAILY NET SERVICE LEVEL REPORT	10
FIGURE 1-10. FEDEX TYPES AND QUANTITIES OF EQUIPMENT	11
FIGURE 1-11. ELECTRONIC BAR CODE SCANNING	12
FIGURE 1-12. MAIL ASSIGNMENT AND TRANSPORT PROCESS	16
FIGURE 1-13. REQUIRED DAILY VOLUMES IN AND OUT OF OFFSHORE LOCATIONS	18
FIGURE 1-14. DAILY VOLUME COMMITMENT VERSUS ACTUAL VOLUME	19
FIGURE 1-15. HOLIDAYS INCLUDED IN THE SOLICITATION	19
FIGURE 1-16. ORDERING PROCESS – NON-PEAK DAY NETWORK	20

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FIGURE 1-17. ORDERING PROCESS – PEAK DAY NETWORK	21
FIGURE 1-18. POSTAL SERVICE–ACCEPTED EDI STANDARDS FOR SCANNING AND DATA TRANSMISSIONS	21
FIGURE 1-19. POSTAL SERVICE-FEDEX EDI NETWORK HIGHLIGHTS	22
FIGURE 1-20. REPRESENTATIVE ULDS	23
FIGURE 1-21. PARAMETERS FOR REDUCTION OF PAYMENT	23
FIGURE 1-22. SAMPLE OF SCANNING DEVICES	25
FIGURE 1-23. FEDEX EXPRESS AIRCRAFT FLEET	27
FIGURE 2-1. FEDEX GOCC	30
FIGURE 2-2. CONTINGENCY EVENT DECISION-TREE FLOWCHART	31
FIGURE 2-3. DECK COLLAPSE, MACARTHUR MAZE, OAKLAND, CA	32
FIGURE 2-4. HURRICANE KATRINA	32
FIGURE 2-5. FEDEX’S METEOROLOGY DEPARTMENT MINIMIZES IMPACT OF WEATHER ON DELIVERY SCHEDULES	33
FIGURE 2-6. FEDEX AIRPLANES WAITING FOR TAKE-OFF	35
FIGURE 2-7. FEDEX HAZMAT RESPONSE TEAM	36

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1.0 Day Network Operating Plan

FedEx, which has the world’s largest cargo aircraft fleet, will build upon our 12 years of successful support of the United States Postal Service to meet its Air Cargo Network requirements for mail delivery with consistently reliable and dependable service.

FedEx will provide a Postal Service Day Network that will deliver all air transportation and ancillary services to all required service points identified by the Postal Service in the Air Cargo Network (ACN) solicitation from Day 1 of the contract. We possess the immediate capacity to provide this service six days per week at the historical non-peak and peak volume levels identified in Attachment 2, Air Stops & Projected Volumes of the solicitation. As illustrated in Figure 1-1, this network includes all 82 required Day Network service points and 3 FedEx hubs.

Figure 1-1. FedEx Air Cargo Day Network

FedEx understands the Postal Service culture, processes, routing, and tender requirements better than any other air freight company.

Single Vendor Network Benefits

Use of a single carrier will provide the Postal Service with needed efficiencies and cost savings. In a multiple-carrier environment, capacity is deployed less efficiently, adding cost and additional handling unnecessarily. For example, if the planned volume could be accommodated on a single scheduled movement with one carrier, splitting this volume over two carriers would require scheduled conveyances from both carriers, which adds cost and inefficiency. With multiple carriers, the costs of monitoring and coordinating activities would increase for the Postal Service. Policies and procedures for the carriers would inevitably differ, creating opportunities for errors, confusion, and potential delay of mail delivery.

FedEx and the Postal Service have established and will maintain a shared aviation network that has enabled the Postal Service to significantly improve the service provided to its customers while continuously reducing the cost. For the past 12 years, FedEx, as the majority carrier, has transported

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Express, Priority, and First Class mail to and from all of the points covered in this solicitation. Since 2006, we have also carried HAZMAT, live, perishable, and registered mail. As the largest carrier for the Postal Service, FedEx has provided this service at historical volume levels through peak days of more than [ * ] to low-volume days covering non-widely observed holidays.

Since the inception of the Postal Service Shared Network, the Postal Service has enjoyed greatly improved service to their customers, stability in their network provider, and reduced costs. The structure of having one carrier responsible for the vast majority of the volume provides the Postal Service with the most cost efficient, simple and reliable air transportation network. At current Postal Service volume levels, other than a few large volume locations, there is not enough mail to warrant the redundancies under a two-vendor network operational concept.

FedEx has been a collaborative business partner with the Postal Service for the past 12 years, and has been extremely responsive to requests for increasing volume, expanding service coverage, adding new products with unique handling characteristics, and maintaining cost controls. We believe that a single-provider network, with its operating efficiencies, extensive network connections, service capabilities and lower cost structure, will provide the greatest long-term benefits for the Postal Service, particularly at a time of fiscal need and budget awareness across the nation. FedEx has the aircraft, equipment, capacity, network reach, and management capability to continue serving the Postal Service in an efficient and low-cost, single-vendor operation well into the future.

The ongoing strategic alliance between FedEx and the Postal Service under the Postal Service Transportation Agreement (Transportation Agreement) brings noteworthy advantages to a renewal contract for the ACN. The Postal Service and FedEx jointly developed many of the processes and procedures that are currently being employed in the Transportation Agreement network. No other air cargo carrier has the benefit of this long and efficient operational experience with the Postal Service. FedEx has worked with the Postal Service to optimize schedules and tender times, eliminate excessive cost, and increase efficiencies, as shown in Figure 1-2.

Figure 1-2. FedEx Key Differentiators

FedEx has a number of key differentiators for operation of the Postal Service Air Cargo Network.

FedEx Key Services	Differentiators
Air Cargo Network: FedEx has the world’s largest cargo aircraft fleet to meet the Postal Service’s aviation requirements with reliable and dependable service.	•     With more than 634 aircraft, FedEx has the world’s largest fleet of cargo aircraft.
	•     We are the only company with proven experience supporting requirements of size, scope, and scale of the Postal Service ACN procurement.
	•     FedEx is the only aviation supplier with staffed operating bases at all ACN Day Network airports.
	•     FedEx is the only aviation supplier to the Postal Service that operates 24/7 with no exclusion for holiday surge and weekend support.
	•     Our ISO 9001:2008 Certification was renewed for 2012.
	•     The FedEx fleet includes more than [ * ] trunk and more than [ * ] feeder spare aircraft that are strategically placed throughout North America to protect service.
Management: FedEx possesses the skill, financial depth, and management tools required to engage and deliver on cost, schedule, and performance expectations.	•     FedEx uses our Quality Driven Management (QDM) approach and methods are built on the proven premise that higher quality lowers costs, improves service levels, and enhances the customer experience.
	•     Over time, QDM has contributed to FedEx being the 6th most admired company on Fortune’s World’s Most Admired Companies list and No. 7 on the Reputation Institute’s list of socially responsible firms in the United States.
	•     FedEx’s leading edge technologies (scanning, data transmission, and communications) will deliver superior aviation support to the Postal Service.
	•     FedEx was the first-ever service company to win the Malcolm Baldrige Quality award, demonstrating our long-standing commitment to service quality.
Past Performance: FedEx has operated with the Postal Service for 12 years.	•     We have successfully met Service Level Requirements for the Postal Service throughout our 12-year service history, as shown in Figure 1-3.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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FedEx Key Services	Differentiators
Transition: An award to FedEx ensures the Postal Service a no-risk, no-cost contract transition.	•      Our knowledge and understanding of the Postal Service mission, operations, culture, and technology, and our business partner approach means a non-disruptive, no-risk transition to the ACN contract.
Innovation and Investment: FedEx is an innovation leader in air cargo logistics.	•      FedEx is ahead of plan to increase the fuel efficiency of our pickup and delivery fleet by 20% between 2005 and 2020.
	•      In FY12, approximately half of our $4 billion in capital expenditures is related to modernizing our air fleet.
	•      FedEx and the Postal Service invented the Transportation Agreement network design, significantly improving the performance and reducing the cost of the air transport service, proving that our vendor-customer team excels in innovative practices.

On-Time Delivery for the Postal Service

FedEx has achieved service levels outlined in the                    [ * ]

Transportation Agreement in alliance with the Postal Service since 2001. Throughout that time, our extensive cargo Day Network transport system has demonstrated our capacity and capability to handle the historical volumes required by the Postal Service on weekdays and weekends, and during non-peak and peak periods. FedEx has delivered high-quality services that have consistently met or exceeded Postal Service mail delivery service requirements as shown in Figure 1-3.

Each of the FedEx Day Network airports across the nation is currently staffed with all necessary personnel to manage the receipt, outbound loading, and inbound delivery of Postal Service cargo. FedEx accomplishes this through an advanced hub-and-spoke system that ensures meeting delivery time requirements in all 82 ramp locations. FedEx is the only air cargo carrier that serves all 82 Postal Service locations and, as we have stated, FedEx has the world’s largest air cargo fleet with 634 aircraft serving airports in more than 220 countries and territories in all regions of the world. We can provide the capacity the Postal Service has outlined in Attachment 2 when and where it is needed without relying on availability of commercial, wet lease, or dry lease aircraft. In addition, FedEx is continuously upgrading our fleet to offer needed capacities more efficiently and economically.

Program and Operational Support for the Postal Service

The FedEx Postal Transportation Management Department (PTM), as described in Volume 1, Section 2.5, has been in place since the inception of the contract relationship in 2001 and is a dedicated Program Management Office (PMO) whose single mission is service to the Postal Service. FedEx Managing Director Ron Stevens has directed this department since the inception of the FedEx–Postal Service strategic alliance. This department was created as the interface for the Postal Service and designed to be a one-stop shop for all things Postal. Regardless of the issue, the Postal Service communicates with a single department. We recruited the best engineers in the country from our Air, Ground and Freight Services (AGFS) Division; knowledgeable in both ramp and hub operations and the planning process to support the Postal Service. These engineers, who are strategically domiciled around the country and aligned with the Postal Service Areas, work daily with the Postal Service on tactical issues affecting service. They work with Global Network Planning (GNP) and the Global Operations Control Center (GOCC) on issues regarding additional lift requirements as required. The PTM engineers also work closely with local management and the Terminal Handling Service (THS) providers on all operational issues. When an exception occurs, the PTM engineers develop a corrective action and communicate it to the Postal Service in the local, area, and headquarters groups.

The engineers are also responsible for developing and communicating the processes for any changes. The group has two dedicated engineers responsible for building the planning matrix each month. They work closely with the Postal Service planners on the volume request for each schedule period and act as a secondary check on lane-level volume from one operating period to the next. PTM also has a dedicated Service Assurance Manager and two Operations Administrators. They provide reports and status updates

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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throughout the day on flight and sort activity as well as issues that may impact service, such as contingency plans for weather events e.g. hurricanes and winter storms. The PTM team has experienced little turnover within the group since its inception. We feel this consistency in leadership at the management and engineer level has contributed to on-going success of this alliance.

PTM coordinates with the FedEx AGFS Division, which operates the air cargo network, and with GNP and GOCC that plan and manage flight operations, including the movement of Postal Service mail. AGFS operates the cargo system through its main Memphis World Hub and through four subordinate organizations that operate FedEx ramps at airports within their respective regions.

PTM coordinates with AGFS headquarters in Memphis, TN, and with the field ramp location managers. AGFS has an extensive management team to oversee the actual flight and logistics operations as illustrated in Figure 1-4. This figure shows the customer-focused FedEx team supporting the Postal Service, leveraging the capabilities of AGFS, and managed by ramp managers at each service point to deliver mail. PTM also coordinates with GNP and GOCC for Postal Service mail scheduling as well as flight operations for the Day Network.

Figure 1-4. Customer-Focused FedEx Mail Service Delivery Team

PTM coordinates with FedEx’s AGFS, which operates the air cargo network and, with GNP and GOCC that, plan and manage flight operations, including the movement of Postal Service mail.

PTM is the focal point for the Postal Service for planning and managing delivery services, which are carried out by AGFS and the ramp managers and staff at each service point. This coordination involves managing freight volumes requested by the Postal Service, planning each monthly operating period, and daily operational activity such as loading and launching aircraft, receiving, and tendering freight to the Postal Service or THS at the destination. Also critical to movement of Postal Service mail is the GOCC, as it operates the aviation services that move the mail.

Packages are scanned and the scan data is transmitted to system collection points constantly as they move through the system. This allows comprehensive reporting of results of each day’s activity. PTM, GNP, and AGFS work together using well-defined and comprehensive communication channels.

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Operating the most sophisticated air cargo network in the world requires immediate communication, the ability to modify logistics operations swiftly and accurately, and total command of an exceptionally large fleet of aircraft. This is a complex management task, performed by demanding, outstanding, and talented professionals.

1.1 Tender and Delivery Times by Air Stop

FedEx is the only aviation supplier with staffed operating bases at all ACN Day Network airports.

Specific tender and delivery times by air stop, including number and type of aircraft, are listed in Attachment 12, Tender and Delivery Time Commitment. FedEx has an exemplary record over its 12-year history on the job. FedEx has consistently met or exceeded the tender time delivery requirement as shown in Figure 1-3. Even during our most challenging operating period in December, with volume surges at twice our non-peak demand and extreme weather, FedEx still met the Postal Service on-time delivery requirement.

1.2 Operational Components of the SOW

FedEx has consistently met service level requirements for the Postal Service throughout our 12-year service history.

Throughout our 12-year alliance with the Postal Service, FedEx has worked with the Postal Service to develop many of the processes that are now used to perform aviation support under the Transportation Agreement. Figure 1-5 illustrates the proven process flow from acceptance at the origin to delivery at the destination that we will use on the ACN contract.

Figure 1-5. FedEx Air Transport Mail Delivery Service Process

FedEx has developed a series of mature processes to move the air cargo from origin to destination, consistently meeting the contractual delivery times.

As shown in Figure 1-5, FedEx accepts the cargo at the origin ramp and flies it to the FedEx hub airport, where it is distributed to its correct outbound container and loaded onto an aircraft to fly to the destination airport. Each lane is managed through established scanning procedures to ensure the correct routing of the mail from origin to destination. A “lane” describes the origin point to destination point routing of the mail, for example from origin city A to destination city B, e.g., from Atlanta to Albuquerque. The main processes in the transport of the mail as specified in the solicitation are:

i.       Services provided as described in Section 1.3 below   ii.      Designation – Aviation Supplier Provided or Postal Provided; and description of Terminal Handling Services a.      Live Mail   b.      Perishable Mail   c.      Registered Mail   d.       HAZMAT

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iii.     Delivery and Specific Delivery Instructions   iv.     Boarding Priority   v.      Frequency   vi.     Mail Assignment and Transport   vii.    Planned Accommodation   viii.   Treatment of Exceptional Types of Mail ix.     Offshore Capacity Requirements   x.      Ordering Process   a.      Peak   b.      Non-Peak   xi.     Electronic Data Interchange to include Scanning and Data Transmission   xii.    Reports

1.3 Services Provided

FedEx has developed and will continue to use mature key processes for the Postal Service ACN that have been thoroughly tested and proven over the 12-year history of the relationship.

Figure 1-6 compares the key processes for the ACN contract to select processes of the current Transportation Agreement contract. We have developed these processes over time in collaboration with the Postal Service and will modify or continue processes as provided under the new ACN contract. These service processes reflect how FedEx efficiently and effectively takes possession of, sorts (if necessary), transports, scans, loads, and delivers mail for the Postal Service.

Figure 1-6. Process Areas of ACN Solicitation Mapped to Transportation Agreement Current Processes

FedEx has developed a mature list of key processes for the Postal Service ACN based on processes that have been developed for the Transportation Agreement contract.

Process Areas of ACN Solicitation Mapped to Transportation Agreement Current Processes
Solicitation Requirements (Proposal Section)	Transportation Agreement Current Processes
Customer Satisfaction and Relationship Management
•     Coordinate/Oversee Operations (1.3.1) •     Ensure Facility and Administrative Support (1.3.2) •     Monitor Performance (1.3.3) •     Ensure the Security of All Mail (1.3.18)	•     Management review of final daily and month-to-date service level reports •     Management review of root cause of issues for correction and implementation •     PTM is the liaison group for the Postal Service within FedEx to ensure that all requirements are met
PTM Strategic Planning and Analysis
•     Ensure the Integrity of Data Entry (1.3.5)	•     Review the forecast for errors and report problems •     Provide detailed planning for the Postal Service and THS for each operating period
Field Support PTM Engineering
•     Assist in Loading and Unloading (1.3.9) •     Scan ULDs (1.3.10) •     Process Mail for Dispatch to Postal Service (1.3.11) •     Close Out, Receive, Dispatch Surface Vehicles (1.3.12) •     Cooperate with All Aviation Suppliers (1.3.14) •     Enter Data Timely and Accurately (1.3.15)	•     Ensure the operations template is complete and accurate for each operating period •     Receive, process, scan, load, and dispatch mail according to the daily operations plan •     Review service exceptions determining causes •     Cooperate with THS and local Post Offices •     PTM engineers work daily with the Postal Service to accept volume above the 105% flex to ensure the best service possible
Hub Support PTM Engineering
•     Provide the Correct Type and Quantity of Equipment (1.3.8) •     Assist in Loading and Unloading (1.3.9)	•     Develop hub monthly operating plan and review with the hub management •     Receive, process, scan, load, and dispatch mail according to the daily operations plan

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Process Areas of ACN Solicitation Mapped to Transportation Agreement Current Processes
Solicitation Requirements (Proposal Section)	Transportation Agreement Current Processes
•     Scan ULDs (1.3.10) •     Handle Overflow Volumes (1.3.13) •     Cooperate with All Aviation Suppliers (1.3.14)	•     Accept, manage, and report rollover volumes •     Provide Memphis, Oakland, and Indianapolis hubs monthly service level and exceptions reports •     Manage sort and other operational delays
Communication, Operations Administration, Reporting, Quality Assurance, and Revenue
•     Provide Feedback to Postal Service (1.3.4) •     Coordinate the Exchange of Information (1.3.6) •     Provide Notification of Changes and Anticipated Changes (1.3.7) •     Prepare Required Reports (1.3.16) •     Provide Feedback to Postal Service ((1.3.4)	•     Complete and distribute day network preliminary report, OSR report, NDSP report, WAR report, and Ad Hoc/Reroute report •     Monitor FedEx systems during shifts, report to PTM, and distribute to Postal Service including both headquarters and field personnel •     Report official service levels to Postal Service

1.3.1 Coordination and Oversight of FedEx Operations

With responsibility for scheduling and management across the FedEx Express global network, GNP and GOCC work closely with PTM to ensure on-time delivery of the mail. The GOCC (Figure 1-7) is fully staffed 24 hours a day, 365 days a year with highly skilled and experienced airline operations management specialists.   The GOCC is one of the most sophisticated control centers in the transportation industry, with state-of-the-art facilities, information systems, and communications, and proven plans and processes based on real-world contingency management experience and expertise. All day, every day, the GOCC team responds to and overcomes challenges, including severe weather systems, flight delays, emergency maintenance events, and even natural disasters. The GOCC supervises and protects FedEx team members and assets while correcting situations that could impact mail delivery service to the Postal Service.   Figure 1-7. FedEx’s GOCC Our Global Operations Control Center is state-of-the art in managing a large airline fleet traversing the nation and the world.

FedEx has the facilities, tools, processes, and staff to effectively respond to contingency situations. We were an industry leader in collaborating with the Federal Aviation Administration (FAA) in responding to the events of September 11, 2001 and the restoration of aviation support for the Postal Service. FedEx belongs to the Domestic Events Network (DEN), which was established on the morning of September 11. DEN is a 24/7 unclassified interagency telephone conference – sponsored by the security arm of the FAA – dedicated to real-time coordination of air security issues.

FedEx has a back-up center located in Collierville, TN, that operates the network in live mode every Monday so that this contingency control center remains fully capable of assuming operational control of our global network in an emergency.

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1.3.2 Facility Support and Administrative Functions

The goal of facility management at FedEx is to enable on-time delivery of Postal Service mail and all non-postal FedEx products. PTM ensures, through its coordination with AGFS, that local facility support and administration functions are present at each airport local ramp, ensuring mail movement, hub support, scanning and data capture, billing support, communications, and other functions. The PTM Department, described in Section 1.0, coordinates all necessary administrative and facility support at each of the FedEx ramp and hub locations throughout the network.

As an example, FedEx facility support includes on-site maintenance staff at each of our ramp and hub locations. We have more than [ * ] ground support and material handling equipment mechanics at FedEx ramps and hubs across the country. We have a planned and executed preventive maintenance program and an equipment replacement plan and schedule to ensure that equipment is operational, capable, and available to support service delivery requirements. We ensure that gate space for our aircraft, loading and surface handling equipment, scanning equipment, and other facility requirements as established in Section 1.3.8, are available.

1.3.3 Monitor Performance

The Postal Service and FedEx have developed, over the years of joint operations, and will continue to provide a series of monitoring control points that provide a high degree of confidence for on-time and reliable mail delivery services. We will continue to operate these control points. Performance is monitored by PTM through our well-established data capture capability that provides snapshots of our performance at 15-minute intervals, and is summarized to show our performance during the day and at the end of day, end of week, and end of monthly operating periods. Sections 1.3.5, 1.3.10, and 1.3.15 further describe key points of data capture and distribution that provide performance monitoring input.

We have email distribution lists in place for the Day Network which include Postal Service local operators, FedEx local operators, and the area and national headquarters personnel for both organizations. Emails of the Day Summaries contain the daily recap data and an attached Excel spreadsheet providing delay details and explanatory information. The reports are prepared in a.m. and p.m. versions and are distributed by the Senior Operations Administrator in PTM with the departmental email ID: PTM_OPS@fedex.com.

We distribute a Weekly Service Level Report–Adjusted, Weekly Analysis Review presentation, and a Saturday Service Level Report to management in several organizations including PTM and Postal Service Air Transportation Operations. We list in Section 1.3.16 in this volume a number of reports that we prepare, including information about the intended audience, a brief description of each report, the distribution timeline, and report frequency. Figure 1-8 lists some benefits of the FedEx performance monitoring activities.

Figure 1-8. FedEx Performance Monitoring Benefits to the Postal Service

The Postal Service and FedEx have developed, over the years of joint operations, a series of monitoring control points that provide a high degree of confidence for on-time and reliable mail delivery services.

FedEx Performance Monitoring Features	Benefits to the Postal Service
Management review of daily Ramp-to-Ramp Report	Assists in identifying operational issues and root causes, leading to corrective action
Monitoring of hub operations with daily Roll-Over Scans and Analysis Reports for potential mail delay	Ensures that mail is identified at the hub for re-routing to ensure timely processing
Monitoring and verification that changes are understood locally via email, telephone, and meetings	Ensures coordination throughout the network when operating plans change, so that all staff are alerted and disruption to mail movement is minimized
Monitoring of monthly service level reports to identify any problems in the network and review with appropriate department	Ensures that sorting and other operations are efficient and meet on-time delivery schedules

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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FedEx Performance Monitoring Features	Benefits to the Postal Services
Provision and monitoring of mission-critical Day Summaries that detail flights more than 60 minutes late departing major hubs or major sorting locations	Establishes the ability throughout the Day Network to adjust schedules to minimize mail delay from its origin to its destination
Monitoring of national weather daily from the FedEx Meteorological Department	Establishes the ability to adjust Day Network flight schedules, re-routing, and hub operations to maximize on-time delivery of mail

1.3.4 Provide Feedback to the Postal Service

FedEx has Operations Administrators who track performance daily. We provide updates on Postal Service transport parameters with regard to system performance throughout the day, with recaps at the end of each operation. Thus, feedback to the Postal Service occurs on both a formal and informal basis, with our PTM informally discussing both normal and unusual operations with their counterparts in the Postal Service and formally through the documented reports that we describe in Section 3.3.16.

1.3.5 Ensure the Integrity of Data Entry

FedEx has eliminated manual data entry to reduce keying errors. In addition, we perform root cause analysis for abnormalities discovered in the data. We have developed a program that validates the accuracy of Dispatch and Routing (D&R) numbers to eliminate duplicate entries. The Error Correction (EC) program searches D&R tags that have been identified as not being billed because no container has been assigned.

The EC program goes into the PSALMS EC website, does a screen scrape of the D&Rs, and downloads them into an Excel document. The program then downloads a Truck Dispatch Report (TDR) and Flight Dispatch Report (FDR) data base and a (Postal Service Alliance Leveraging Multiple Synergies) PSALMS billing file to search against. It takes the D&R and does the search to see if the unbilled D&R tag can be found on the TDR/FDR to identify a container that it can be assigned to. If the D&R is found, it is then compared to D&Rs already billed that are located in the PSALMS billing file. If there is a comparable D&R found, then the D&R is a duplicate and the D&R is not billed again. If the D&R is not found in the billing file, the container found is assigned and the D&R is billed using that container.

If the D&R is not found in the TDR/FDR database, the program goes into a master database to get the corresponding scans. If the scanned data reveals a DECONS, the D&R is deemed invalid and the D&R is not billed. If there is no DECONS scan and there is a CONS scan, then the CONS number is recorded and is used by the program to go into FAMIS to do an additional search of TDR and FDR data. If the program cannot find a container to assign the D&R tag to, then it is noted as “Research Required” and the engineers do more research on the D&R.

[ * ]

1.3.6 Coordinate the Exchange of Information

FedEx has a series of comprehensive daily, weekly, and monthly reports that coordinate information across the FedEx and Postal Service organizations. FedEx will communicate daily with the Postal Service through electronic reports, using EDI 214, Version 4010, as well as face-to-face meetings with on-site ramp personnel.

Daily reports include: [ * ]

Weekly reports include: [ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Planning reports are provided monthly and include:

[ * ]

The reports are prepared in a.m. and p.m. versions and distributed by the Senior Operations Administrator in PTM with the departmental Email ID: PTM_OPS@fedex.com. We present a portion of the Daily Ramp to Ramp Report for September 19, 2012 in Figure 1-9 as an example.

[ * ]

Figure 1-9. Final Ramp to Ramp Daily Net Service Level Report

FedEx has a series of comprehensive daily, weekly, and monthly reports that coordinate information across the organizations.

1.3.7 Provide Notification of Changes or Anticipated Changes

Monthly meetings between the Postal Service, THS, and FedEx will continue to communicate all planned changes in aircraft, tender times, and other operational issues. PTM Operations Administrators communicate mission-critical information via reporting and special alerts regarding sort-down times, actual and variance to plan, and inbound and outbound flight and truck exception activity in and out of all hubs and major sort locations. They also communicate ad hoc and alternate move activity. Flight schedules and area operating plans identify changes to Postal Service headquarters, area offices, and the local operating teams. FedEx and the Postal Service also hold local meetings at ramp locations to manage and correct local issues.

1.3.8 Correct Type and Quantity of Equipment

FedEx will continue to provide a Unit Load Device (ULD) matrix monthly, which lists the planned ULD equipment by day and by week for the month. This information is in the Planning Matrix which will be sent to Postal Service headquarters, the THS operator, and the local Postal Service representative in each market.

FedEx also maintains spare aircraft, crews, ULDs, vehicles, and operating equipment which are strategically positioned to ensure on-time operations and to ensure that we meet the Postal Service’s operational requirements. Figure 1-10 lists our ramp and ground equipment that is used to load, move, and manage all air cargo, including Postal Service mail.

ULDs & GSE (Domestic)	Quantity
AMJ		[ *	]
SAA		[ *	]
AYY		[ *	]
LD3		[ *	]
Baggage cart		[ *	]
Dolly (regular)		[ *	]
Dolly (LD3)		[ *	]
Belt loader		[ *	]
Aircraft loader		[ *	]
Tug (cargo)		[ *	]
Tug (aircraft push)		[ *	]

Figure 1-10. FedEx Types and Quantities of Equipment

FedEx is an experienced air cargo transportation

company, with the required ramp and container

equipment to move the Postal Service freight

throughout the network on schedule.

1.3.9 Assist in Unloading or Loading ULDs to or from Surface Transportation

FedEx will continue to assist in unloading or loading ULDs to and from all surface transportation. FedEx has more than [ * ] ramp personnel across the network. FedEx personnel work with THS operators and subcontractors to ensure that the ULDs arriving at the origin or destination ramp are transferred to and from aircraft and trucks expeditiously. We have accommodated this assistance requirement over our 12-year history with the Postal Service and our personnel comply with this requirement routinely to move the mail. Our local ramp managers and staff have solid working relationships with the THS subcontractors at each ramp location, and those relationships operate to make the Postal Service processes work without interruption to ensure that we meet daily schedule demands.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.3.10 Scan Material Handling Units (Required) or Postal MTE

FedEx performs scans on all handling units to ensure the chain of custody and accountability for all Postal Service handling units tendered to FedEx. All handling units will be scanned consistent with our established best practices. FedEx will perform possession scans, load scans, hub sort scans, hub nest scans, and delivery scans. Scan data will be aggregated and transmitted via electronic EDI to FedEx and Postal Service information technology systems. No scanning of Mail Transport Equipment (MTE) is required as FedEx is not performing the THS function.

1.3.11 Process Mail for Dispatch from the Aviation Supplier’s Facility to the Postal Service Facility

Upon request from the Postal Service, FedEx will process mail for movement via aircraft, tug and dolly, containerized trucks, and bulk trucks as necessary, from our facility to the Postal Service facility.

Day Sort Operations processes mail that arrives inbound to the hub from the field operations each day. This includes Priority Mail (PML), Express Mail (EML), First Class Mail (FCM), and Registered Mail (RML). During the week, any EML that was tendered and labeled as day product will be processed by the Day Sort Operations. Any EML that is not scanning correctly will be taken immediately to the Postal Service Re-Label Area. The Postal Service Re-Label Area has been given instructions on how to handle EML with distribution table problems.

1.3.12 Close-Out, Receive, and Dispatch All Surface Vehicles

FedEx will continue to work closely with all THS providers to close out, receive, and dispatch all surface vehicles. Our streamlined approach will be managed by the FedEx ramp manager at each service point.

Figure 1-11. Electronic Bar Code Scanning

Bar code scanning of tags and ULD devices ensures accurate and timely data capture.

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1.3.13 Handle Overflow Volumes per Postal Service General Directions

FedEx will continue to work closely with the THS and the Postal Service to accept overflow volumes of mail. Our ramp managers, in collaboration with Postal Service managers, will make every effort to accept and process all overflow volumes when possible. FedEx ramp managers at service point locations will coordinate with Postal Service staff to identify overflow situations as early as possible, develop solutions to handle the overflow volumes, and resolve the overflow situation quickly and effectively with zero to minimal impact on mail delivery service schedules.

1.3.14 Cooperate With All Aviation Suppliers in the Transportation Service Chain

At both the PTM management level and the local ramp manager level, FedEx will cooperate with all suppliers in the transportation chain including air carriers, air cargo companies, airport staff, and THS service providers.

Areas of cooperation will include items such as sharing ground handling equipment when one party has equipment breakdowns, sharing joint-use ramps, and working collaboratively to deal with contingency events or irregular operations that would endanger on-time performance.

1.3.15 Enter Data Timely and Accurately

FedEx has developed a series of processes that depend on accurate and timely collection of data. The foundation for quickly capturing data in a highly accurate manner is the electronic identification of cargo as it moves from its origin to its destination. Bar code scanning establishes the foundation for FedEx’s near-100% accuracy and high speed of data capture for fast-paced and time-sensitive processes (Figure 1-11).

These data capture techniques and system updates allow customers to determine the progress of their cargo from origin to destination. The accuracy of the data capture also allows the network performance reports to be prepared and submitted to the Postal Service. FedEx has been at the forefront of the industry in the development of these rapid data capture technologies and has applied them to all processes in the Postal Service network.

1.3.16 Prepare Required Reports

FedEx has prepared and submitted all required and requested reports over the life of the current Postal Service contract. As requested by the Postal Service, FedEx will continue to provide these reports under the Air Cargo Network contract. Reports submitted under the current contract will be continued as is, or modified as required by the solicitation. These reports include:

[ * ]

In addition to these reports, FedEx will also provide new reports that are required to meet Postal Service requirements. In all reports, we will be diligent in providing accurate, timely information to enable Postal Service oversight and management of the ACN contract.

1.3.16.1 Daily Mail Condition Report

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.3.16.2 Operational Condition Reports

[ * ]

1.3.16.3 Dimensional Weight Reports

[ * ]

1.3.17 Perform Verification of Security Seals on Surface Transportation

FedEx will continue to verify all security seals on surface transportation prior to leaving our facility, as we have done since 2001. This will be a physical inspection of security seals on each trailer upon receipt by FedEx. The verification inspection will also be done prior to tendering the mail to the THS provider or Postal Service. The FedEx ramp manager at each ramp will ensure that all security seals are verified and logged by ramp staff. The process involves verifying the integrity of the seal on the back of the trailer and noting it on the Truck Dispatch Report paperwork.

1.3.18 Ensure the Security of All Mail

It is the mission of FedEx to protect and safeguard all mail from the time it is tendered to FedEx until the time FedEx tenders it to the THS or Postal Service. We accomplish this through a combination of training of staff, physical protection of facilities, and scanning of mail up to nine times from tender to FedEx through tender to THS or Postal Service. We also run background checks on all employees, and we conduct drug screening to ensure we have a drug-free workplace to decrease the likelihood of security incidents related to the mail while it is in our possession.

We provide initial and annual refresher training on mail handling and on the importance of the security of the mail to all FedEx employees involved in the contract. We have physical protection capabilities at each ramp location including closed-circuit video surveillance, facility access control, intrusion detection, and routine patrols by FedEx or local uniformed security staff. We maintain tight access control at all facilities to ensure that only authorized individuals are allowed into areas processing mail. Individuals attempting to enter or exit a sorting facility must successfully clear established screening checkpoints. These checkpoints:

• Ensure that the employee/vendor has an active ID badge.

• Screen each employee/vendor for contraband through our x-ray and metal detecting devices.

• Ensure that all customer property remains in designated sorting areas.

Through this combination of security procedures, security equipment, trained FedEx employees, and uniformed security staff, FedEx provides a heightened level of security to protect mail while it is in our possession.

1.4 Designation (Postal Service Performs Terminal Handling Service (THS) – Day Network)

During the term of the Transportation Agreement, processes were jointly developed by the Postal Service and FedEx resulting in well-designed routines that enable critical schedules to be met.

For the ACN Day Network contract, Fed Ex proposes that the Postal Service perform the THS operation.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.5 Delivery and Specific Delivery Instructions (Postal Service Performs THS Operation on Day Network)

The Postal Service and FedEx have developed efficient and effective communications over their long relationship that allow proper focus on tactical issues of delivery and schedule.

FedEx and the Postal Service have developed efficient and effective coordination processes and procedures over our long relationship to expedite the delivery of mail. All FedEx employees, as they do today, will assist Postal Service employees in both the unloading of inbound surface vehicles and the loading and dispatching of outbound surface vehicles. FedEx routinely transmits reports to the Postal Service (see Section 1.3.16 for report details) on mail delivery status and operational issues. Regularly scheduled meetings enable a broader audience to discuss a wide range of topics, while daily communications focus on tactical issues such as extra volume and late tender. Daily interface between the Postal Service and FedEx occurs via email; phone; and face-to-face meetings among PTM engineers and management, FedEx ramp managers, and local Postal Service contract and operations managers.

1.5.1 Delivery – Day Network

FedEx will deliver mail to the Postal Service destination ramps on or before the latest delivery time in accordance with Attachment 12, Tender and Delivery Time Commitment. Since FedEx will not be performing the THS operation, the Postal Service or THS contractors will unload the mail from the ULDs received, scan it, and separate it according to Attachment 5, Separations, and then transfer it to Postal Service supplied MTE.

A daily FedEx matrix plan will be distributed to hubs and ramps, which will track changes in volumes and available lift, so that FedEx will be able to accommodate any increases in volume.

1.5.2 Delivery – Night Network

Not applicable to Day Network.

1.5.3 Saturday Delivery – Day Network

FedEx will deliver mail according to specifics of mail tendered on Saturday, as outlined in Attachment 3, Operating Plan, Day Network. All destinations are air destinations (service points served by aircraft) unless identified in Attachment 12 as surface destinations (service points served by truck).

1.6 Boarding Priority

FedEx will adhere to Postal Service boarding priorities as we have done successfully on the Transportation Agreement since 2001.

In accordance with Postal Service priorities, FedEx will adhere to the boarding priority described in the following sections.

1.6.1 Boarding Priority – Day Network

FedEx will load accepted mail in the following boarding preference order, as specified by the Postal Service.

1. Registered (CON-CON) Mail

2. Live mail

3. Perishables

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4. HAZMAT, regardless of mail class

5. Domestic Priority and Express Mail

6. First Class Mail

7. All other mail

Any repossession of mail by the Postal Service without exercising the rights outlined in this RFP under Repossession of Mail by the Postal Service will be determined by the Postal Service designee, depending on circumstances.

1.6.2 Boarding Priority – Night Network

Not applicable to Day Network.

1.7 Frequency

FedEx will provide aviation supplier support to meet all Postal Service frequency of service requirements

The frequency of service for the Day Network is based on 6 days of Postal Service delivery, Tuesday through Sunday. This provides approximately 307 operating days annually (308 in a leap year). Holidays excluded are discussed in Section 1.14.4 of this proposal.

1.8 Mail Assignment and Transport – Day Network

Mail assignment and transport, the heart of the current Transportation Agreement, will also be the core of the new ACN contract and will continue to be a focus for feedback and improvement.

FedEx will prepare and deliver flight schedules to the Postal Service at least 30 days in advance of the first day of the operating period. These schedules are developed by PTM and are part of the Network Operating Plan as operational documents that convert the plan into action. After receipt of flight schedules, the Postal Service will create dispatch routing instructions based on FedEx flight schedules that subsequently are shown on the Postal Service D&R tag.

Mail Assignment and Transport Process – Day Network defines how the Postal Service will give FedEx tendered mail and illustrates the steps required in the planning process for assignment and transport, as shown in Figure 1-12. “All Mail Due FedEx Time” is outlined in Attachment 12 and is the time that the last piece of mail tendered must be in FedEx’s hands.

Figure 1-12. Mail Assignment and Transport Process

This process, jointly developed by the Postal Service and FedEx, facilitates on-time delivery.

1.9 Mail Assignment and Transport – Night Network

Not applicable to Day Network.

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1.10 Aviation Provider Planned Accommodation – Day Network

With the largest air cargo fleet in the world, FedEx is better able to absorb changes in Postal Service volumes and can provide greater flexibility to the Postal Service than any other air cargo carrier.

FedEx will guarantee up to 105% of the planned capacity in the Day Network for each origin daily. Should tendered mail exceed 105% of planned capacity, FedEx has the option to refuse the excess; however, throughout the current relationship, FedEx frequently has handled volumes tendered by the Postal Service exceeding its guarantee. Such flexibility is part of our commitment to providing the most dependable, reliable, and customer-focused service to the Postal Service.

1.11 Aviation Provider Planned Accommodation – Night Network

Not applicable to Day Network.

1.12 Treatment of Exceptional Types of Mail

Over the past 6 years, FedEx has integrated the special handling requirements associated with the increasing amounts of exceptional types of mail into our normal daily operations.

Since 2006, the volume of exceptional mail types, including lives, perishables, and HAZMAT, has increased continuously. FedEx provides rigorous training in the handling of exceptional types of mail as part of the training for new employees and annual refresher training.

1.12.1 Treatment of Live Mail

For live mail handling, FedEx will continue to use a multi-step process that covers all aspects of receipt, verification of live mail viability, inspection, scanning, loading, and unloading of both perishable and live mail. The FedEx guidelines include all requirements outlined in the Postal Service Domestic Mail Manual 601, Subsection 9.3.

Prior to contract award, as specified in the Statement of Work, FedEx and the Postal Service will negotiate an attachment that lays out the specifics of transportation of perishable and live mail. Because FedEx has been handling these exceptional types of mail for six years, we expect minimal issues.

1.12.2 Treatment of Perishables

Perishable mail is treated in the same manner as that described in Section 1.12.1.

1.12.3 Treatment of Registered Mail

To accurately track each piece of Registered Mail, FedEx will provide the Postal Service with the following information:

• Aircraft number

• Aircraft compartment location

• Actual flight departure time

• Any accident or irregularities

• D&R tags indicating final destination air stop.

FedEx will send an email alerting the Postal Service of Registered Mail that has failed to make its planned dispatch; we will then await instructions from the Postal Service.

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1.12.4 Treatment of Hazardous Material (HAZMAT)

FedEx follows and will continue to follow all applicable Federal, state, and local laws and regulations, including, but not limited to, OSHA and FAA rules and regulations in the handling of HAZMAT. We provide extensive training to certify Dangerous Goods Specialists to ensure that all Postal Service HAZMAT will be handled in accordance with regulatory requirements. FedEx personnel take annual refresher training on the handling of HAZMAT, which means that all FedEx personnel have up-to-date information on any changes to procedures or policies as well as the review of current procedures. FedEx will comply with all Postal Service requirements for the tagging and treatment of HAZMAT as follows:

• Tagging of hazardous materials

• ORM-D Air is for air and surface transport; ORM-D is for surface transport only.

• Division Class 6.2 is permitted only for medical/veterinary use, research or laboratory certification for public health. The shipper must pack these goods to withstand shocks, pressure changes, and other handling conditions.

• Division Class 9 is for miscellaneous materials presenting hazards during transport (solid dry ice, elevated temperature substances, environmentally hazardous substances, lifesaving appliances, and asbestos).

• Hazardous and Dangerous Goods and all other hazardous material.

• Assignment of hazardous materials

• Must be tendered at least 2 hours prior to final tender time of flight.

• There is no surcharge.

• Manifest copy and items must be handed to a FedEx representative 2 hours prior to closeout time of flight.

• Verification of postal manifest includes checking the number of pieces, weight, inclusion of appropriate shipper’s certification in aircraft load manifest, and completeness of pilot notification paperwork.

• Documentation of refusal to handle HAZMAT includes name, address of mailer and FedEx location, type and amount of HAZMAT, and reason for refusal.

• Procedures for HAZMAT spills, releases, incidents, and emergencies. In the 12 years that FedEx has worked with the Postal Service, there have been NO exceptions to these procedures:

• While the HAZMAT is in the possession of FedEx, but not onboard aircraft, damaged HAZMAT items must not be loaded.

• For items causing injury, illness, significant property damage, or disruption of operations, FedEx will complete PS Form 1770 and submit to the Postal Service.

• If there is an incident while onboard aircraft, FedEx must complete DOT Form F 5800.1. Within 24 hours, a copy of the form must be sent to the COR. Such incidents include HAZMAT cargo spills that come into contact with mail.

1.13 Offshore Capacity Requirement – Day Network

FedEx staffed ramps at all required offshore airports enables us to meet all offshore capacity requirements from Day One of the contract.

Capacity to handle the mail volume is critical within the continental United States, but capacity for offshore deliveries to Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands is equally critical. FedEx has, and will continue to provide, at a minimum, the daily volumes required in the solicitation, shown in Figure 1-13.

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Figure 1-13. Required Daily Volumes In and Out of Offshore Locations

[ * ]		[ * ]		[ * ]
	[ * ]		[ * ]		[ * ]
	[ * ]		[ * ]		[ * ]
	[ * ]		[ * ]		[ * ]

Mail destined for St. Thomas and St. Croix, Virgin Islands, is handled through San Juan, Puerto Rico. FedEx will accommodate any increase in capacity through the planning process and by mutual agreement with the Postal Service.

1.14 Volume Commitment – General Information

Throughout the 12-year Transportation Agreement relationship, FedEx has generally had sufficient capacity to handle whatever volume the Postal Service required.

FedEx will continue our 12-year record of successfully supporting the Postal Service’s dynamic volume requirements and of meeting service level agreements (SLAs) for aviation services. Our knowledge and understanding of the Postal Service mission, operations, culture, and technology provides a non-disruptive, no-risk option for the Postal Service – no learning curve, no initial training for existing employees, no changes in processes. Essentially, all activities will continue in the manner that the Postal Service has enjoyed since the beginning of the strategic alliance with FedEx.

FedEx has the fleet, pilots, facilities, and support staff – including [ * ] A&P-certified aircraft mechanics – to immediately support future Postal Service volume schedules and forecasts. From Day 1 of the new contract, FedEx can handle any Postal Service volume based on historical volumes. A one-day sample from a peak week in December 2011 that clearly shows our ability to support Postal Service volume schedules and forecasts is shown in Figure 1-14.

Figure 1-14. Daily Volume Commitment versus Actual Volume

FedEx has the capacity in its fleet to support any practical volume that the Postal Service can request, as evidenced by this December example from 2011.

[ * ]
	[ * ]	[ * ]	[ * ]
	[ * ]	[ * ]	[ * ]

1.14.1 Volume Commitment – Contract Volume Minimum – Day Network

FedEx has the capacity and capabilities to meet the minimum contract volume of [ * ] cubic feet per operational day. The volume is estimated by averaging the actual (or anticipated) volume per operational day across the 6-day operating period.

1.14.2 Operating Period Volume Minimum – Day Network

FedEx understands and agrees with the volume minimums for the Day Network with the Postal Service performing all THS operations.

1.14.3 Aviation Supplier Performs THS Operation

The Postal Service will perform THS operations for the Day Network.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.14.4 Operating Period Volume Minimum – Night Network

Not applicable to Day Network.

1.14.5 Volume Commitment – Holiday – Day Network

On holidays, mail will be handled in accordance with the requirements of the solicitation. Holidays are shown in Figure 1-15.   For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the following days will not be included: Figure 1-15. Holidays Included in the Solicitation The asterisks indicate widely observed holidays.

• Widely observed holidays

• The days following the widely observed holidays that occur on a Monday

• Non-widely observed holidays that fall on a Monday.

For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the following days will be included at a 50% volume level:

• The day following widely observed holidays not occurring on a Monday

• Non-widely observed holidays not occurring on a Monday

• The day after a non-widely observed holiday.

1.14.6 Volume Commitment – Holiday – Night Network

Not applicable to Day Network.

1.15 Operating Periods

FedEx will plan and operate the Day Network in accordance with Attachment 1, Postal Service Operating Periods. Because FedEx has been providing services for 12 years based on Transportation Agreement operating periods very similar to those specified in Attachment 1, the transition to the new contract will be virtually risk-free and indistinguishable to the Postal Service. FedEx will provide to the Postal Service our monthly operating plan 30 days before the beginning of the operating period, and will specify the specific type of airline ULD per origin/destination, destination of airline ULD – direct (bypass), and destination of airline ULD – mixed (to be sorted at hub).

1.16 Ordering Process – Introduction

FedEx will use the proven ordering process used successfully under the current Transportation Agreement to meet Postal Service peak and non-peak volume requirements.

The Postal Service process for ordering air transportation for mail to and from destinations in the contiguous 48 states and Alaska, Hawaii, Puerto Rico, and the Virgin Islands is provided at Day 120 for non-peak periods and Day 150 for peak periods.

Because the current ordering process is very similar to that outlined in the ACN statement of work (SOW), FedEx has already demonstrated the ability to work within the specified timeframes. Careful planning means that mail tendered to FedEx will arrive on time at the proper service point, thus maintaining the Postal Service’s historical record for quality service.

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1.16.1 Ordering Process – Non-Peak – Day Network

The non-peak Day Network ordering process will begin with the Postal Service providing FedEx a request for mail volumes that delineates each lane pair (origin and destination) based on separate plans for Tuesday/Wednesday, Thursday/Friday, Saturday, and Sunday. Volumes by lane pair will be specified in cubic feet. Figure 1-16 provides further details of this process.

Figure 1-16. Ordering Process – Non-Peak Day Network

Detailed planning and coordination with the Postal Service ensures that FedEx will meet contract delivery schedules and volumes.

FedEx and the Postal Service agree on the delivery mechanism of orders and responses. For bypass containers allocated in lanes with 110% capacity of ULD configuration for planned aircraft, the Postal Service and FedEx will agree, during the planning process, that bypass and mixed containers will be built at origin service points.

1.16.2 Ordering Process – Non-Peak – Night Network

Not applicable to Day Network.

1.16.3 Ordering Process – Peak – Day Network

The 4 or 5 weeks that make up each peak operating period include Christmas week so that the requested volume capacity is sufficient to meet Postal Service volume requirements for holiday mail delivery. Both non-peak and peak volume forecasting specify individual origin and destination lane pairs and are expressed in cubic feet. Figure 1-17 provides further details of this process.

Figure 1-17. Ordering Process – Peak Day Network

Detailed planning and coordination with the Postal Service ensures that FedEx will meet contract delivery schedules and volumes.

1.16.4 Ordering Process – Peak – Night Network

Not applicable to Day Network.

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1.17 Electronic Data Interchange (EDI) Including Scanning and Data Transmission

FedEx has the infrastructure and experience with EDI to provide the Postal Service with a low-risk solution for rapid transmission of high-volume data streams.

FedEx will transmit and receive status and operational data according to the EDI standards as required in the solicitation, Attachment 7, Electronic Data Interchange Service Requirements. Additionally, we will transmit payment information using the Attachment 7 standards for financial data. We will use the standards shown in Figure 1-18 for transactions of volume and relevant scans with the Postal Service.

Figure 1-18. Postal Service–Accepted EDI Standards for Scanning and Data Transmissions

FedEx will use these EDI standards for status and operational data as well as for payment information transmission with the Postal Service.

Standard	Purpose
CARDIT	To convey detailed information about domestic shipments.
RESDIT	To receive status information at the handling unit level for domestic mail shipments.
INVOIC ADV	Message claiming payment for goods and services supplied under agreed-upon conditions; also serves as specification for Debit Note and Credit Note messages. Postal Service implementation is to provide invoice advice to its transport providers of the items, which comprise amounts payable for transportation services.
CLAIMS	Message claiming payment for goods and services supplied under agreed-upon conditions; also serves as specification for Debit Note and Credit Note messages. Postal Service implementation is to provide mechanism for its transport providers to report claims for the mail handling items which comprise amounts payable for transportation services.

EDI based on the UN/EDIFACT format is ideal technology for the high volume of transactions that will be processed, based on contract requirements. FedEx owns the world’s largest private digitized, value-added network (VAN) for business-to-business data exchange, FedExNet^®, which allows us to easily accommodate large data streams. We have successfully used the FedExNet^® VAN for the Postal Service since 2001 to transmit and receive operational and status data, as well as payment data. We are very familiar with the Attachment 7 EDI requirements and standards, as we have used CARDIT and RESDIT protocols extensively since 2005 for international postal customers.

The status and operational data, as well as payment data, will be transmitted over the VAN as shown in Figure 1-19. Primary files on the FedEx side reside in the Scanning Database, which stores and transmits scans and service files (shown as SRS, Summary Reporting System) and the PSALMS Revenue Database, which stores invoice and reconciliation files (shown as REV). With EDI, the Postal Service will receive the invoice and reconciliation data from FedEx via a secure mailbox on FedExNet^®.

Figure 1-19. Postal Service-FedEx EDI Network Highlights

FedEx has the experience and infrastructure to fully execute Postal Service–accepted EDI standards.

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Scanning and Data Transmission

FedEx will perform all scans in accordance with the solicitation scan requirements. A summary of the scans that we will perform is provided in Section 1.19. We will transmit the required data elements within 2 hours of a reportable event. Available data will be transmitted at 15 minute intervals in the appropriate EDI format.

1.17.1 Surface Visibility Scanning

Since the Postal Service will perform THS, surface visibility scans will continue to be performed by the THS providers.

1.18 Reports (See Section 1.3.16)

FedEx will continue to provide all required and requested reports over the life of the ACN contract.

In Section 1.3.16 of this volume, we list the RFP-required reports and other, suggested reports that are useful for monitoring performance on this contract and that provide input for future volume and schedule planning.

1.19 Performance Requirements and Measurement

The knowledge and understanding FedEx has of Postal Service processes will enable us to meet or exceed your service performance requirements.

FedEx will comply with the solicitation, meeting the delivery performance requirements during an operating period on a lane-by-lane basis, of:

• Day Network: [ * ]%

• Peak operating period: [ * ]% for the Day Network.

As presented in Section 1.17, we will perform all required scans to provide baseline operational, status, and invoice data to the Postal Service.

At Origin:

• Possession of ULD and handling units (D&R)

• Load scan connecting ULD to aircraft or truck.

At Hub:

• If mixed ULD

• Hub sort scan handling units (D&R)

• Nest scan connecting handling unit to ULD

• Load scan connecting ULD to aircraft or truck

• If bypass ULD at the hub

• Load scan connecting ULD to aircraft or truck.

In Transit (when applicable):

• Transfer scans on all intermodal movement, specifically where handling units and /or air containers are transferred from an air segment to a surface option

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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• Transfer scans on all transfers to feeder options, specifically where handling units and /or air containers are transferred from an air segment to another air segment.

At Destination:      •     Delivery scans of ULDs and handling units.   Performance measurement will be based on the FedEx delivery scan at the correct destination. Representative ULDs in our fleet are shown in Figure 1-20. Figure 1-20. Representative ULDs

As stated earlier, operational data will be transmitted by EDI between the Postal Service and FedEx. Payment calculation for delivery performance is based on a lane-level basis.

1.20 Reduction of Payment

The FedEx commitment to the Postal Service, as shown by our high level of service over the past 12 years, demonstrates our ability to achieve desired service levels and minimize payment penalties.

FedEx will comply with the reductions in payment as specified in the solicitation. There is no penalty for handling units meeting delivery performance standards during an operating period on a lane-by-lane basis of:

• ³ [ * ]% for Day Network

• ³ [ * ]% for peak operating period.

Reductions in transportation payment for handling units delivered late are shown in Figure 1-21.

Figure 1-21. Parameters for Reduction of Payment

FedEx fully accepts the requirements as stated in the solicitation.

Delivery Late	Reduction in Transportation Payment
> 0 min and < 30 min		[ *	]
³ 30 min and £ 60 min		[ *	]
> 60 min		[ *	]

1.21 Performance Management

Quarterly performance reviews with the Postal Service will provide visibility of contract performance and will improve and enhance communications between the Postal Service and FedEx.

FedEx will meet with the Postal Service every quarter, at a minimum, to discuss performance management as stated in the solicitation. FedEx will submit a list of potential topics for Postal Service consideration and a list of FedEx personnel planning to attend. The minutes of the meeting will be shared between the parties. The following items will be included on the agenda:

a. Cost Control: Cost control measures being implemented and results

b. Holiday Operations and Planning: Status of FedEx operations and planning for upcoming holidays

c. Aviation Supplier Performance: Review of quarterly FedEx performance against contract requirements

d. Peak Season Planning: Review of FedEx planning for upcoming peak season

e. Quality: Review of quality initiatives, audits, and service delivery improvement efforts

f. Ramp Operations: Discussion of ramp operations focused on areas for improvement

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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g. Reconciliation of Irregularities: Presentation summary of reconciliation actions during the previous quarter

h. Security: Review of security incidents during the previous quarter and FedEx initiatives to improve system-wide security

i. Technology Issues: Review of technology issues and concerns in previous quarter and an update on technology initiatives and plans

j. Tender and Delivery Hygiene: Report on the issues and collaboration to address the problems at the identified locations

k. Volume Planning: Review of volume planning effectiveness in previous quarter and provision of recommendations to improve volume planning

l. Other Pertinent Topics: Presentation and review of other topics as necessary.

1.22 Payment Procedures

The basis of all payments is the scanned information that we will transmit promptly to ensure accurate and complete invoicing and payments.

In this section we present details of payment procedures, including:

• Rates and Payment General

• Payment Processing – Day Network – Per Cube

1.22.1 Rates and Payment General

The basis of all rates and payments is the scans, beginning with the possession/load scan and ending with the delivery scan at the completion of the FedEx delivery to the Postal Service. FedEx understands that if the delivery scan is not submitted or is not at the correct location, there will be no payment. FedEx team members take great care in handling our customers’ packages. Postal Service shipments enter our sorting system at specific times, are scanned, and then secured in the appropriate containers, trailers, or aircraft.

The FedEx payment process includes electronic remittance advice and electronic funds transfer (EFT) to reduce much of the cost and paperwork involved in issuing payments. Both of these tools reduce check processing costs, while ensuring quick and accurate application of payment. Remittance advice file processing is automatically included with the EDI invoices.

1.22.1.1 Scan Requirements

FedEx will comply with all scanning and data transmission requirements as stated in the solicitation. FedEx leads the transportation industry in scanning and tracking technology. Packages are scanned during our pickup, sort, and delivery processes by handlers and by automated overhead scanners and scanning systems. Scanning enables FedEx and the Postal Service to observe the movement of packages electronically from pickup to delivery for an added level of security and end-to-end tracking of the mail. Using a variety of wireless data collection devices such as PScan and PowerPad as shown in Figure 1-22, we scan D&R tags at each hand-off point, capturing a variety of shipment information, including:

•   Dispatch and routing number   •   Origin/destination location information   •   Ship date •   Exception scans   •   Type of service   •   Proof of delivery.

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Figure 1-22. Sample of Scanning Devices

FedEx has a variety of scanning devices strategically located to provide end-to-end tracking.

1.22.1.2 Night Turn Scan Requirements

Not applicable to Day Network.

1.22.1.3 Day Turn Scan Requirements

FedEx will comply with all day turn scan requirements as presented in Section 1.19. FedEx will provide scans to allow end-to-end tracking of the mail.

1.22.2 Payment Processing – Day Network – Per Cube

1.22.2.1 Invoicing

FedEx will comply with the solicitation requirements for invoicing and payment for the Day Network. Payment will be based on handling units and ULDs (in cubic feet) and completion of scans for the required operating periods. We will include additional charges not covered in the automated payments system in our monthly invoices. We will produce a weekly invoice based on a service week that begins at 0000 hours Saturday and ends at 2359 on Friday. We will submit the invoice by noon on Wednesday in order to receive payment by Wednesday, 3 weeks following the receipt of the invoice.

1.22.2.2 Mail Tendered in ULDs

FedEx will comply with the conditions and solicitation requirements for Mail Tendered in ULDs.

1.22.2.3 Mail Tendered from Surface Trucks

FedEx will comply with the conditions and solicitation requirements for Mail Tendered from Surface Trucks.

1.22.2.4 Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub

FedEx accepts the conditions and will comply with the solicitation requirements for Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub.

1.22.2.5 Aviation Supplier Surface Transportation – Not Included in Transportation Payment

When the Postal Service requires unplanned surface transportation of mail, we will include a separate rate per mile for highway transportation as included in Attachment 10, Pricing. We will comply with the conditions and solicitation requirements for Aviation Supplier Surface Transportation – Not Included in Transportation Payment.

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1.22.2.6 Economic Adjustment

FedEx will comply with all requirements in the solicitation section on Economic Adjustment. Only the non-fuel line haul rate will be economically adjusted. We will use the economic adjustments in Attachment 10, Pricing.

1.22.2.7 Hub Sort Scan

FedEx will comply with all requirements in the solicitation on providing Hub Sort Scan at the appropriate hubs as part of our normal process. We agree that the Postal Service will pay for hub sort only where the sorts are supported by EDI scan information.

1.22.2.8 Re-Labeling Charge

FedEx will comply with all requirements and accepts all statements in the solicitation for this section. FedEx understands that the Postal Service will pay an additional charge for replacing a D&R tag that is missing or becomes illegible. The Postal Service will provide equipment to FedEx to perform this function.

Re-labeling is an example of our commitment to the Postal Service. In 2002, the Postal Service approached FedEx, requesting that we take over the re-labeling function at the Memphis hub. From the time that we assumed responsibility for this area, most, if not all pieces, move out the same day that they arrive at the sort. FedEx re-labels approximately [ * ] pieces per day on a non-contingency day. Approximately [ * ] times per month the Postal Service declares a contingency (meaning its SAMS equipment is down in the local market) and the unlabeled handling units are sent to the Memphis hub, where FedEx labels the mail. In these situations, we label between [ * ] and [ * ] handling units of mail and introduce them back into the network, thereby allowing the Postal Service to accomplish mail delivery service to its customers.

1.22.2.9 Fuel Adjustment

FedEx agrees that the Postal Service will make a monthly fuel adjustment to the fuel line haul rate in accordance with the solicitation section on Fuel Adjustment.

1.22.3 Payment Processing – Day Network – Per Pound

FedEx will provide service paid by the cube for the Day Network, so this optional service will not be provided.

1.22.4 Payment Processing – Night Network – Per Pound

Not applicable to Day Network.

1.22.4.1 Invoicing

Not applicable to Day Network.

1.22.4.2 Economic Adjustments

Not applicable to Day Network.

1.22.4.3 Re-Labeling Charge

Not applicable to Day Network.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.23 Reconciliation Process

FedEx will work collaboratively with the Postal Service to reconcile and resolve all payment issues as expeditiously as possible.

FedEx will comply with the requirements in the solicitation section entitled Reconciliation Process. The Postal Service Revenue Team and the FedEx Revenue Team have worked together since 2001 to refine many different reconciliation items. Through constant diligence in monitoring the revenue stream for anomalies, we have collaboratively developed the current reconciliation process. With this knowledge and experience with the Postal Service reconciliation process, FedEx will continue to review and refine the reconciliation process to support the Postal Service’s reconciliation requirements and process on the ACN contract.

1.24 Mode of Transportation to Service Each Air Stop – (Mail Assignment and Transport) as Identified in Tender and Delivery Specifications Listed in Attachment 3 and Attachment 4

As one of the most reliable, dependable, and largest air cargo carriers in the world, with a record of successfully supporting the Postal Service since 2001, we will be able to provide all modes of transportation to service each air stop on Day 1 of the ACN contract.

The mode of transportation to service each air stop will be provided in the Monthly Operating Plan, which provides the details for each operating period. We will tailor our plans, including modes of transportation, to Postal Service needs. In general, for the Day Network (Tuesday through Sunday, excluding Saturday), we use aircraft. On Saturday, we use a combination of air and truck transport. We provide here an overview of our aircraft and truck fleet.

The FedEx Express aircraft fleet is shown in Figure 1-22. In addition, FedEx has on-call arrangements to lease additional aircraft to handle peak volume and other contingencies.

Figure 1-22. FedEx Express Aircraft Fleet

FedEx has ample capacity to service each air stop.

FedEx Aircraft Fleet
Description	Owned		Leased		Total		Maximum Operational Revenue Payload (pounds per aircraft) (1)
Jet (Trunk) Aircraft
Airbus A300-600		35		36		71		85,600
Airbus A310-200		18		0		18		61,900
Airbus A310-300		17		0		17		67,500
Boeing B727-200		29		0		29		38,200
Boeing B757-200		60		0		60		45,800
Boeing 767-300F(2)		0		0		0		98,856
Boeing B777F		22		0		22		178,000
McDonnell Douglas MD10-10		52		0		52		108,700
McDonnell Douglas MD10-30		12		5		17		114,200
McDonnell Douglas MD11		38		26		64		164,200
Non-Jet (Feeder) Aircraft
ATR 42-300/320		26		0		26		10,880

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FedEx Aircraft Fleet
Description	Owned		Leased		Total		Maximum Operational Revenue Payload (pounds per aircraft) (1)
ATR 72-202/212		21		0		21		14,660
Cessna 208B		237		0		237		2,500
Total All Aircraft		567		67		634

1 Maximum Operational revenue payload is the lesser of the net volume-limited payload and the net maximum structural payload.

2 This aircraft model will be introduced in 2013 and is included here to show the contribution over the life of the contract.

In addition to our aircraft, FedEx Express operates approximately 52,400 ground transport vehicles, including pickup and delivery vans, larger trucks called container transport vehicles, and over-the-road tractors and trailers. These vehicles are strategically located at service points across the network to support volumes and service delivery requirements and are repositioned to meet mail service delivery schedules.

1.25 Other Components of the Statement of Work Not Previously Discussed

This section presents components of this solicitation which are not discussed earlier or are referenced in Volume 1. We have added this subsection for easier cross-reference.

1.25.1 Service Points

FedEx currently serves all locations in the Day Network via our extensive U.S. network using three air cargo hubs. Beginning on Day 1, FedEx can furnish all services to all locations specified in the solicitation in Attachment 3. Because we are the world’s largest air cargo carrier and have successfully performed on this contract for the last 12 years, we are uniquely qualified to provide uninterrupted service to the Postal Service through our infrastructure, support facilities, and continuity of staff.

1.25.2 Management Plan

Our Management Plan details are fully presented in Volume 1, Section 3.0. Since the solicitation calls for a full response for all SOW elements, we have added this reference to facilitate evaluation and use during the contract period.

1.25.3 Repossession of Mail by the Postal Service

FedEx will fully comply with the solicitation requirement to provide repossession of mail by the Postal Service in the event that the Postal Service requires mail to be returned. We will actively work with local Postal Service agents or representatives to expeditiously return the mail.

1.25.4 Local Agreements

In accordance with the solicitation, no local agreements, informal agreements, or working agreements made without appropriate binding authority will bind or obligate the Postal Service or FedEx.

1.25.5 Operating Periods

The FedEx response fully addresses all activities in the operating periods, including planning, transport operations, and payments. We will offer the full range of services throughout the entire life of the contract.

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1.25.6 Incentive Plan

FedEx is committed to achieving the service level agreements for mail delivery required by the ACN contract. Additionally, we will work collaboratively with the Postal Service after contract award to establish an incentive plan to improve our overall mail delivery performance rating, with the goal of achieving to achieve [ * ]% in Year 3 starting in October 2015, and [ * ]% in Year 5 beginning in October 2017, for the Non-Peak Day Network. Our approach will build on our record of outstanding mail delivery performance for the Postal Service over the past 12 years.

1.25.7 Sustainability

Sustainability requirements are addressed in Volume 1, Section 6.0.

1.25.8 Security

Security requirements are addressed in Volume 1, Section 5.0.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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2.0 Contingency Plan

[ * ]

2.1 Aircraft Mechanical Delays or Cancellations

[ * ]

2.2 A Breakdown of Any Maintenance Support or Ground Handling Equipment and Duties at Any Outstation

[ * ]

2.3 Delays, Cancellations, or Aircraft Weight Limitations Caused by Weather Conditions

[ * ]

2.4 Airport Closings per FAA

[ * ]

2.5 Labor Disruptions Including, But Not Limited to, Walkouts or Strikes

[ * ]

2.6 Staffing Shortages Relating to Medical or Other Emergencies

[ * ]

2.7 Delays Caused by Environmental Issues Such as Fuel Spills, Chemical Spills, and Other HAZMAT

[ * ]

2.8 Other Conditions That May Affect On-Time Performance

In addition to the contingency conditions addressed in Section 2 of this proposal, FedEx knows that there are a multitude of additional situations, from snow to volcanoes to typhoons, that have the potential to impact our aviation network and our support for the Postal Service. In all cases, GOCC, in close collaboration with PTM, anticipates contingency events, assesses possible impacts, tailors and implements contingency plans, performs all required actions, and manages the contingency situation through to closure. FedEx’s primary objective in dealing with contingencies is to ensure that we continue to provide all required mail delivery services according to Postal Service contract schedules.

2.9 Training of Employees on Contingency Plan

Contingencies, from blizzards to hurricanes to floods, are a way of life for FedEx employees. Our staff has to be prepared at any given moment to respond to contingencies, implement proven plans, and continue service to our customers. Our employees, from the GOCC contingency planners and managers, to the PTM management team, to the ramp staff at each FedEx airport location, are trained to deal with events and circumstances beyond their immediate control. FedEx employees receive initial and annual recurrence training for contingency plans and response actions for each FedEx airport location. They receive additional training when contingency plans are revised or local procedures are updated. Training records are maintained in employee personnel files and include training received, test scores, and certifications

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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United States Postal Service

Air Cargo Network

Volume 2B - 100% of the Night Network (Required)

Solicitation Number: 5A-12-A-0024

November 6, 2012

Issued By:

Air Transportation CMC

Transportation Portfolio

Supply Management

475 L’Enfant Plaza SW

Room 1P650

Washington DC 20260-0650

This proposal includes data that may not be duplicated, used, or disclosed outside the Postal Service – in whole or in part – for any purpose other than to evaluate this proposal. If, however, a contract is awarded to this offeror as a result of – or in connection with – the submission of such data, the Postal Service will have the right to duplicate, use, or disclose the data to the extent provided in the resulting contract. This restriction does not limit the Postal Service’s right to use information contained in the data if it is obtained from another source without restriction. The data subject to this restriction are contained in all sheets as marked.

United States Postal Service Air Cargo Network Volume 2B - 100% of the Night Network November 6, 2012

Table of Contents

1.0	NIGHT NETWORK OPERATING PLAN	1
1.1	TENDER AND DELIVERY TIMES BY AIR STOP	5
1.2	OPERATIONAL COMPONENTS OF THE SOW	5
1.3	SERVICES PROVIDED	6
1.3.1	Coordination and Oversight of FedEx Operations	7
1.3.2	Facility Support and Administrative Functions	8
1.3.3	Monitor Performance	8
1.3.4	Provide Feedback to the Postal Service	9
1.3.5	Ensure the Integrity of Data Entry	9
1.3.6	Coordinate the Exchange of Information	9
1.3.7	Provide Notification of Changes or Anticipated Changes	11
1.3.8	Correct Type and Quantity of Equipment	11
1.3.9	Assist in Unloading or Loading ULDs to or from Surface Transportation	11
1.3.10	Scan Material Handling Units (required) or Postal MTE	11
1.3.11	Process Mail for Dispatch from the Aviation Supplier’s Facility to the Postal Service Facility	12
1.3.12	Close-Out, Receive, and Dispatch All Surface Vehicles	12
1.3.13	Handle Overflow Volumes per Postal Service General Directions	12
1.3.14	Cooperate With All Aviation Suppliers in the Transportation Service Chain	12
1.3.15	Enter Data Timely and Accurately	12
1.3.16	Prepare Required Reports	13
1.3.16.1	Daily Mail Condition Report	13
1.3.16.2	Operational Condition Reports	13
1.3.16.3	Dimensional Weight Reports	13
1.3.17	Perform Verification of Security Seals on Surface Transportation	13
1.3.18	Ensure the Security of All Mail	14
1.4	DESIGNATION (POSTAL SERVICE PERFORMS TERMINAL HANDLING SERVICE (THS) – NIGHT NETWORK)	14
1.5	DELIVERY AND SPECIFIC DELIVERY INSTRUCTIONS (POSTAL SERVICE PERFORMS THS OPERATION ON DAY NETWORK)	14
1.5.1	Delivery – Day Network	14
1.5.2	Delivery – Night Network	14
1.5.3	Saturday Delivery – Day Network	15
1.6	BOARDING PRIORITY	15
1.6.1	Boarding Priority – Day Network	15
1.6.2	Boarding Priority – Night Network	15
1.7	FREQUENCY	15
1.8	MAIL ASSIGNMENT AND TRANSPORT – DAY NETWORK	15
1.9	MAIL ASSIGNMENT AND TRANSPORT – NIGHT NETWORK	16
1.10	AVIATION PROVIDER PLANNED ACCOMMODATION – DAY NETWORK	16
1.11	AVIATION PROVIDER PLANNED ACCOMMODATION – NIGHT NETWORK	16
1.12	TREATMENT OF EXCEPTIONAL TYPES OF MAIL	17
1.12.1	Treatment of Live Mail	17
1.12.2	Treatment of Perishables	17

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1.12.3	Treatment of Registered Mail	17
1.12.4	Treatment of Hazardous Material (HAZMAT)	17
1.13	OFFSHORE CAPACITY REQUIREMENT – DAY NETWORK	18
1.14	VOLUME COMMITMENT – GENERAL INFORMATION	18
1.14.1	Volume Commitment – Contract Volume Minimum – Day Network	19
1.14.2	Operating Period Volume Minimum – Day Network	19
1.14.3	Aviation Supplier Performs THS Operation	19
1.14.4	Operating Period Volume Minimum – Night Network	19
1.14.5	Volume Commitment – Holiday – Day Network	19
1.14.6	Volume Commitment – Holiday – Night Network	19
1.15	OPERATING PERIODS	19
1.16	ORDERING PROCESS – INTRODUCTION	20
1.16.1	Ordering Process – Non-Peak – Day Network	20
1.16.2	Ordering Process – Non-Peak – Night Network	20
1.16.3	Ordering Process – Peak – Day Network	20
1.16.4	Ordering Process – Peak – Night Network	20
1.17	ELECTRONIC DATA INTERCHANGE (EDI) INCLUDING SCANNING AND DATA TRANSMISSION	21
1.17.1	Surface Visibility Scanning	22
1.18	REPORTS (SEE SECTION 1.3.16)	22
1.19	PERFORMANCE REQUIREMENTS AND MEASUREMENT	22
1.20	REDUCTION OF PAYMENT	23
1.21	PERFORMANCE MANAGEMENT	23
1.22	PAYMENT PROCEDURES	24
1.22.1	Rates and Payment General	24
1.22.1.1	Scan Requirements	24
1.22.1.2	Night Turn Scan Requirements	25
1.22.1.3	Day Turn Scan Requirements	25
1.22.2	Payment Processing – Day Network – Per Cube	25
1.22.2.1	Invoicing	25
1.22.2.2	Mail Tendered in ULDs	25
1.22.2.3	Mail Tendered from Surface Trucks	25
1.22.2.4	Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub	25
1.22.2.5	Aviation Supplier Surface Transportation – Not Included in Transportation Payment	25
1.22.2.6	Economic Adjustment	26
1.22.2.7	Hub Sort Scan	26
1.22.2.8	Re-Labeling Charge	26
1.22.2.9	Fuel Adjustment	26
1.22.3	Payment Processing – Day Network – Per Pound	26
1.22.4	Payment Processing – Night Network – Per Pound	26
1.22.4.1	Invoicing	26
1.22.4.2	Economic Adjustments	26
1.22.4.3	Re-Labeling Charge	26
1.23	RECONCILIATION PROCESS	27
1.24	MODE OF TRANSPORTATION TO SERVICE EACH AIR STOP – (MAIL ASSIGNMENT AND TRANSPORT) AS IDENTIFIED IN TENDER AND DELIVERY SPECIFICATIONS LISTED IN ATTACHMENT 3 AND ATTACHMENT 4	27
1.25	OTHER COMPONENTS OF THE STATEMENT OF WORK NOT PREVIOUSLY DISCUSSED	28

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1.25.1	Service Points	28
1.25.2	Management Plan	28
1.25.3	Repossession of Mail by the Postal Service	28
1.25.4	Local Agreements	28
1.25.5	Operating Periods	28
1.25.6	Incentive Plan	28
1.25.7	Sustainability	29
1.25.8	Security	29
2.0	CONTINGENCY PLAN	30
2.1	AIRCRAFT MECHANICAL DELAYS OR CANCELLATIONS	33
2.2	A BREAKDOWN OF ANY MAINTENANCE SUPPORT OR GROUND HANDLING EQUIPMENT AND DUTIES AT ANY OUTSTATION	33
2.3	DELAYS, CANCELLATIONS, OR AIRCRAFT WEIGHT LIMITATIONS CAUSED BY WEATHER CONDITIONS	33
2.4	AIRPORT CLOSINGS PER FAA	35
2.5	LABOR DISRUPTIONS INCLUDING, BUT NOT LIMITED TO, WALKOUTS OR STRIKES	35
2.6	STAFFING SHORTAGES RELATING TO MEDICAL OR OTHER EMERGENCIES	35
2.7	DELAYS CAUSED BY ENVIRONMENTAL ISSUES SUCH AS FUEL SPILLS, CHEMICAL SPILLS, OR OTHER HAZMAT	36
2.8	OTHER CONDITIONS THAT MAY AFFECT ON-TIME PERFORMANCE	36
2.9	TRAINING OF EMPLOYEES ON CONTINGENCY PLAN	36
3.0	COMPLETED ATTACHMENT 12: TENDER & DELIVERY TIME COMMITMENT	37

List of Figures

FIGURE 1-1. FEDEX AIR CARGO NIGHT NETWORK	1
FIGURE 1-2. FEDEX KEY DIFFERENTIATORS	2
FIGURE 1-3. FEDEX ON-TIME DELIVERY HISTORY	3
FIGURE 1-4. CUSTOMER-FOCUSED FEDEX MAIL SERVICE DELIVERY TEAM	4
FIGURE 1-5. FEDEX AIR TRANSPORT MAIL DELIVERY SERVICE PROCESS	5
FIGURE 1-6. PROCESS AREAS OF ACN SOLICITATION MAPPED TO TRANSPORTATION AGREEMENT CURRENT PROCESSES	6
FIGURE 1-7. FEDEX’S GOCC	7
FIGURE 1-8. FEDEX PERFORMANCE MONITORING BENEFITS TO THE POSTAL SERVICE	8
FIGURE 1-9. FINAL RAMP TO RAMP DAILY NET SERVICE LEVEL REPORT	10
FIGURE 1-10. FEDEX TYPES AND QUANTITIES OF EQUIPMENT	11
FIGURE 1-11. ELECTRONIC BAR CODE SCANNING	12
FIGURE 1-12. MAIL ASSIGNMENT AND TRANSPORT PROCESS	16
FIGURE 1-13. DAILY VOLUME COMMITMENT VERSUS ACTUAL VOLUME	19
FIGURE 1-14. HOLIDAYS INCLUDED IN THE SOLICITATION	19
FIGURE 1-15. ORDERING PROCESS – NON-PEAK NIGHT NETWORK	20
FIGURE 1-16. ORDERING PROCESS – PEAK NIGHT NETWORK	21
FIGURE 1-17. POSTAL SERVICE–ACCEPTED EDI STANDARDS FOR SCANNING AND DATA TRANSMISSIONS	21
FIGURE 1-18. POSTAL SERVICE-FEDEX EDI NETWORK HIGHLIGHTS	22
FIGURE 1-19. REPRESENTATIVE ULDS	23

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FIGURE 1-20. PARAMETERS FOR REDUCTION OF PAYMENT	23
FIGURE 1-21. SAMPLE OF SCANNING DEVICES	25
FIGURE 1-22. FEDEX EXPRESS AIRCRAFT FLEET	27
FIGURE 2-1. FEDEX GOCC	30
FIGURE 2-2. CONTINGENCY EVENT DECISION-TREE FLOWCHART	31
FIGURE 2-3. DECK COLLAPSE, MACARTHUR MAZE, OAKLAND, CA	32
FIGURE 2-4. HURRICANE KATRINA	32
FIGURE 2-5. FEDEX’S METEOROLOGY DEPARTMENT MINIMIZES IMPACT OF WEATHER ON DELIVERY SCHEDULES	33
FIGURE 2-6. FEDEX AIRPLANES WAITING FOR TAKE-OFF	35
FIGURE 2-7. FEDEX HAZMAT RESPONSE TEAM	36

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1.0 Night Network Operating Plan

FedEx, which has the world’s largest cargo aircraft fleet, will build upon our 12 years of successful support of the United States Postal Service to meet its Air Cargo Network requirements for mail delivery with consistently reliable and dependable service.

FedEx will provide a Postal Service Night Network that will deliver all air transportation and ancillary services to all required service points identified by the Postal Service in the Air Cargo Network (ACN) solicitation from Day 1 of the contract. We possess the immediate capacity to provide this service five days per week at the historical non-peak and peak volume levels identified in Attachment 2, Air Stops & Projected Volumes of the solicitation. As illustrated in Figure 1-1, this network includes all 146 required NIght Network service points and 5 FedEx hubs.

Figure 1-1. FedEx Air Cargo Night Network

FedEx understands the Postal Service culture, processes, routing, and tender  requirements better than any other

air freight company.

Single Vendor Network Benefits

Use of a single carrier will provide the Postal Service with needed efficiencies and cost savings. In a multiple-carrier environment, capacity is deployed less efficiently, adding cost and additional handling unnecessarily. For example, if a late Postal Service shipment on the day network misses the tender time, the Postal Service would have the option of directing the single carrier to move the product on the night network and enable the mail to be delivered to Postal customers on time. With multiple carriers, the costs of monitoring and coordinating activities would increase for the Postal Service. Policies and procedures for the carriers would inevitably differ, creating opportunities for errors, confusion, and potential delay of mail delivery.

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FedEx and the Postal Service have established and will maintain a shared aviation network that has enabled the Postal Service to significantly improve the service provided to its customers while continuously reducing the cost. For the past 12 years, FedEx, as the majority carrier, has transported Express, Priority, and First Class mail to and from all of the points covered in this solicitation. Since 2006, we have also carried HAZMAT, live, perishable, and registered mail. As the largest carrier for the Postal Service, FedEx has provided this service at historical volume levels through peak days of more than [ * ] to low-volume days covering non-widely observed holidays.

FedEx has been a collaborative business partner with the Postal Service for the past 12 years, and has been extremely responsive to requests for increasing volume, expanding service coverage, adding new products with unique handling characteristics, and maintaining cost controls. We believe that a single-provider network, with its operating efficiencies, extensive network connections, service capabilities and lower cost structure, will provide the greatest long-term benefits for the Postal Service, particularly at a time of fiscal need and budget awareness across the nation. FedEx has the aircraft, equipment, capacity, network reach, and management capability to continue serving the Postal Service in an efficient and low-cost, single-vendor operation well into the future.

The ongoing strategic alliance between FedEx and the Postal Service under the Postal Service Transportation Agreement (Transportation Agreement) brings noteworthy advantages to a renewal contract for the ACN. The Postal Service and FedEx jointly developed many of the processes and procedures that are currently being employed in the Transportation Agreement network. No other air cargo carrier has the benefit of this long and efficient operational experience with the Postal Service. FedEx has worked with the Postal Service to optimize schedules and tender times, eliminate excessive cost, and increase efficiencies, as shown in Figure 1-2.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Figure 1-2. FedEx Key Differentiators

FedEx has a number of key differentiators for operation of the Postal Service Air Cargo Network.

FedEx Key Services	Differentiators
Air Cargo Network: FedEx has the world’s largest cargo aircraft fleet to meet the Postal Service’s aviation requirements with reliable and dependable service.	•     With more than 634 aircraft, FedEx has the world’s largest fleet of cargo aircraft. •     We are the only company with proven experience supporting requirements of size, scope, and scale of the Postal Service ACN procurement. •     FedEx is the only aviation supplier with staffed operating bases at all ACN Night Network airports. •     FedEx is the only aviation supplier to the Postal Service that operates 24/7 with no exclusion for holiday surge and weekend support. •     Our ISO 9001:2008 Certification was renewed for 2012. •     The FedEx fleet includes more than [ * ] trunk and more than [ * ] feeder spare aircraft that are strategically placed throughout North America to protect service.
Management: FedEx possesses the skill, financial depth, and management tools required to engage and deliver on cost, schedule, and performance expectations.	•     FedEx uses our Quality Driven Management (QDM) approach and methods are built on the proven premise that higher quality lowers costs, improves service levels, and enhances the customer experience. •     Over time, QDM has contributed to FedEx being the 6th most admired company on Fortune’s World’s Most Admired Companies list and No. 7 on the Reputation Institute’s list of socially responsible firms in the United States. •     FedEx’s leading edge technologies (scanning, data transmission, and communications) will deliver superior aviation support to the Postal Service. •     FedEx was the first-ever service company to win the Malcolm Baldrige Quality award, demonstrating our long-standing commitment to service quality.
Past Performance: FedEx has operated with the Postal Service for 12 years.	•     We have successfully met Service Level Requirements for the Postal Service throughout our 12-year service history, as shown in Figure 1-3.
Transition: An award to FedEx ensures the Postal Service a no-risk, no-cost contract transition.	•     Our knowledge and understanding of the Postal Service mission, operations, culture, and technology, and our business partner approach means a non-disruptive, no-risk transition to the ACN contract.
Innovation and Investment: FedEx is an innovation leader in air cargo logistics.	•     FedEx is ahead of plan to increase the fuel efficiency of our pickup and delivery fleet by 20% between 2005 and 2020. •     In FY12, approximately half of our $4 billion in capital expenditures is related to modernizing our air fleet. •     FedEx and the Postal Service invented the Transportation Agreement network design, significantly improving the performance and reducing the cost of the air transport service, proving that our vendor-customer team excels in innovative practices.

[ * ]

On-Time Delivery for the Postal Service

FedEx has achieved service levels outlined in the Transportation Agreement in alliance with the Postal Service since 2001. Throughout that time, our extensive cargo Night Network transport system has demonstrated our capacity and capability to handle the historical volumes required by the Postal Service on weekdays during non-peak and peak periods. FedEx has delivered high-quality services that have consistently met or exceeded Postal Service mail delivery service requirements as shown in Figure 1-3.

Each of the FedEx Night Network airports across the nation is currently staffed with all necessary personnel to manage the receipt, outbound loading, and inbound delivery of Postal Service cargo. FedEx accomplishes this through an advanced hub-and-spoke system that ensures meeting delivery time requirements in all 146 ramp locations. FedEx is the only air cargo carrier that serves all 146 Postal Service locations and, as we have stated, FedEx has the world’s largest air cargo fleet with 634 aircraft

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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serving airports in more than 220 countries and territories in all regions of the world. We can provide the capacity the Postal Service has outlined in Attachment 2 when and where it is needed without relying on availability of commercial, wet lease, or dry lease aircraft. In addition, FedEx is continuously upgrading our fleet to offer needed capacities more efficiently and economically.

Program and Operational Support for the Postal Service

The FedEx Postal Transportation Management Department (PTM), as described in Volume 1, Section 2.5, has been in place since the inception of the contract relationship in 2001 and is a dedicated Program Management Office (PMO) whose single mission is service to the Postal Service. FedEx Managing Director Ron Stevens has directed this department since the inception of the FedEx–Postal Service strategic alliance. This department was created as the interface for the Postal Service and designed to be a one-stop shop for all things Postal. Regardless of the issue, the Postal Service communicates with a single department. We recruited the best engineers in the country from our Air, Ground and Freight Services (AGFS) Division; they are knowledgeable in both ramp and hub operations and the planning process to support the Postal Service. These engineers, who are strategically domiciled around the country and aligned with the Postal Service Areas, work daily with the Postal Service on tactical issues affecting service. They work with Global Network Planning (GNP) and the Global Operations Control Center (GOCC) on issues regarding additional lift requirements as required. The PTM engineers also work closely with local management on all operational issues. When an exception occurs, the PTM engineers develop a corrective action and communicate it to the Postal Service in the local, area, and headquarters groups.

The engineers are also responsible for developing and communicating the processes for any changes. The group has two dedicated engineers responsible for building the planning matrix each month. They work closely with the Postal Service planners on the volume request for each schedule period and act as a secondary check on lane-level volume from one operating period to the next. PTM also has a dedicated Service Assurance Manager and two Operations Administrators. They provide reports and status updates throughout the day on flight and sort activity as well as issues that may impact service, such as contingency plans for weather events e.g. hurricanes and winter storms. The PTM team has experienced little turnover within the group since its inception. We feel this consistency in leadership at the management and engineer level has contributed to on-going success of this alliance.

PTM coordinates with the FedEx AGFS Division, which operates the air cargo network, and with GNP and GOCC that plan and manage flight operations, including the movement of Postal Service mail. AGFS operates the cargo system through its main Memphis World Hub and through four subordinate organizations that operate FedEx ramps at airports within their respective regions.

PTM coordinates with AGFS headquarters in Memphis, TN, and with the field ramp location managers. AGFS has an extensive management team to oversee the actual flight and logistics operations as illustrated in Figure 1-4. This figure shows the customer-focused FedEx team supporting the Postal Service, leveraging the capabilities of AGFS, and managed by ramp managers at each service point to deliver mail. PTM also coordinates with GNP and GOCC for Postal Service mail scheduling as well as flight operations for the Night Network.

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Figure 1-4. Customer-Focused FedEx Mail Service Delivery Team

PTM coordinates with FedEx’s AGFS, which operates the air cargo network and, with GNP and GOCC that plan and manage flight operations, including the movement of Postal Service mail

PTM is the focal point for the Postal Service for planning and managing delivery services, which are carried out by AGFS and the ramp managers and staff at each service point. This coordination involves managing freight volumes requested by the Postal Service, planning each monthly operating period, and daily operational activity such as loading and launching aircraft, receiving, and tendering freight to the Postal Service at the destination. Also critical to movement of Postal Service mail is the GOCC, as it operates the aviation services that move the mail.

Packages are scanned and the scan data is transmitted to system collection points constantly as they move through the system. This allows comprehensive reporting of results of each day’s activity. PTM, GNP, and AGFS work together using well-defined and comprehensive communication channels. Operating the most sophisticated air cargo network in the world requires immediate communication, the ability to modify logistics operations swiftly and accurately, and total command of an exceptionally large fleet of aircraft. This is a complex management task, performed by demanding, outstanding, and talented professionals.

1.1 Tender and Delivery Times by Air Stop

FedEx is the only aviation supplier with staffed operating bases at all ACN Night Network airports.

Specific tender and delivery times by air stop, including number and type of aircraft, are listed in Attachment 12, Tender and Delivery Time Commitment. FedEx has an exemplary record over its 12-year history on the job. FedEx has consistently met or exceeded the tender time delivery requirement as shown in Figure 1-3. Even during our most challenging operating period in December, with volume surges at twice our non-peak demand and extreme weather, FedEx still met the Postal Service on-time delivery requirement.

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1.2 Operational Components of the SOW

FedEx has consistently met service level requirements for the Postal Service throughout our 12-year service history.

Throughout our 12-year alliance with the Postal Service, FedEx has worked with the Postal Service to develop many of the processes that are now used to perform aviation support under the Transportation Agreement. Figure 1-5 illustrates the proven process flow from acceptance at the origin to delivery at the destination that we will use on the ACN contract.

Figure 1-5. FedEx Air Transport Mail Delivery Service Process

FedEx has developed a series of mature processes to move the air cargo from origin to destination, consistently meeting the contractual delivery times.

As shown in Figure 1-5, FedEx accepts the cargo at the origin ramp and flies it to the FedEx hub airport, where it is distributed to its correct outbound container and loaded onto an aircraft to fly to the destination airport. Each lane is managed through established scanning procedures to ensure the correct routing of the mail from origin to destination. A “lane” describes the origin point to destination point routing of the mail, for example from origin city A to destination city B, e.g., from Atlanta to Albuquerque. The main processes in the transport of the mail as specified in the solicitation are:

i.       Services provided as described in Section 1.3 below   ii.      Designation – Aviation Supplier Provided or Postal Provided; and description of Terminal Handling Services   iii.     Delivery and Specific Delivery Instructions   iv.     Boarding Priority   v.      Frequency   vi.     Mail Assignment and Transport   vii.    Planned Accommodation   viii.   Treatment of Exceptional Types of Mail a.      Live Mail   b.      Perishable Mail   c.      Registered Mail   d.      HAZMAT   ix.     Offshore Capacity Requirements   x.      Ordering Process   a.      Peak   b.      Non-Peak   xi.     Electronic Data Interchange to include Scanning and Data Transmission   xii.    Reports

1.3 Services Provided

FedEx has developed and will continue to use mature key processes for the Postal Service ACN that have been thoroughly tested and proven over the 12-year history of the relationship.

Figure 1-6 compares the key processes for the ACN contract to select processes of the current Transportation Agreement contract. We have developed these processes over time in collaboration with the Postal Service and will modify or continue processes as provided under the new ACN contract. These

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service processes reflect how FedEx efficiently and effectively takes possession of, sorts (if necessary), transports, scans, loads, and delivers mail for the Postal Service.

Figure 1-6. Process Areas of ACN Solicitation Mapped to Transportation Agreement Current Processes

FedEx has developed a mature list of key processes for the Postal Service ACN based on processes that have been developed for the Transportation Agreement contract.

Process Areas of ACN Solicitation Mapped to Transportation Agreement Current Processes
Solicitation Requirements (Proposal Section)	Transportation Agreement Current Processes
Customer Satisfaction and Relationship Management
•     Coordinate/Oversee Operations (1.3.1) •     Ensure Facility and Administrative Support (1.3.2) •     Monitor Performance (1.3.3) •     Ensure the Security of All Mail (1.3.18)	•     Management review of final daily and month-to-date service level reports •     Management review of root cause of issues for correction and implementation •     PTM is the liaison group for the Postal Service within FedEx to ensure that all requirements are met
PTM Strategic Planning and Analysis
•     Ensure the Integrity of Data Entry (1.3.5)	•     Review the forecast for errors and report problems •     Provide detailed planning for the Postal Service for each operating period
Field Support PTM Engineering
•     Assist in Loading and Unloading (1.3.9) •     Scan ULDs (1.3.10) •     Process Mail for Dispatch to Postal Service (1.3.11) •     Close Out, Receive, Dispatch Surface Vehicles (1.3.12) •     Cooperate with All Aviation Suppliers (1.3.14) •     Enter Data Timely and Accurately (1.3.15)	•     Ensure the operations template is complete and accurate for each operating period •     Receive, process, scan, load, and dispatch mail according to the daily operations plan •     Review service exceptions determining causes •     Cooperate with local Post Offices •     PTM engineers work daily with the Postal Service to accept volume above the 120% flex to ensure the best service possible
Hub Support PTM Engineering
•     Provide the Correct Type and Quantity of Equipment (1.3.8) •     Assist in Loading and Unloading (1.3.9) •     Scan ULDs (1.3.10) •     Handle Overflow Volumes (1.3.13) •     Cooperate with All Aviation Suppliers (1.3.14)	•     Develop hub monthly operating plan and review with the hub management •     Receive, process, scan, load, and dispatch mail according to the daily operations plan •     Accept, manage, and report rollover volumes •     Provide hub monthly service level and exceptions reports •     Manage sort and other operational delays
Communication, Operations Administration, Reporting, Quality Assurance, and Revenue
•     Provide Feedback to Postal Service (1.3.4) •     Coordinate the Exchange of Information (1.3.6) •     Provide Notification of Changes and Anticipated Changes (1.3.7) •     Prepare Required Reports (1.3.16) •     Provide Feedback to Postal Service ((1.3.4)	•     Complete and distribute day network preliminary report, OSR report, NDSP report, WAR report, and Ad Hoc/Reroute report •     Monitor FedEx systems during shifts, report to PTM, and distribute to Postal Service including both headquarters and field personnel •     Report official service levels to Postal Service

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1.3.1 Coordination and Oversight of FedEx Operations

With responsibility for scheduling and management across the FedEx Express global network, GNP and GOCC work closely with PTM to ensure on-time delivery of the mail. The GOCC (Figure 1-7) is fully staffed 24 hours a day, 365 days a year with highly skilled and experienced airline operations management specialists.

The GOCC is one of the most sophisticated control centers in the transportation industry, with state-of-the-art facilities, information systems, and communications, and proven plans and processes based on real-world contingency management experience and expertise. All day, every day, the GOCC team responds to and overcomes challenges, including severe weather systems, flight delays, emergency maintenance events, and even natural disasters. The GOCC supervises and protects FedEx team members and assets while correcting situations that could impact mail delivery service to the Postal Service.

Figure 1-7. FedEx’s GOCC

Our Global Operations Control Center is state-of-the art in managing a large airline fleet traversing the nation and the world.

FedEx has the facilities, tools, processes, and staff to effectively respond to contingency situations. We were an industry leader in collaborating with the Federal Aviation Administration (FAA) in responding to the events of September 11, 2001 and the restoration of aviation support for the Postal Service. FedEx belongs to the Domestic Events Network (DEN), which was established on the morning of September 11. DEN is a 24/7, unclassified interagency telephone conference – sponsored by the security arm of the FAA – dedicated to real-time coordination of air security issues.

FedEx has a back-up center located in Collierville, TN, that operates the network in live mode every Monday so that this contingency control center remains fully capable of assuming operational control of our global network in an emergency.

1.3.2 Facility Support and Administrative Functions

The goal of facility management at FedEx is to enable on-time delivery of Postal Service mail and all non-postal FedEx products. PTM ensures, through its coordination with AGFS, that local facility support and administration functions are present at each airport local ramp, ensuring mail movement, hub support, scanning and data capture, billing support, communications, and other functions. The PTM Department, described in Section 1.0, coordinates all necessary administrative and facility support at each of the FedEx ramp and hub locations throughout the network.

As an example, FedEx facility support includes on-site maintenance staff at each of our ramp and hub locations. . We have more than [ * ] ground support and material handling equipment mechanics at FedEx ramps and hubs across the country. We have a planned and executed preventive maintenance program and an equipment replacement plan and schedule to ensure that equipment is operational, capable, and available to support service delivery requirements. We ensure that gate space for our aircraft, loading and surface handling equipment, scanning equipment, and other facility requirements as established in Section 1.3.8, are available.

1.3.3 Monitor Performance

The Postal Service and FedEx have developed, over the years of joint operations, and will continue to provide a series of monitoring control points that provide a high degree of confidence for on-time and reliable mail delivery services. We will continue to operate these control points. Performance is monitored

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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by PTM through our well-established data capture capability that provides snapshots of our performance at 15-minute intervals, and is summarized to show our performance during the day and at the end of day, end of week, and end of monthly operating periods. Sections 1.3.5, 1.3.10, and 1.3.15 further describe key points of data capture and distribution that provide performance monitoring input.

We have email distribution lists in place the for the Night Network which include Postal Service local operators, FedEx local operators, and the area and national headquarters personnel for both organizations. Emails of the Day Summaries contain the daily recap data and an attached Excel spreadsheet providing delay details and explanatory information. The reports are prepared in a.m. and p.m. versions and are distributed by the Senior Operations Administrator in PTM with the departmental email ID: PTM_OPS@fedex.com.

We distribute a Weekly Service Level Report–Adjusted and a Weekly Analysis Review presentation to management in several organizations including PTM and Postal Service Air Transportation Operations. We list in Section 1.3.16 in this volume a number of reports that we prepare, including information about the intended audience, a brief description of each report, the distribution timeline, and report frequency. Figure 1-8 lists some benefits of the FedEx performance monitoring activities.

Figure 1-8. FedEx Performance Monitoring Benefits to the Postal Service

The Postal Service and FedEx have developed, over the years of joint operations, a series of monitoring control points that provide a high degree of confidence for on-time and reliable mail delivery services.

FedEx Performance Monitoring Features	Benefits to the Postal Service
Management review of daily Ramp-to-Ramp Report	Assists in identifying operational issues and root causes, leading to corrective action
Monitoring of hub operations with daily Roll-Over Scans and Analysis Reports for potential mail delay	Ensures that mail is identified at the hub for re-routing to ensure timely processing
Monitoring and verification that changes are understood locally via email, telephone, and meetings	Ensures coordination throughout the network when operating plans change, so that all staff are alerted and disruption to mail movement is minimized
Monitoring of monthly service level reports to identify any problems in the network and review with appropriate department	Ensures that sorting and other operations are efficient and meet on-time delivery schedules
Provision and monitoring of mission-critical Day Summaries that detail flights more than 60 minutes late departing major hubs or major sorting locations	Establishes the ability throughout the Night Network to adjust schedules to minimize mail delay from its origin to its destination
Monitoring of national weather daily from the FedEx Meteorological Department	Establishes the ability to adjust Night Network flight schedules, re-routing, and hub operations to maximize on-time delivery of mail

1.3.4 Provide Feedback to the Postal Service

FedEx has Operations Administrators who track performance daily. We provide updates on Postal Service transport parameters with regard to system performance throughout the day, with recaps at the end of each operation. Thus, feedback to the Postal Service occurs on both a formal and informal basis, with our PTM informally discussing both normal and unusual operations with their counterparts in the Postal Service and formally through the documented reports that we describe in Section 3.3.16.

1.3.5 Ensure the Integrity of Data Entry

FedEx has eliminated manual data entry to reduce keying errors. In addition, we perform root cause analysis for abnormalities discovered in the data. We have developed a program that validates the accuracy of Dispatch and Routing (D&R) numbers to eliminate duplicate entries. The Error Correction (EC) program searches D&R tags that have been identified as not being billed because no container has been assigned.

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The EC program goes into the PSALMS EC website, does a screen scrape of the D&Rs, and downloads them into an Excel document. The program then downloads a Truck Dispatch Report (TDR) and Flight Dispatch Report (FDR) data base and a (Postal Service Alliance Leveraging Multiple Synergies) PSALMS billing file to search against. It takes the D&R and does the search to see if the unbilled D&R tag can be found on the TDR/FDR to identify a container that it can be assigned to. If the D&R is found, it is then compared to D&Rs already billed that are located in the PSALMS billing file. If there is a comparable D&R found, then the D&R is a duplicate and the D&R is not billed again. If the D&R is not found in the billing file, the container found is assigned and the D&R is billed using that container.

If the D&R is not found in the TDR/FDR database, the program goes into a master database to get the corresponding scans. If the scanned data reveals a DECONS, the D&R is deemed invalid and the D&R is not billed. If there is no DECONS scan and there is a CONS scan, then the CONS number is recorded and is used by the program to go into FAMIS to do an additional search of TDR and FDR data. If the program cannot find a container to assign the D&R tag to, then it is noted as “Research Required” and the engineers do more research on the D&R.

[ * ]

1.3.6 Coordinate the Exchange of Information

FedEx has a series of comprehensive daily, weekly, and monthly reports that coordinate information across the FedEx and Postal Service organizations. FedEx will communicate daily with the Postal Service through electronic reports, using EDI 214, Version 4010, as well as face-to-face meetings with on-site ramp personnel.

Daily reports include:

[ * ]

Weekly reports include:

[ * ]

Planning reports are provided monthly and include:

[ * ]

The reports are prepared in a.m. and p.m. versions and distributed by the Senior Operations Administrator in PTM with the departmental Email ID: PTM_OPS@fedex.com. We present a portion of the Daily Ramp to Ramp Report for September 19, 2012 in Figure 1-9 as an example.

[ * ]

Figure 1-9. Final Ramp to Ramp Daily Net Service Level Report

FedEx has a series of comprehensive daily, weekly, and monthly reports that coordinate information across the organizations.

1.3.7 Provide Notification of Changes or Anticipated Changes

Monthly meetings between the Postal Service and FedEx will continue to communicate all planned changes in aircraft, tender times, and other operational issues. PTM Operations Administrators communicate mission-critical information via reporting and special alerts regarding sort-down times, actual and variance to plan, and inbound and outbound flight and truck exception activity in and out of all

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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hubs and major sort locations. They also communicate ad hoc and alternate move activity. Flight schedules and area operating plans identify changes to Postal Service headquarters, area offices, and the local operating teams. FedEx and the Postal Service also hold local meetings at ramp locations to manage and correct local issues.

1.3.8 Correct Type and Quantity of Equipment

FedEx will continue to provide a Unit Load Device (ULD) matrix monthly, which lists the planned ULD equipment by day and by week for the month. This information is in the Planning Matrix which will be sent to Postal Service headquarters and the local Postal Service representative in each market.

FedEx also maintains spare aircraft, crews, ULDs, vehicles, and operating equipment which are strategically positioned to ensure on-time operations and to ensure that we meet the Postal Service’s operational requirements. Figure 1-10 lists our ramp and ground equipment that is used to load, move, and manage all air cargo, including Postal Service mail.

ULDs & GSE (Domestic)	Quantity
AMJ	[ * ]
SAA	[ * ]
AYY	[ * ]
LD3	[ * ]
Baggage cart	[ * ]
Dolly (regular)	[ * ]
Dolly (LD3)	[ * ]
Belt loader	[ * ]
Aircraft loader	[ * ]
Tug (cargo)	[ * ]
Tug (aircraft push)	[ * ]

Figure 1-10. FedEx Types and Quantities of Equipment

FedEx is an experienced air cargo transportation

company, with the required ramp and container

equipment to move the Postal Service freight

throughout the network on schedule.

1.3.9 Assist in Unloading or Loading ULDs to or from Surface Transportation

FedEx will continue to assist in unloading or loading ULDs to and from all surface transportation. FedEx has more than [ * ] ramp personnel across the network. FedEx personnel work with the Postal Service to ensure that the ULDs arriving at the origin or destination ramp are transferred to and from aircraft and trucks expeditiously. We have accommodated this assistance requirement over our 12-year history with the Postal Service and our personnel comply with this requirement routinely to move the mail. Our local ramp managers and staff have solid working relationships with the Postal Service representatives at each ramp location, and those relationships operate to make the Postal Service processes work without interruption to ensure that we meet daily schedule demands.

1.3.10 Scan Material Handling Units (required) or Postal MTE

FedEx performs scans on all handling units to ensure the chain of custody and accountability for all Postal Service handling units tendered to FedEx. All handling units will be scanned consistent with our established best practices. FedEx will perform possession scans, load scans, hub sort scans, hub nest scans, and delivery scans. Scan data will be aggregated and transmitted via electronic EDI to FedEx and Postal Service information technology systems. No scanning of Mail Transport Equipment (MTE) is required as FedEx is not performing the THS function.

1.3.11 Process Mail for Dispatch from the Aviation Supplier’s Facility to the Postal Service Facility

Upon request from the Postal Service, FedEx will process mail for movement via aircraft, tug and dolly, containerized trucks, and bulk trucks as necessary, from our facility to the Postal Service facility.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Before the start of the sort, any EML that has been rolled from the previous Night Sort Operations is to be staged in the appropriate staging area. Any EML which does not move on the scheduled night sort is held for sorting on the next night sort. Any EML that is not scanning correctly will be taken immediately to the Postal Service Re-Label Area. The Postal Service Re-Label Area has been given instructions on how to handle EML with distribution table problems.

FedEx will comply with all requirements and will accept all the statements in the solicitation for this section. The additional charge is for replacing a D&R tag that is missing or becomes illegible. The Postal Service will provide equipment to FedEx to perform this function.

1.3.12 Close-Out, Receive, and Dispatch All Surface Vehicles

FedEx will continue to work closely with all THS providers to close out, receive, and dispatch all surface vehicles. Our streamlined approach will be managed by the FedEx ramp manager at each service point.

1.3.13 Handle Overflow Volumes per Postal Service General Directions

FedEx will continue to work closely with the Postal Service to accept overflow volumes of mail. Our ramp managers, in collaboration with Postal Service managers, will make every effort to accept and process all overflow volumes when possible. FedEx ramp managers at service point locations will coordinate with Postal Service staff to identify overflow situations as early as possible, develop solutions to handle the overflow volumes, and resolve the overflow situation quickly and effectively with zero to minimal impact on mail delivery service schedules.

1.3.14 Cooperate With All Aviation Suppliers in the Transportation Service Chain

At both the PTM management level and the local ramp manager level, FedEx will cooperate with all suppliers in the transportation chain including air carriers, air cargo companies, airport staff, and THS service providers.

Areas of cooperation will include items such as sharing ground handling equipment when one party has equipment breakdowns, sharing joint-use ramps, and working collaboratively to deal with contingency events or irregular operations that would endanger on-time performance.

1.3.15 Enter Data Timely and Accurately

FedEx has developed a series of processes that depend on accurate and timely collection of data (Figure 1-11). The foundation for quickly capturing data in a highly accurate manner is the electronic identification of cargo as it moves from its origin to its destination. Bar code scanning establishes the foundation for FedEx’s near-100% accuracy and high speed of data capture for fast-paced and time-sensitive processes.

Figure 1-11. Electronic Bar Code Scanning

Bar code scanning of tags and ULD devices ensures accurate and timely data capture.

These data capture techniques and system updates allow customers to determine the progress of their cargo from origin to destination. The accuracy of the data capture also allows the network performance reports to be prepared and submitted to the Postal Service. FedEx has been at the forefront of the industry in the development of these rapid data capture technologies and has applied them to all processes in the Postal Service network.

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1.3.16 Prepare Required Reports

FedEx has prepared and submitted all required and requested reports over the life of the current Postal Service contract. As requested by the Postal Service, FedEx will continue to provide these reports under the Air Cargo Network contract. Reports submitted under the current contract will be continued as is, or modified as required by the solicitation. These reports include:

[ * ]

In addition to these reports, FedEx will also provide new reports that are required to meet Postal Service requirements. In all reports, we will be diligent in providing accurate, timely information to enable Postal Service oversight and management of the ACN contract.

1.3.16.1 Daily Mail Condition Report

[ * ]

1.3.16.2 Operational Condition Reports

[ * ]

1.3.16.3 Dimensional Weight Reports

[ * ]

1.3.17 Perform Verification of Security Seals on Surface Transportation

FedEx will continue to verify all security seals on surface transportation prior to leaving our facility, as we have done since 2001. This will be a physical inspection of security seals on each trailer upon receipt by FedEx. The verification inspection will also be done prior to tendering the mail to the Postal Service. The FedEx ramp manager at each ramp will ensure that all security seals are verified and logged by ramp staff. The process involves verifying the integrity of the seal on the back of the trailer and noting it on the Truck Dispatch Report paperwork.

1.3.18 Ensure the Security of All Mail

It is the mission of FedEx to protect and safeguard all mail from the time it is tendered to FedEx until the time FedEx tenders it to the Postal Service. We accomplish this through a combination of training of staff, physical protection of facilities, and scanning of mail up to nine times from tender to FedEx through tender to the Postal Service. We also run background checks on all employees, and we conduct drug screening to ensure we have a drug-free workplace to decrease the likelihood of security incidents related to the mail while it is in our possession.

We provide initial and annual refresher training on mail handling and on the importance of the security of the mail to all FedEx employees involved in the contract. We have physical protection capabilities at each ramp location including closed-circuit video surveillance, facility access control, intrusion detection, and routine patrols by FedEx or local uniformed security staff. We maintain tight access control at all facilities to ensure that only authorized individuals are allowed into areas processing mail. Individuals attempting to enter or exit a sorting facility must successfully clear established screening checkpoints. These checkpoints:

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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•   Ensure that the employee/vendor has an active ID badge.

•   Screen each employee/vendor for contraband through our x-ray and metal detecting devices.

•   Ensure that all customer property remains in designated sorting areas.

Through this combination of security procedures, security equipment, trained FedEx employees, and uniformed security staff, FedEx provides a heightened level of security to protect mail while it is in our possession.

1.4 Designation (Postal Service Performs Terminal Handling Service (THS) – Night Network)

FedEx will accept direct tender of night volume from the Postal Service and the Postal Service will accept direct tender from FedEx to satisfy the requirement for the aviation supplier to provide THS functions on the Night Network.

1.5 Delivery and Specific Delivery Instructions (Postal Service Performs THS Operation on Day Network)

Not applicable to Night Network.

1.5.1 Delivery – Day Network

Not applicable to Night Network.

1.5.2 Delivery – Night Network

FedEx and the Postal Service have developed efficient and effective coordination processes and procedures over our long relationship to expedite the delivery of mail. All FedEx employees, as they do today, will assist Postal Service employees in both the unloading of inbound surface vehicles and the loading and dispatching of outbound surface vehicles. FedEx routinely transmits reports to the Postal Service (see Section 1.3.16 for report details) on mail delivery status and operational issues. Regularly scheduled meetings enable a broader audience to discuss a wide range of topics, while daily communications focus on tactical issues such as extra volume and late tender. Daily interface between the Postal Service and FedEx occurs via email; phone; and face-to-face meetings among PTM engineers and management, FedEx ramp managers, and local Postal Service contract and operations managers.

FedEx will deliver mail to the Postal Service on or before the latest delivery time (as indicated in Attachment 12) for the Night Network. At all destination service points, FedEx will unload the mail from the ULDs received, scan it, and deliver it to the Postal Service as outlined in Attachment 4, Operating Plan, Night Network. FedEx will accept direct tender of night volume from the Postal Service to satisfy the requirement for the aviation supplier to provide THS functions on the Night Network.

The FedEx matrix plan will cover Night Network. Tender and service commitments by delivery times will be tracked, measured, and reviewed for potential service improvements by the customer service and relationship team within PTM at FedEx.

1.5.3 Saturday Delivery – Day Network

Not applicable to Night Network.

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1.6 Boarding Priority

FedEx will adhere to Postal Service boarding priorities as we have done successfully on the Transportation Agreement since 2001.

In accordance with Postal Service priorities, FedEx will adhere to the boarding priority described in the following sections.

1.6.1 Boarding Priority – Day Network

Not applicable to Night Network.

1.6.2 Boarding Priority – Night Network

In the Night Network, FedEx will load accepted mail in the following mail boarding preference order:

1. Express Mail

2. All other classes of mail

Any repossession of mail by the Postal Service without exercising the rights outlined in this RFP under Repossession of Mail by the Postal Service will be determined by the Postal Service designee, depending on circumstances.

1.7 Frequency

FedEx will provide aviation supplier support to meet all Postal Service frequency of service requirements

The frequency of service for the Night Network is based on 5 days of Postal Service delivery, Monday through Friday. This provides approximately 254 operating days annually (255 in a leap year). Excluded holidays are discussed in section 1.14.5 in this proposal.

1.8 Mail Assignment and Transport – Day Network

Not applicable to Night Network

1.9 Mail Assignment and Transport – Night Network

Mail assignment and transport, the heart of the current Transportation Agreement, will also be the core of the new CAN contract and will continue to be a focus for feedback and improvement,

FedEx will prepare and deliver flight schedules to the Postal Service at least 30 days in advance of the first day of the operating period. These schedules are developed by PTM and are part of the Network Operating Plan as operational documents that convert the plan into action. After receipt of flight schedules, the Postal Service will create dispatch routing instructions based on FedEx flight schedules that subsequently are shown on the Postal Service D&R tag.

Mail Assignment and Transport Process – Night Network defines how the Postal Service will give FedEx tendered mail and illustrates the steps required in the planning process for assignment and transport, as shown in Figure 1-12.

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Figure 1-12. Mail Assignment and Transport Process

This process, jointly developed by the Postal Service and FedEx, facilitates on-time delivery.

Once flight schedules and dispatch routing instructions have been exchanged, the Postal Service will show the routing on D&R tags and deliver not less than 75% of total volume assigned to the Night Network outbound flights per the time listed in Attachment 12. The Postal Service will then provide the remaining 25% of total volume at the time specified by location in Attachment 12. “All Mail Due FedEx Time” is outlined in Attachment 12 and is the time that the last piece of mail tendered must be in FedEx’s hands.

1.10 Aviation Provider Planned Accommodation – Day Network

Not applicable to Night Network.

1.11 Aviation Provider Planned Accommodation – Night Network

Flexibility to handle additional volume required by the Postal Service is part of our commitment to providing the most dependable, reliable, and customer-focused service.

FedEx will accept up to 120% of planned capacity in the Night Network for each origin daily. Should tendered mail exceed 120% of planned capacity, FedEx has the option to refuse the excess; however, throughout the current relationship, FedEx frequently has handled volumes tendered by the Postal Service in excess of the guarantee. Such flexibility is part of our commitment to providing the most dependable, reliable and customer-focused service to the Postal Service.

1.12 Treatment of Exceptional Types of Mail

Over the past 6 years, FedEx has integrated the special handling requirements associated with the increasing amounts of exceptional types of mail into our normal daily operations.

Since 2006, the volume of exceptional mail types, including lives, perishables, and HAZMAT, has increased continuously. FedEx provides rigorous training in the handling of exceptional types of mail as part of the training for new employees and annual refresher training.

1.12.1 Treatment of Live Mail

For live mail handling, FedEx will continue to use a multi-step process that covers all aspects of receipt, verification of live mail viability, inspection, scanning, loading, and unloading of both perishable and live mail. The FedEx guidelines include all requirements outlined in the Postal Service Domestic Mail Manual 601, Subsection 9.3.

Prior to contract award, as specified in the Statement of Work, FedEx and the Postal Service will negotiate an attachment that lays out the specifics of transportation of perishable and live mail. Because FedEx has been handling these exceptional types of mail for six years, we expect minimal issues.

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1.12.2 Treatment of Perishables

Perishable mail is treated in the same manner as that described in Section 1.12.1.

1.12.3 Treatment of Registered Mail

To accurately track each piece of Registered Mail, FedEx will provide the Postal Service with the following information:

• Aircraft number

• Aircraft compartment location

• Actual flight departure time

• Any accident or irregularities

• D&R tags indicating final destination air stop.

FedEx will send an email alerting the Postal Service of Registered Mail that has failed to make its planned dispatch; we will then await instructions from the Postal Service.

1.12.4 Treatment of Hazardous Material (HAZMAT)

FedEx follows and will continue to follow all applicable Federal, state, and local laws and regulations, including, but not limited to, OSHA and FAA rules and regulations in the handling of HAZMAT. We provide extensive training to certify Dangerous Goods Specialists to ensure that all Postal Service HAZMAT will be handled in accordance with regulatory requirements. FedEx personnel take annual refresher training on the handling of HAZMAT, which means that all FedEx personnel have up-to-date information on any changes to procedures or policies as well as the review of current procedures. FedEx will comply with all Postal Service requirements for the tagging and treatment of HAZMAT as follows:

• Tagging of hazardous materials

• ORM-D Air is for air and surface transport; ORM-D is for surface transport only.

• Division Class 6.2 is permitted only for medical/veterinary use, research or laboratory certification for public health. The shipper must pack these goods to withstand shocks, pressure changes, and other handling conditions.

• Division Class 9 is for miscellaneous materials presenting hazards during transport (solid dry ice, elevated temperature substances, environmentally hazardous substances, lifesaving appliances, asbestos).

• Hazardous and Dangerous Goods and all other hazardous material.

• Assignment of hazardous materials

• Must be tendered at least 2 hours prior to final tender time of flight.

• There is no surcharge.

• Manifest copy and items must be handed to a FedEx representative 2 hours prior to closeout time of flight.

• Verification of postal manifest includes checking the number of pieces, weight, inclusion of appropriate shipper’s certification in aircraft load manifest, and completeness of pilot notification paperwork.

• Documentation of refusal to handle HAZMAT includes name, address of mailer and FedEx location, type and amount of HAZMAT, and reason for refusal.

• Procedures for HAZMAT spills, releases, incidents, and emergencies. In the 12 years that FedEx has worked with the Postal Service, there have been NO exceptions to these procedures:

• While the HAZMAT is in the possession of FedEx, but not onboard aircraft, damaged HAZMAT items must not be loaded.

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• For items causing injury, illness, significant property damage, or disruption of operations, FedEx will complete PS Form 1770 and submit to the Postal Service.

• If there is an incident while onboard aircraft, FedEx must complete DOT Form F 5800.1. Within 24 hours, a copy of the form must be sent to the COR. Such incidents include HAZMAT cargo spills that come into contact with mail.

1.13 Offshore Capacity Requirement – Day Network

Not applicable to Night Network.

1.14 Volume Commitment – General Information

Throughout the 12-year Transportation Agreement relationship, FedEx has generally had sufficient capacity to handle whatever volume the Postal Service required.

FedEx will continue our 12-year record of successfully supporting the Postal Service’s dynamic volume requirements and of meeting service level agreements (SLAs) for aviation services. Our knowledge and understanding of the Postal Service mission, operations, culture, and technology provides a non-disruptive, no-risk option for the Postal Service – no learning curve, no initial training for existing employees, no changes in processes. Essentially, all activities will continue in the manner that the Postal Service has enjoyed since the beginning of the strategic alliance with FedEx.

FedEx has the fleet, pilots, facilities, and support staff – including [ * ] A&P-certified aircraft mechanics – to immediately support future Postal Service volume schedules and forecasts. From Day 1 of the new contract, FedEx can handle any Postal Service volume based on historical volumes. Figure 1-13 is a 1-day sample from a peak week in December 2011 that clearly shows our ability to support Postal Service volume schedules and forecasts.

Figure 1-13. Daily Volume Commitment Versus Actual Volume

	[	* ]
	[	* ]
[ * ]	[	* ]	[	* ]
[ * ]	[	* ]	[	* ]

1.14.1 Volume Commitment – Contract Volume Minimum – Day Network

Not applicable to Night Network.

1.14.2 Operating Period Volume Minimum – Day Network

Not applicable to Night Network.

1.14.3 Aviation Supplier Performs THS Operation

Not applicable to Night Network.

1.14.4 Operating Period Volume Minimum – Night Network

Although there are no volume minimums for the Night Network, FedEx will accept direct tender of night volume from the Postal Service, and the Postal Service will accept direct tender from FedEx, to satisfy the requirement for the aviation supplier to provide THS functions on the Night Network.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.14.5 Volume Commitment – Holiday – Day Network

Not applicable to Night Network.

1.14.6 Volume Commitment – Holiday – Night Network

On holidays, Night Network mail will be dealt with in accordance with the requirements of the solicitation. Holidays are shown in Figure 1-14. The widely observed holidays will not be included in the Operating Period Volume Minimum calculation. The non-widely observed holidays will be included at a 50% volume level in the Operating Period Volume Minimum calculation.	•   New Year’s Day* •   Martin Luther King Day •   Presidents Day •   Memorial Day* •   Independence Day*	•   Labor Day* •   Columbus Day •   Veterans Day •   Thanksgiving* •   Christmas*
	Figure 1-14. Holidays Included in the Solicitation The asterisks indicate widely observed holidays.

1.15 Operating Periods

FedEx will plan and operate the Night Network in accordance with Attachment 1, Postal Service Operating Periods. Because FedEx has been providing services for 12 years based on Transportation Agreement operating periods very similar to those specified in Attachment 1, the transition to the new contract will be virtually risk-free and indistinguishable to the Postal Service. FedEx will provide to the Postal Service our monthly operating plan 30 days before the beginning of the operating period, and will specify the specific type of airline ULD per origin/destination, and destination of airline ULD – mixed (to be sorted at hub) in those locations that are not loose loaded.

1.16 Ordering Process – Introduction

FedEx will use the proven ordering process used successfully under the current Transportation Agreement to meet Postal Service peak and non-peak volume requirements.

The Postal Service process for ordering air transportation for mail to and from destinations in the contiguous 48 states and Alaska, Hawaii, Puerto Rico, and the Virgin Islands is provided at Day 120 for non-peak periods and Day 150 for peak periods.

Because the current ordering process is very similar to that outlined in the ACN statement of work (SOW), FedEx has already demonstrated the ability to work within the specified timeframes. Careful planning means that mail tendered to FedEx will arrive on time at the proper service point, thus maintaining the Postal Service’s historical record for quality service.

1.16.1 Ordering Process – Non-Peak – Day Network

Not applicable to Night Network.

1.16.2 Ordering Process – Non-Peak – Night Network

The non-peak Night Network process will begin with the Postal Service providing FedEx a request for mail volumes that delineates each lane pair (origin and destination) Monday through Friday for the average day. Volumes by lane pair will be specified by weight. Figure 1-15 provides further details of this process.

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Figure 1-15. Ordering Process – Non-Peak Night Network

Detailed planning and coordination with the Postal Service ensures that FedEx will meet contract delivery schedules.

1.16.3 Ordering Process – Peak – Day Network

Not applicable to Night Network.

1.16.4 Ordering Process – Peak – Night Network

The 4 or 5 weeks that make up each peak operating period include Christmas week so that the requested volume capacity is sufficient to meet Postal Service volume requirements for holiday mail delivery. Both non-peak and peak volume forecasting specify individual origin and destination lane pairs and are expressed in pounds.

The ordering process for peak Night Network is illustrated in Figure 1-16. FedEx and the Postal Service have established and improved both peak and non-peak ordering processes over our 12-year relationship. This alliance has fostered a very effective continuous improvement environment that identifies areas for positive change and implements the changes.

Figure 1-16. Ordering Process – Peak Night Network

Detailed planning and coordination with the Postal Service ensures that FedEx will meet contract delivery schedules and volumes.

1.17 Electronic Data Interchange (EDI) Including Scanning and Data Transmission

FedEx has the infrastructure and experience with EDI to provide the Postal Service with a low-risk solution for rapid transmission of high-volume data streams.

FedEx will transmit and receive status and operational data according to the EDI standards as required in the solicitation, Attachment 7, Electronic Data Interchange Service Requirements. Additionally, we will transmit payment information using the Attachment 7 standards for financial data. We will use the standards shown in Figure 1-17 for transactions of volume and relevant scans with the Postal Service.

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Figure 1-17. Postal Service–Accepted EDI Standards for Scanning and Data Transmissions

FedEx will use these EDI standards for status and operational data as well as for payment information transmission with the Postal Service.

Standard	Purpose
CARDIT	To convey detailed information about domestic shipments.
RESDIT	To receive status information at the handling unit level for domestic mail shipments.
INVOIC ADV	Message claiming payment for goods and services supplied under agreed-upon conditions; also serves as specification for Debit Note and Credit Note messages. Postal Service implementation is to provide invoice advice to its transport providers of the items, which comprise amounts payable for transportation services.
CLAIMS	Message claiming payment for goods and services supplied under agreed-upon conditions; also serves as specification for Debit Note and Credit Note messages. Postal Service implementation is to provide mechanism for its transport providers to report claims for the mail handling items which comprise amounts payable for transportation services.

EDI based on the UN/EDIFACT format is ideal technology for the high volume of transactions that will be processed, based on contract requirements. FedEx owns the world’s largest private digitized, value-added network (VAN) for business-to-business data exchange, FedExNet^®, which allows us to easily accommodate large data streams. We have successfully used the FedExNet^® VAN for the Postal Service since 2001 to transmit and receive operational and status data, as well as payment data. We are very familiar with the Attachment 7 EDI requirements and standards, as we have used CARDIT and RESDIT protocols extensively since 2005 for international postal customers.

The status and operational data, as well as payment data, will be transmitted over the VAN as shown in Figure 1-18. Primary files on the FedEx side reside in the Scanning Database, which stores and transmits scans and service files (shown as SRS, Summary Reporting System) and the PSALMS Revenue Database, which stores invoice and reconciliation files (shown as REV). With EDI, the Postal Service will receive the invoice and reconciliation data from FedEx via a secure mailbox on FedExNet^®.

Figure 1-18. Postal Service-FedEx EDI Network Highlights

FedEx has the experience and infrastructure to fully execute Postal Service–accepted EDI standards.

Scanning and Data Transmission

FedEx will perform all scans in accordance with the solicitation scan requirements. A summary of the scans that we will perform is provided in Section 1.19. We will transmit the required data elements within 2 hours of a reportable event. Available data will be transmitted at 15 minute intervals in the appropriate EDI format.

1.17.1 Surface Visibility Scanning

Not applicable to Night Network.

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1.18 Reports (See Section 1.3.16)

FedEx will continue to provide all required and requested reports over the life of the ACN contract.

In Section 1.3.16 of this volume, we list the RFP-required reports and other, suggested reports that are useful for monitoring performance on this contract and that provide input for future volume and schedule planning.

1.19 Performance Requirements and Measurement

The knowledge and understanding FedEx has of Postal Service processes will enable us to meet or exceed your service performance requirements.

FedEx will comply with the solicitation, meeting the delivery performance requirements during an operating period on a lane-by-lane basis, of:

• Night Network: [ * ]%

• Peak operating period: [ * ]% for the Day and Night Networks.

As presented in Section 1.17, we will perform all required scans to provide baseline operational, status, and invoice data to the Postal Service.

At Origin:

• Possession of ULD and handling units (D&R)

• Load scan connecting ULD to aircraft or truck.

At Hub:

• Hub sort scan handling units (D&R)

• Nest scan connecting handling unit to ULD

• Load scan connecting ULD to aircraft or truck

In Transit (when applicable):

• Transfer scans on all intermodal movement, specifically where handling units and /or air containers are transferred from an air segment to a surface option

• Transfer scans on all transfers to feeder options, specifically where handling units and /or air containers are transferred from an air segment to another air segment.

At Destination:      •     Delivery scans of ULDs and handling units.   Performance measurement will be based on the FedEx delivery scan at the correct destination. Representative ULDs in our fleet are shown in Figure 1-19. Figure 1-19. Representative ULDs

As stated earlier, operational data will be transmitted by EDI between the Postal Service and FedEx. Payment calculation for delivery performance is based on a lane-level basis.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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1.20 Reduction of Payment

The FedEx commitment to the Postal Service, as shown by our high level of service over the past 12 years, demonstrates our ability to achieve desired service levels and minimize payment penalties.

FedEx will comply with the reductions in payment as specified in the solicitation. There is no penalty for handling units meeting delivery performance standards during an operating period on a lane-by-lane basis of:

• ³ [ * ] for Night Network

• ³ [ * ] for peak operating period.

Reductions in transportation payment for handling units delivered late are shown in Figure 1-20.

Figure 1-20. Parameters for Reduction of Payment

FedEx fully accepts the requirements as stated in the solicitation.

Delivery Late	Reduction in Transportation Payment
> 0 min and < 30 min		[	* ]
³ 30 min and £ 60 min		[	* ]
> 60 min		[	* ]

1.21 Performance Management

Quarterly performance reviews with the Postal Service will provide visibility of contract performance and will improve and enhance communications between the Postal Service and FedEx.

FedEx will meet with the Postal Service every quarter, at a minimum, to discuss performance management as stated in the solicitation. FedEx will submit a list of potential topics for Postal Service consideration and a list of FedEx personnel planning to attend. The minutes of the meeting will be shared between the parties. The following items will be included on the agenda:

a. Cost Control: Cost control measures being implemented and results

b. Holiday Operations and Planning: Status of FedEx operations and planning for upcoming holidays

c. Aviation Supplier Performance: Review of quarterly FedEx performance against contract requirements

d. Peak Season Planning: Review of FedEx planning for upcoming peak season

e. Quality: Review of quality initiatives, audits, and service delivery improvement efforts

f. Ramp Operations: Discussion of ramp operations focused on areas for improvement

g. Reconciliation of Irregularities: Presentation summary of reconciliation actions during the previous quarter

h. Security: Review of security incidents during the previous quarter and FedEx initiatives to improve system-wide security

i. Technology Issues: Review of technology issues and concerns in previous quarter and an update on technology initiatives and plans

j. Tender and Delivery Hygiene: Report on the issues and collaboration to address the problems at the identified locations

k. Volume Planning: Review of volume planning effectiveness in previous quarter and provision of recommendations to improve volume planning

l. Other Pertinent Topics: Presentation and review of other topics as necessary.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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United States Postal Service Air Cargo Network Volume 2B - 100% of the Night Network November 6, 2012

1.22 Payment Procedures

The basis of all payments is the scanned information that we will transmit promptly to ensure accurate and complete invoicing and payments.

In this section we present details of payment procedures, including:

• Rates and Payment General

• Payment Processing – Night Network – Per Pound.

1.22.1 Rates and Payment General

The basis of all rates and payments is the scans, beginning with the possession/load scan and ending with the delivery scan at the completion of the FedEx delivery to the Postal Service. FedEx understands that if the delivery scan is not submitted or is not at the correct location, there will be no payment. FedEx team members take great care in handling our customers’ packages. Postal Service shipments enter our sorting system at specific times, are scanned, and then secured in the appropriate containers, trailers, or aircraft.

The FedEx payment process includes electronic remittance advice and electronic funds transfer (EFT) to reduce much of the cost and paperwork involved in issuing payments. Both of these tools reduce check processing costs, while ensuring quick and accurate application of payment. Remittance advice file processing is automatically included with the EDI invoices.

1.22.1.1 Scan Requirements

FedEx will comply with all scanning and data transmission requirements as stated in the solicitation. FedEx leads the transportation industry in scanning and tracking technology. Packages are scanned during our pickup, sort, and delivery processes by handlers and by automated overhead scanners and scanning systems. Scanning enables FedEx and the Postal Service to observe the movement of packages electronically from pickup to delivery for an added level of security and end-to-end tracking of the mail. Using a variety of wireless data collection devices such as PScan and PowerPad as shown in Figure 1-21, we scan D&R tags at each hand-off point, capturing a variety of shipment information, including:

•   Dispatch and routing number   •   Origin/destination location information   •   Ship date •   Exception scans   •   Type of service   •   Proof of delivery.

Figure 1-21. Sample of Scanning Devices

FedEx has a variety of scanning devices strategically located to provide end-to-end tracking.

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1.22.1.2 Night Turn Scan Requirements

FedEx will comply with all night turn scan requirements and will perform the following scans:

At Origin:

• Possession/load scan of ULDs and handling units (D&R tags)

At Destination:

• Delivery scans of ULDs and handling units.

1.22.1.3 Day Turn Scan Requirements

Not applicable to Night Network.

1.22.2 Payment Processing – Day Network – Per Cube

Not applicable to Night Network.

1.22.2.1 Invoicing

Not applicable to Night Network.

1.22.2.2 Mail Tendered in ULDs

Not applicable to Night Network.

1.22.2.3 Mail Tendered from Surface Trucks

Not applicable to Night Network.

1.22.2.4 Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub

Not applicable to Night Network.

1.22.2.5 Aviation Supplier Surface Transportation – Not Included in Transportation Payment

Not applicable to Night Network.

1.22.2.6 Economic Adjustment

Not applicable to Night Network.

1.22.2.7 Hub Sort Scan

Not applicable to Night Network.

1.22.2.8 Re-Labeling Charge

Not applicable to Night Network.

1.22.2.9 Fuel Adjustment

Not applicable to Night Network.

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United States Postal Service Air Cargo Network Volume 2B - 100% of the Night Network November 6, 2012

1.22.3 Payment Processing – Day Network – Per Pound

Not applicable to Night Network.

1.22.4 Payment Processing – Night Network – Per Pound

1.22.4.1 Invoicing

FedEx accepts the solicitation requirements for invoicing and payment for the Night Network based on pounds and completion of scans during the operating periods. We will include additional charges not covered by the automated payments system in our monthly invoices. FedEx will produce an invoice weekly, based on a service week that begins at 0000 hours Saturday and ends at 2359 on Friday. We will submit the invoice by noon on Wednesday in order to receive payments by Wednesday, 3 weeks following the receipt of the invoice.

1.22.4.2 Economic Adjustments

FedEx will comply with all requirements in the solicitation section on Economic Adjustments. Only the non-fuel line haul rate will be economically adjusted. We will use the economic adjustments in Attachment 10, Pricing.

1.22.4.3 Re-Labeling Charge

FedEx will comply with all requirements and will accept all statements in the solicitation for this section. FedEx understands that the Postal Service will pay an additional charge for replacing a D&R tag that is missing or becomes illegible. The Postal Service will provide equipment to FedEx to perform this function.

Re-labeling is an example of our commitment to the Postal Service. In 2002, the Postal Service approached FedEx requesting that we take over the re-labeling function at the Memphis hub. From the time we assumed responsibility for this area, most if not all pieces move out the same day that they arrive at the sort. FedEx re-labels approximately [ * ] pieces per day on a non-contingency day. Approximately [*] times per month, the Postal Service declares a contingency (meaning its SAMS equipment is down in the local market) and the unlabeled handling units are sent to the Memphis hub, where FedEx labels the mail. In these situations, we label between [ * ] and [ * ] handling units of mail and introduce them back into the network, thereby allowing the Postal Service to accomplish mail delivery service to its customers.

1.23 Reconciliation Process

FedEx will work collaboratively with the Postal Service to reconcile and resolve all payment issues as expeditiously as possible.

FedEx will comply with the requirements in the solicitation section entitled Reconciliation Process. The Postal Service Revenue Team and the FedEx Revenue Team have worked together since 2001 to refine many different reconciliation items. Through constant diligence in monitoring the revenue stream for anomalies, we have collaboratively developed the current reconciliation process. With this knowledge and experience with the Postal Service reconciliation process, FedEx will continue to review and refine the reconciliation process to support the Postal Service’s reconciliation requirements and process on the ACN contract.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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United States Postal Service Air Cargo Network Volume 2B - 100% of the Night Network November 6, 2012

1.24 Mode of Transportation to Service Each Air Stop – (Mail Assignment and Transport) as Identified in Tender and Delivery Specifications Listed in Attachment 3 and Attachment 4

As one of the most reliable, dependable, and largest air cargo carriers in the world, with a record of successfully supporting the Postal Service since 2001, we will be able to provide all modes of transportation to service each air stop on Day 1 of the ACN contract.

The mode of transportation to service each air stop will be provided in the Monthly Operating Plan, which provides the details for each operating period. We will tailor our plans, including modes of transportation, to Postal Service needs. The FedEx Express aircraft fleet is shown in Figure 1-22. In addition, FedEx has on-call arrangements to lease additional aircraft to handle peak volume and other contingencies.

Figure 1-22. FedEx Express Aircraft Fleet

FedEx has ample capacity to service each air stop.

FedEx Aircraft Fleet
Description	Owned		Leased		Total		Maximum Operational Revenue Payload (pounds per aircraft) (1)
Jet (Trunk) Aircraft
Airbus A300-600		35		36		71		85,600
Airbus A310-200		18		0		18		61,900
Airbus A310-300		17		0		17		67,500
Boeing B727-200		29		0		29		38,200
Boeing B757-200		60		0		60		45,800
Boeing 767-300F(2)		0		0		0		98,856
Boeing B777F		22		0		22		178,000
McDonnell Douglas MD10-10		52		0		52		108,700
McDonnell Douglas MD10-30		12		5		17		114,200
McDonnell Douglas MD11		38		26		64		164,200
Non-Jet (Feeder) Aircraft
ATR 42-300/320		26		0		26		10,880
ATR 72-202/212		21		0		21		14,660
Cessna 208B		237		0		237		2,500
Total All Aircraft		567		67		634

1 Maximum Operational revenue payload is the lesser of the net volume-limited payload and the net maximum structural payload.

2 This aircraft model will be introduced in 2013 and is included here to show the contribution over the life of the contract.

In addition to our aircraft, FedEx Express operates approximately 52,400 ground transport vehicles, including pickup and delivery vans, larger trucks called container transport vehicles, and over-the-road tractors and trailers. These vehicles are strategically located at service points across the network to support volumes and service delivery requirements and are repositioned to meet mail service delivery schedules.

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United States Postal Service Air Cargo Network Volume 2B - 100% of the Night Network November 6, 2012

1.25 Other Components of the Statement of Work Not Previously Discussed

This section presents components of this solicitation which are not discussed earlier or are referenced in Volume 1. We have added this subsection for easier cross-reference.

1.25.1 Service Points

FedEx currently serves all locations in the Night Network via our extensive U.S. network using five air cargo hubs. Beginning on Day 1, FedEx can furnish all services to all locations specified in the solicitation in Attachments 3 and 4. Because we are the world’s largest air cargo carrier and have successfully performed on this contract for the last 12 years, we are uniquely qualified to provide uninterrupted service to the Postal Service through our infrastructure, support facilities, and continuity of staff.

1.25.2 Management Plan

Our Management Plan details are fully presented in Volume 1, Section 3.0. Since the solicitation calls for a full response for all SOW elements, we have added this reference to facilitate evaluation and use during the contract period.

1.25.3 Repossession of Mail by the Postal Service

FedEx will fully comply with the solicitation requirement to provide repossession of mail by the Postal Service in the event that the Postal Service requires mail to be returned. We will actively work with local Postal Service agents or representatives to expeditiously return the mail.

1.25.4 Local Agreements

In accordance with the solicitation, no local agreements, informal agreements, or working agreements made without appropriate binding authority will bind or obligate the Postal Service or FedEx.

1.25.5 Operating Periods

The FedEx response fully addresses all activities in the operating periods, including planning, transport operations, and payments. We will offer the full range of services throughout the entire life of the contract.

1.25.6 Incentive Plan

FedEx is committed to achieving the service level agreements for mail delivery required by the ACN contract. Additionally, we will work collaboratively with the Postal Service after contract award to establish an incentive plan to improve our overall mail delivery performance rating, with the goal of achieving to achieve [ * ]% in Year 3 starting in October 2015, and [ * ]% in Year 5 beginning in October 2017, for the Non-Peak Day Network. Our approach will build on our record of outstanding mail delivery performance for the Postal Service over the past 12 years.

1.25.7 Sustainability

Sustainability requirements are addressed in Volume 1, Section 6.0.

1.25.8 Security

Security requirements are addressed in Volume 1, Section 5.0.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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2.0 Contingency Plan

[ * ]

2.1 Aircraft Mechanical Delays or Cancellations

[ * ]

2.2 A Breakdown of Any Maintenance Support or Ground Handling Equipment and Duties at Any Question

[ * ]

2.3 Delays, Cancellations, or Aircraft Weight Limitations Caused by Weather Conditions

[ * ]

2.4 Airport Closings per FAA

[ * ]

2.5 Labor Disruptions Including, But Not Limited to, Walkouts or Strikes

[ * ]

2.6 Staffing Shortages Relating to Medical or Other Emergencies

[ * ]

2.7 Delays Caused by Environmental Issues Such as Fuel Spills, Chemical Spills, or Other HAZMAT

[ * ]

2.8 Other Conditions That May Affect On-Time Performance

In addition to the contingency conditions addressed in Section 2 of this proposal, FedEx knows that there are a multitude of additional situations, from snow to volcanoes to typhoons that have the potential to impact our aviation network and our support for the Postal Service. In all cases, GOCC, in close collaboration with PTM, anticipates contingency events, assesses possible impacts, tailors and implements contingency plans, performs all required actions, and manages the contingency situation through to closure. FedEx’s primary objective in dealing with contingencies is to ensure that we continue to provide all required mail delivery services according to Postal Service contract schedules.

2.9 Training of Employees on Contingency Plan

Contingencies, from blizzards to hurricanes to floods, are a way of life for FedEx employees. Our staff has to be prepared at any given moment to respond to contingencies, implement proven plans, and continue service to our customers. Our employees, from the GOCC contingency planners and managers, to the PTM management team, to the ramp staff at each FedEx airport location, are trained to deal with events

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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and circumstances beyond their immediate control. FedEx employees receive initial and annual recurrence training for contingency plans and response actions for each FedEx airport location. They receive additional training when contingency plans are revised or local procedures are updated. Training records are maintained in employee personnel files and include training received, test scores, and certifications.

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United States Postal Service

Air Cargo Network

Volume 3A – 100% of the Day Network (Required)

Solicitation Number: 5A-12-A-0024

November 6, 2012

Issued By:

Air Transportation CMC

Transportation Portfolio

Supply Management

475 L’Enfant Plaza SW

Room 1P650

Washington DC 20260-0650

This proposal includes data that may not be duplicated, used, or disclosed outside the Postal Service – in whole or in part – for any purpose other than to evaluate this proposal. If, however, a contract is awarded to this offeror as a result of – or in connection with – the submission of such data, the Postal Service will have the right to duplicate, use, or disclose the data to the extent provided in the resulting contract. This restriction does not limit the Postal Service’s right to use information contained in the data if it is obtained from another source without restriction. The data subject to this restriction are contained in all sheets as marked.

United States Postal Service Air Cargo Network Volume 3A November 6, 2012

Table of Contents

1.0	SIGNED PS FORM 8203	1
2.0	COMPLETED ATTACHMENT 10: PRICING	2
3.0	REPRESENTATIONS AND CERTIFICATIONS	21
4.0	CERTIFICATION OF PROVISION 4-10	25
5.0	COMPLETED PROVISION 9-1	26
6.0	PROVISION 4-2 COMPLIANCE MATRIX	27

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3.0 Representations and Certifications

PROVISION 4-3 REPRESENTATIONS AND CERTIFICATIONS (MARCH 2006) (4.2.2)

a. Type of Business Organization. The offeror, by checking the applicable blocks, represents that it:

(1) Operates as:

x a corporation incorporated under the laws of the state of Delaware;

¨ an individual;

¨ a partnership;

¨ a joint venture;

¨ a limited liability company

¨ a nonprofit organization,         or;

¨ an educational institution; and

(2) Is (check all that apply)

¨ a small business concern;

¨ a minority business

¨ Black American

¨ Hispanic American

¨ Native American

¨ Asian American

¨ a woman-owned business;

¨ an educational or other nonprofit organization, or

x none of the above entities.

(3) Small Business Concern. A small business concern for the purposes of Postal Service purchasing means a business, including an affiliate, that is independently owned and operated, is not dominant in producing or performing the supplies or services being purchased, and has no more than 500 employees, unless a different size standard has been established by the Small Business Administration (see 13 CFR 121, particularly for different size standards for airline, railroad, and construction companies). For subcontracts of $50,000 or less, a subcontractor having no more than 500 employees qualifies as a small business without regard to other factors.

(4) Minority Business. A minority business is a concern that is at least 51 percent owned by, and whose management and daily business operations are controlled by, one or more members of a socially and economically disadvantaged minority group, namely U.S. citizens who are Black Americans, Hispanic Americans, Native Americans, or Asian Americans. (Native Americans are American Indians, Eskimos, Aleuts, and Native Hawaiians. Asian Americans are U.S. citizens whose origins are Japanese, Chinese, Filipino, Vietnamese, Korean, Samoan, Laotian, Kampuchea (Cambodian), Taiwanese, in the U.S. Trust Territories of the Pacific Islands or in the Indian subcontinent.)

(5) Woman-owned Business. A woman-owned business is a concern at least 51 percent of which is owned by a woman (or women) who is a U.S. citizen, controls the firm by exercising the power to make policy decisions, and operates the business by being actively involved in day-to-day management.

(6) Educational or Other Nonprofit Organization. Any corporation, foundation, trust, or other institution operated for scientific or educational purposes, not organized for profit, no part of the net earnings of which inures to the profits of any private shareholder or individual.

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b. Parent Company and Taxpayer Identification Number.

(1) A parent company is one that owns or controls the basic business policies of an offeror. To own means to own more than 50 percent of the voting rights in the offeror. To control means to be able to formulate, determine, or veto basic business policy decisions of the offeror. A parent company need not own the offeror to control it; it may exercise control through the use of dominant minority voting rights, proxy voting, contractual arrangements, or otherwise.

(2) Enter the offeror’s Taxpayer Identification Number (TIN) in the space provided. The TIN is the offeror’s Social Security number or other Employee Identification Number used on the offeror’s Quarterly Federal Tax Return, U.S. Treasury Form 941. Offeror’s TIN 71-0427007

(3) Check this block if the offeror is owned or controlled by a parent company:  x

(4) If the block above is checked, provide the following information about the parent company:

Parent Company’s Name: FedEx Corporation

Parent Company’s Main Office:                             

Address:

No. and Street: 942 Shady Grove Road

City: Memphis            State: Tennessee            Zip Code: 38120            

Parent Company’s TIN: 62-1721435

(5) If the offeror is a member of an affiliated group that files its federal income tax return on a consolidated basis (whether or not the offeror is owned or controlled by a parent company, as provided above) provide the name and TIN of the common parent of the affiliated group:

Name of Common Parent: FedEx Corporation

Common Parent’s TIN: 62-1721435

c. Certificate of Independent Price Determination.

(1) By submitting this proposal, the offeror certifies, and in the case of a joint proposal each party to it certifies as to its own organization, that in connection with this solicitation:

(a) The prices proposed have been arrived at independently, without consultation, communication, or agreement, for the purpose of restricting competition, as to any matter relating to the prices with any other offeror or with any competitor;

(b) Unless otherwise required by law, the prices proposed have not been and will not be knowingly disclosed by the offeror before award of a contract, directly or indirectly to any other offeror or to any competitor; and

(c) No attempt has been made or will be made by the offeror to induce any other person or firm to submit or not submit a proposal for the purpose of restricting competition.

(2) Each person signing this proposal certifies that:

(a) He or she is the person in the offeror’s organization responsible for the decision as to the prices being offered herein and that he or she has not participated, and will not participate, in any action contrary to paragraph a above; or

(b) He or she is not the person in the offeror’s organization responsible for the decision as to the prices being offered but that he or she has been authorized in writing to act as agent for the persons responsible in certifying that they have not participated, and will not participate, in any action contrary to paragraph a above, and as their agent does hereby so certify; and he or she has not participated, and will not participate, in any action contrary to paragraph a above.

(3) Modification or deletion of any provision in this certificate may result in the disregarding of the proposal as unacceptable. Any modification or deletion should be accompanied by a signed statement explaining the reasons and describing in detail any disclosure or communication.

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d. Certification of Nonsegregated Facilities.

(1) By submitting this proposal, the offeror certifies that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform services at any location under its control where segregated facilities are maintained. The offeror agrees that a breach of this certification is a violation of the Equal Opportunity clause in this contract.

(2) As used in this certification, segregated facilities means any waiting rooms, work areas, rest rooms or wash rooms, restaurants or other eating areas, time clocks, locker rooms or other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment area, transportation, or housing facilities provided for employees that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin, because of habit, local custom, or otherwise.

(3) The offeror further agrees that (unless it has obtained identical certifications from proposed subcontractors for specific time periods) it will obtain identical certifications from proposed subcontractors before awarding subcontracts exceeding $10,000 that are not exempt from the provisions of the Equal Opportunity clause; that it will retain these certifications in its files; and that it will forward the following notice to these proposed subcontractors (except when they have submitted identical certifications for specific time periods):

Notice: A certification of nonsegregated facilities must be submitted before the award of a subcontract exceeding $10,000 that is not exempt from the Equal Opportunity clause. The certification may be submitted either for each subcontract or for all subcontracts during a period (quarterly, semiannually, or annually).

e. Certification Regarding Debarment, Proposed Debarment, and Other Matters (This certification must be completed with respect to any offer with a value of $100,000 or more.)

(1) The offeror certifies, to the best of its knowledge and belief, that it or any of its principals

(a) Are ¨ are not x presently debarred or proposed for debarment, or declared ineligible for the award of contracts by any Federal, state, or local agency;

(b) Have ¨ have not x, within the three-year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, state, or local) contract or subcontract; violation of Federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, or receiving stolen property;

(c) Are ¨ are not x presently indicted for, or otherwise criminally or civilly charged by a governmental entity with, commission of any of the offenses enumerated in subparagraph (b) above;

(d) Have ¨ have not x within a three-year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in conjunction with obtaining, attempting to obtain, or performing a public (Federal, state or local) contract or subcontract; violation of Federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion or receiving stolen property; and

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(e) Are ¨ are not x presently indicted for, or otherwise criminally or civilly charged by a governmental entity with, commission of any of the offenses enumerated in subparagraph (d) above.

(2) The offeror has ¨ has not x, within a three-year period preceding this offer, had one or more contracts terminated for default by any Federal, state, or local agency.

(3) “Principals,” for the purposes of this certification, means officers, directors, owners, partners, and other persons having primary management or supervisory responsibilities within a business entity (e.g., general manager, plant manager, head of a subsidiary, division, or business segment, and similar positions).

(4) The offeror must provide immediate written notice to the Contracting Officer if, at any time prior to contract award, the offeror learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.

(5) A certification that any of the items in paragraph (a) of this provision exists will not necessarily result in withholding of an award under this solicitation. However, the certification will be considered as part of the evaluation of the offeror’s capability (see PM 2.1.9.c.3). The offeror’s failure to furnish a certification or provide additional information requested by the contracting officer will affect the capability evaluation.

(6) Nothing contained in the foregoing may be construed to require establishment of a system of records in order to render, in good faith, the certification required by paragraph (a) of this provision. The knowledge and information of an offeror is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.

(7) This certification concerns a matter within the jurisdiction of an agency of the United States and the making of a false, fictitious, or fraudulent certification may render the maker subject to prosecution under section 1001, Title 18, United States Code.

(8) The certification in paragraph (a) of this provision is a material representation of fact upon which reliance was placed when making the award. If it is later determined that the offeror knowingly rendered an erroneous certification, in addition to other remedies available to the Postal Service, the Contracting Officer may terminate the contract resulting from this solicitation for default.

f. Incorporation by Reference. If checked, the following provisions are incorporated in this solicitation:

(Contracting officer will check as appropriate.)

¨ (a)      Provision 1-2, Domestic Source Certificate—Supplies

¨ (b)      Provision 1-3, Domestic Source Certificate—Construction Materials

¨ (c)      Provision 9-1, Equal Opportunity Affirmative Action Program

¨ (d)      Provision 9-2, Preaward Equal Opportunity Compliance Review

¨ (e)      Provision 9-3, Notice of Requirements for Equal Opportunity Affirmative Action

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4.0 Certification of Provision 4-10

FedEx will comply with the policies delineated in Handbook AS-805, Information Security, and processes defined in Handbook AS-805-A, Application Information Security Assurance (ISA) Process.

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5.0 Completed Provision 9-1

Provision 9-1: Equal Opportunity Affirmative Action Program (March 2006)

FedEx, represents that it

1. X has developed and has on file,      has not developed and does not have on file, at each establishment, affirmative action programs as required by the rules and regulations of the Secretary of Labor (41 CFR 60-1 and 60-2) and X has,      has not filed the required reports with the Joint Reporting Committee, or

2. N/A has not previously had contracts subject to the written affirmative action program requirement of the rules and regulations of the Secretary of Labor.

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6.0 Provision 4-2 Compliance Matrix

Volume 1
Line Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
1929	Supplier Eligibility	1	1.0	1	Y
1933	14 CFR Part 121 Air Carrier Certification	1	1.1	1	Y
1936	Flight Origins and Destinations (Attachments 2, 3, 4)	1	1.2	3	Y
1939	Transport of Live Animals (DMM 601.9.3)	1	1.3	3	Y
1942	Transport of Hazardous Material (DMM 601.10.0)	1	1.4	3	Y
1945	Transport of Perishables (DMM 601.9.0)	1	1.5	3	Y
1947	Scanning and Data Exchange (Attachment 7)	1	1.6	3	Y
1947	Dispatch and Routing Tags	1	1.6	3	Y
1948	EDI Compliance	1	1.6	3	Y
1952	Eligibility Status	1	1.7	4	Y
1956	Supplier Capability	1	2.0	5	Y
1961	Ability to Meet Required Delivery Schedule	1	2.1	6	Y
1965	Air Fleet Equipment Description	1	2.2	7	Y
1965	Age of Air Fleet	1	2.2.1	8	Y
1965	Fuel Efficiency of Air Fleet	1	2.2.2	8	Y
1965	Aircraft Modernization Plan	1	2.2.3	8	Y
1967	Ground Handling and Sorting Operations	1	2.3	9	Y
1969	Integrity and Business Ethics Record	1	2.4	10	Y
1971	Organization	1	2.5	11	Y
1971	Organization Structure	1	2.5.1	11	Y
1971	Experience	1	2.5.2	12	Y
1971	Accounting and Operational Controls	1	2.5.3	12	Y
1971	Technical Skills	1	2.5.4	12	Y
1972	Production and Property Controls	1	2.5.5	13	Y
1974	Financial Condition	1	2.6	13	Y
1977	Management Plan	1	3.0	14	Y
1978	Daily Operations Management Plan	1	3.1	14	Y
1981	Late Arriving Aircraft and Trucks (Originating and Destinating)	1	3.1.1	14	Y
1984	Early Arriving Aircraft and Trucks	1	3.1.2	14	Y
1985	Mail Arriving Out of Normal Sequence	1	3.1.3	14	Y
1986	Trucks Not On-Site for Dispatch	1	3.1.4	14	Y
1987	Inclement Weather During Operations	1	3.1.5	15	Y
1992	Protection of Mail During Inclement Weather	1	3.1.6	15	Y
1993	Labor Actions	1	3.1.7	15	Y
1994	Inadequate Staffing	1	3.1.8	16	Y
1995	Inability to Complete Loading	1	3.1.9	16	Y
1996	Overflow Mail	1	3.1.10	16	Y
1997	Less Mail Transportation Equipment (MTE) Than Required	1	3.1.11	16	Y
1998	Damaged/Non Airworthy Containers	1	3.1.12	16	Y
1999	Damaged Surface Containers	1	3.1.13	16	Y
2000	Damaged or Non-labeled Mail	1	3.1.14	17	Y

SN#: 5A-12-A-0024	27
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

United States Postal Service Air Cargo Network Volume 3A November 6, 2012

Volume 1
Line Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
2001	Plan and Schedule Changes	1	3.1.15	17	Y
2002	Loose Load Mail	1	3.1.16	17	Y
2003	HAZMAT- Acceptable and Non-acceptable Pieces	1	3.1.17	17	Y
2004	Handling and Staging of Live Animals	1	3.1.18	18	Y
2005	Assisting Aviation Supplier in Container Positioning	1	3.1.19	18	Y
2006	Assisting Aviation Supplier in Maintaining Open Lines of Communication	1	3.1.20	18	Y
2007	Supplies Maintenance	1	3.1.21	18	Y
2008	Power Losses	1	3.1.22	18	Y
2009	Natural Disasters	1	3.1.23	18	Y
2010	Equipment Breakdowns	1	3.1.24	19	Y
2011	Airport Closings	1	3.1.25	19	Y
2012	Air Traffic Control (ATC) Impact Mitigation Plan	1	3.1.26	19	Y
1979	Not Listed But of Equal Importance-Other Factors Impacting FedEx	1	3.1.27	20	Y
2014	Past Performance	1	4.0	22	Y
2019	Record of Conformance to Contract Requirements	1	4.1	23	Y
2021	Record of FedEx On-Time Performance	1	4.2	23	Y
2027	Established Productive Business Relations	1	4.3	24	Y
2027	Cooperation and Commitment to Customer Satisfaction	1	4.3.1	25	Y
2028	Governance and Code of Business Conduct and Ethics	1	4.3.2	25	Y
2032	Current or Recent Postal Service Contracts and On-Time Performance Rates	1	4.4	26	Y
2034	Non-Postal Contracts of Similar Size, Scope, and Nature as in this Solicitation	1	4.5	27	Y
2037	Security Plan	1	5.0	30	Y
2038	Establish Coordination	1	5.1	30	Y
2038	Implementation, Administration, and Maintenance Activities	1	5.2	31	Y
2040	Conformance with Federal Aviation Administration (FAA), Transportation Security Administration (TSA), and Local Airport Authority	1	5.3	33	Y
2042	Protection and Safeguard of U.S. Mails	1	5.4	33	Y
2043	Personnel Screening Procedures	1	5.5	34	Y
2043	Personnel Security Training	1	5.6	34	Y
2044	Security Breach Procedures	1	5.7	34	Y
2046	Sustainability Plan	1	6.0	35	Y
2047	Environmental Initiatives	1	6.1	35	Y
2049	Collaborative Efforts with Postal Service	1	6.1.1	35	Y
2048	Current Sustainability Initiatives and Metrics	1	6.2	35	Y
2047	Attachment – FedEx Sustainability Report 2011 (Environment & Efficiency)	1			Y
2052	Subcontracting Plan	1	7.0	40	Y

SN#: 5A-12-A-0024	28
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

United States Postal Service Air Cargo Network Volume 3A November 6, 2012

Volume 2A
Line Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
2064	Day Network Operating Plan	2	1.0	1	Y
2074	Tender and Delivery Times by Air Stop (Service Points)	2	1.1	5	Y
2078	Operational Components of the Statement of Work	2	1.2	5	Y
2079	Services Provided	2	1.3	6	Y
2080	Coordination and Oversight of FedEx Operations	2	1.3.1	7	Y
2082	Performance of Facility Support and Administrative Functions	2	1.3.2	8	Y
2084	Monitor Performance	2	1.3.3	8	Y
2085	Provide Feedback to the Postal Service	2	1.3.4	9	Y
2086	Ensure the Integrity of Data Entry	2	1.3.5	9	Y
2087	Coordinate the Exchange of Information	2	1.3.6	9	Y
2088	Provide Notification of Changes or Anticipated Changes in Services Provided (Including Subcontractors) to the Postal Service	2	1.3.7	11	Y
2090	Provide the Correct Type and Quantity of Equipment (Other than Postal MTE) Necessary to Support the Service Requirements of this Contract	2	1.3.8	11	Y
2092	Assist in Unloading or Loading ULDs to or from Surface Transportation	2	1.3.9	11	Y
2093	Scan material Handling Units (required) or Postal MTE (if required)	2	1.3.10	11	Y
2094	Process Mail for Dispatch from the Aviation Supplier’s Facility to the Postal Service Facility	2	1.3.11	12	Y
2096	Close-out, receive, and dispatch all surface vehicles	2	1.3.12	12	Y
2097	Handle Overflow Volumes per Postal Service General Directions	2	1.3.13	12	Y
2098	Cooperate With All Aviation Suppliers in the Transportation Service Chain	2	1.3.14	12	Y
2099	Enter Data Timely and Accurately	2	1.3.15	12	Y
2100	Prepare Required Reports	2	1.3.16	13	Y
768	Daily Mail Condition Report	2	1.3.16.1	13	Y
776	Operational Condition Reports	2	1.3.16.2	13	Y
791	Dimensional Weight Reports	2	1.3.16.3	13	Y
2101	Perform verification of Security Seals on Surface Transportation	2	1.3.17	13	Y
2102	Ensure the security of all mail	2	1.3.18	14	Y
2104	Designation (i.e. Aviation supplier Provided or Postal Provided) and description of Terminal Handling Services	2	1.4	14	Y
2106	Delivery and Specific Delivery Instructions	2	1.5	14	Y
297	Delivery—Day Network	2	1.5.1	14	Y
311	Delivery—Night Network	2	1.5.2	15	Y
320	Saturday Delivery—Day Network	2	1.5.3	15	Y
2107	Boarding Priority	2	1.6	15	Y
362	Boarding Priority—Day Network	2	1.6.1	15	Y
383	Boarding Priority—Night Network	2	1.6.2	15	Y

SN#: 5A-12-A-0024	29
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

United States Postal Service Air Cargo Network Volume 3A November 6, 2012

Volume 2A
Line Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
2108/114	Frequency	2	1.7	15	Y
2109/126	Mail Assignment and Transport—Day Network	2	1.8	16	Y
2109/138	Mail Assignment and Transport—Night Network	2	1.9	16	Y
2110/261	Aviation Supplier Planned Accommodation—Day Network	2	1.10	16	Y
2110/279	Aviation Supplier Planned Accommodation—Night Network	2	1.11	16	Y
2111/395	Treatment of Exceptional Types of Mail	2	1.12	16	Y
2112/477	Live Mail	2	1.12.1	17	Y
2113/477	Perishable Mail	2	1.12.2	17	Y
2114/490	Registered Mail	2	1.12.3	17	Y
2115/396/435	HAZMAT	2	1.12.4	17	Y
2117/507	Offshore Capacity Requirements—Day Network	2	1.13	18	Y
530	Volume Commitment—General Information	2	1.14	18	Y
561	Volume Commitment—Contract Volume Minimum—Day Network	2	1.14.1	19	Y
571/572	Operating Period Volume Minimum—Day Network (Postal Service Performs THS Operation)	2	1.14.2	19	Y
571/583	Operating Period Volume Minimum—Day Network (Aviation Supplier Performs THS Operation)	2	1.14.3	19	Y
595	Operating Period Volume Minimum—Night Network	2	1.14.4	19	Y
607	Volume Commitment—Holiday—Day Network	2	1.14.5	19	Y
634	Volume Commitment—Holiday—Night Network	2	1.14.6	19	Y
655	Operating Periods	2	1.15	20	Y
2118	Ordering process	2	1.16	20	Y
2120/661	Ordering Process—Non-Peak—Day Network	2	1.16.1	20	Y
2120/689	Ordering Process—Non-Peak—Night Network	2	1.16.2	20	Y
2119/707	Ordering Process—Peak—Day Network	2	1.16.3	21	Y
2119/739	Ordering Process—Peak—Night Network	2	1.16.4	21	Y
2122/761/798	Electronic Data Interchange (EDI) to Include Scanning and Data Transmission	2	1.17	21	Y
865	Surface Visibility Scanning	2	1.17.1	22	Y
2123	Reports (See Section 1.3.16)	2	1.18	22	Y
2124/883	Performance Requirements and Measurement	2	1.19	22	Y
936	Reduction of Payment	2	1.20	23	Y
957	Performance Management: a. Cost Control; b. Holiday Operations and Planning; c. Aviation Supplier Performance; d. Peak season Planning; e. Quality; f. Ramp Operations; g. Reconciliation of Irregularities; h. Security; i. Technology Issues; j. Tender and Delivery Hygiene; k. Volume Planning; l. Other Pertinent Topics.	2	1.21	24	Y
1251	Payment Procedures	2	1.22	24	Y
1253	Rates and Payment General	2	1.22.1	24	Y
1263	Scan Requirements	2	1.22.1.1	25	Y
1266	Night Turn Scan Requirements	2	1.22.1.2	25	Y
1271	Day Turn Scan Requirements	2	1.22.1.3	25	Y

SN#: 5A-12-A-0024	30
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

United States Postal Service Air Cargo Network Volume 3A November 6, 2012

Volume 2A
Line      Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
1325	Payment Processing—Day Network—Per Cube	2	1.22.2	25	Y
1327	Invoicing	2	1.22.2.1	25	Y
1331	Mail Tendered in ULDs	2	1.22.2.2	25	Y
1358	Mail Tendered from Surface Trucks	2	1.22.2.3	25	Y
1363	Mail Tendered from Ad hoc Trucks into the Aviation Supplier Hub	2	1.22.2.4	26	Y
1369	Aviation Supplier Surface Transportation—Not included in Transportation Payment	2	1.22.2.5	26	Y
1374	Economic Adjustment	2	1.22.2.6	26	Y
1380	Hub Sort Scan	2	1.22.2.7	26	Y
1389	Re-Labeling Charge	2	1.22.2.8	26	Y
1410	Fuel Adjustment	2	1.22.2.9	26	Y
1444	Payment Processing—Day Network—Per Pound	2	1.22.3	26	Y
1525	Payment Processing—Night Network—Per Pound	2	1.22.4	26	Y
1527	Invoicing	2	1.22.4.1	27	Y
1534	Economic Adjustments	2	1.22.4.2	27	Y
1540	Re-Labeling Charge	2	1.22.4.3	27	Y
1566	Reconciliation Process	2	1.23	27	Y
2126	Mode of Transportation to Service Each Air Stop—(Mail Assignment and Transport) as Identified in Tender and Delivery Specifications Listed in Atch 3 and Atch 4	2	1.24	27	Y
2078	Other Components of the Statement of Work not Previously Discussed	2	1.25	28	Y
53	Service Points	2	1.25.1	28	Y
64	Management Plan	2	1.25.2	28	Y
389	Repossession of Mail by the Postal Service	2	1.25.3	28	Y
146	Local Agreements	2	1.25.4	29	Y
655	Operating Periods	2	1.25.5	29	Y
1864	Incentive Plan	2	1.25.6	29	Y
975	Sustainability	2	1.25.7	29	Y
1008	Security	2	1.25.8	29	Y
2131	Contingency Plan	2	2.0	30	Y
2136	Aircraft Mechanical Delays or Cancellations	2	2.1	33	Y
2137	A Breakdown of Any Maintenance Support or Ground Handling Equipment and Duties at Any Outstations	2	2.2	33	Y
2139	Delays, Cancellations or Aircraft Weight Limitations Caused by Weather Conditions	2	2.3	33	Y
2140	Airport Closings per FAA	2	2.4	35	Y
2141	Labor Disruptions Including, but not Limited to, Walkouts or Strikes	2	2.5	35	Y
2142	Staffing Shortages Relating to Medical or Other Emergencies	2	2.6	35	Y
2143	Delays Caused by Environmental Issues Such as Fuel Spills, Chemical Spills, or Other HAZMAT	2	2.7	35	Y
2144	Other Conditions that May Affect On-time Performance	2	2.8	36	Y

SN#: 5A-12-A-0024	31
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

United States Postal Service Air Cargo Network Volume 3A November 6, 2012

Volume 2A
Line      Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
74	Training of Employees on Contingency Plan	2	2.9	36	Y
1743	Attachment 12	2	3.0	37	Y

Volume 3A
Line      Number	Evaluation Area	Response Reference			Compliant (Y/N)
		Volume	Section	Page
1875	Signed PS Form 8203	3	1.0	1	Y
1878	Completed Attachment 10: Pricing	3	2.0	2	Y
1889	Representations and Certifications	3	3.0	21	Y
1893	Certification of Provision 4-10	3	4.0	25	Y
1896	Completed Provision 9-1	3	5.0	26	Y
1899	Provision 4-2 Compliance Matrix	3	6.0	27	Y

SN#: 5A-12-A-0024	32
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal.

EX-10.53

EXHIBIT 10.53

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT   1. CONTRACT ID CODE     PAGE OF   1    ,    2

2. AMENDMENT/MODIFICATION NO. 001	3. EFFECTIVE DATE   05/28/2013	4. REQUISITION/PURCHASE REQ. NO.	5. PROJECT NO. (If applicable)
6. ISSUED BY                         CODE	5ASNET	7. ADMINISTERED BY (If other than Item 6)	CODE	5ASNET
Gregory Bayne Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW Room 1P 650 Washington DC 20260-0650 (202)268-3428		Air Transportation CMC Air Transportation CMC United States Postal Service 475 L’Enfant Plaza SW, Room 1P650 Washington DC 202-0650

8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code) FEDERAL EXPRESS CORPORATION 3610 HACKS CROSS ROAD MEMPHIS, TN 38125-8800		(x)	9A. AMENDMENT OF SOLICIATION NO.
			9B. DATED (SEE ITEM 11)
		x	10A. MODIFICATION OF CONTRACT/ORDER NO. ACN-13-FX
			10B. DATED (SEE ITEM 11)
CODE	FACILITY CODE

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

¨     ¨  is extended,         ¨  is not extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods:

(a)By completing Items 8 and 15, and returning                     copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted;

or (c) By separate letter or telegram which includes a reference to the solicitation and amendment number. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment your desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNTING AND APPROPIRATION DATA     (If  required.)   Net Decrease: [*]            

13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

(x)	A.	THIS CHANGE BY CLAUSE IS ISSUED PURSUANT TO: (Specify clause) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
	B.	THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14.
	C.	THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
x	D.	OTHER (such as no cost change/cancellation, termination, etc.) (Specify type of modification and authority): THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. OPTION 1, DESCRIBED IN Item 3, exercised unilaterally by the Postal Service

E. IMPORTANT:     Contractor x is not, ¨ is required to sign this document and return                         copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this modification is to unilaterally exercise Option 1, as described in Item

3, allowing the Postal Service to truck to and from the Memphis hub and these Day Network air stops.

As such, Option 1, Attachment 3: Operating Plan, Day Network, Option 1, Attachment 4:

Operating Plan, Night Network, and Option 1, Attachment 10: Pricing are hereby incorporated.

Sub Rept Req’d: Y Carrier Code: FX Route Termini

S: Various Route Termini End: Various Payment

Terms: NET 30

Discount Terms:

Continued...

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)       Gregory Bayne

15B. CONTRACTOR/OFFEROR     (Signature of person authorized to sign) 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA       /s/ GREGORY BAYNE (Signature of Contracting Officer) 16C. DATE SIGNED   05/28/2013

USPS Internal San Mateo Accounts Payable Use Only

*Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

CONTINUATION SHEET REQUISITION NO.                      PAGE OF 2         2

CONTRACT/ORDER NO. ACN-13-FX/001 AWARD/ EFFECTIVE DATE   05/28/2013 MASTER/AGENCY CONTRACT NO. SOLICITATION NO. SOLICITATION ISSUE DATE

ITEM NO.	SCHEDULE OF SUPPLIES / SERVICES	QUANTITY	UNIT	UNIT PRICE	AMOUNT
00003	See Schedule FOB: Destination Period of Performance: 10/01/2013 to 09/30/2020 Change Item 00003 to read as follows: Option 1: Truck Location Tender and Delivery Times After contract award but not later than one hundred twenty (120) days prior to Operating Period 1, as shown in Attachment 1: Postal Service Operating Periods, the Postal Service, at its sole discretion, may exercise Option 1 to implement Option 1, Attachment 3: Operating Plan, Day Network, and Option 1, Attachment 4: Operating Plan, Night Network, reflecting changes to the process codes and tender and delivery times allowing the Postal Service to truck to and from Memphis and these air stops. In consideration for exercising Option 1, the subject pricing will be reduced in accordance with Option 1, Attachment 10: Pricing. Account Number: 53503 The dollar amounts included in boxes 12 and 14 are for USPS internal Budgeting purposes only, and in no way provide a guarantee to the supplier.				[*]

USPS Internal San Mateo Accounts Payable Use Only

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

United States Postal Service

AIR CARGO NETWORK

Contract ACN-13-FX

Awarded By:

Air Transportation CMC

Transportation Portfolio

Supply Management

475 L’Enfant Plaza SW

Room 1P 650

Washington, DC 20260-0650

April 23, 2013

Modification 1 Issued May 28, 2013

Air Cargo Network

Contract ACN-13-FX

Table of Contents

Table of Contents

Part 1: Statement of Work	5
Purpose and Scope	5
Scale	5
Services Provided	5
Service Points	6
Management Plan	6
Frequency	7
Mail Assignment and Transport - Day Network	7
Mail Assignment and Transport - Night Network	7
Local Agreements	7
Postal Service Performs Terminal Handling Service (THS) Operation - Day Network	7
Aviation Supplier Planned Accommodation - Day Network	8
Aviation Supplier Planned Accommodation - Night Network	9
Delivery - Day Network	9
Delivery - Night Network	9
Saturday Delivery - Day Network	9
Specific Delivery Instructions	9
Boarding Priority - Day Network	9
Boarding Priority - Night Network	10
Repossession of Mail by the Postal Service	10
Treatment of Exceptional Types of Mail	10
Perishable Mail and Live Mail	12
Registered Mail	12
Offshore Capacity Requirement - Day Network	12
Volume Commitment - General Information	12
Volume Commitment - Contract Volume Minimum - Day Network	13
Operating Period Volume Minimum - Day Network	13
Operating Period Volume Minimum - Night Network	13
Volume Commitment - Holiday - Day Network	14
Volume Commitment - Holiday - Night Network	14
Operating Periods	14
Ordering Process - Non-Peak - Day Network	15
Ordering Process - Non-Peak - Night Network	15
Ordering Process - Peak - Day Network	15
Ordering Process - Peak - Night Network	16
Electronic Data Interchange (EDI)	16
Operational Condition Reports	17
Dimensional Weight Reports	18
Scanning and Data Transmission	18
Performance Requirements and Measurement	19
Reduction of Payment	20
Performance Management	20
Sustainability	21
Security	21
Postal Service Employees Allowed Access	21
Personnel Screening	22
Payment Procedures	26
Rates and Payment General	26
Payment Processing - Day Network - Per Cube	27
Payment Processing - Night Network - Per Pound	29
Reconciliation Process	29

Page 2 of 101

Air Cargo Network

Contract ACN-13-FX

Table of Contents

Part 3: Contract Clauses		31
Clause B-1:	Definitions (March 2006) (Tailored)	31
Clause B-3:	Contract Type (March 2006) (Tailored)	34
Clause B-9:	Claims and Disputes (March 2006) (Tailored)	34
Clause B-10:	Pricing of Adjustments (March 2006) (Tailored)	35
Clause B-15:	Notice of Delay (March 2006) (Tailored)	35
Clause B-22:	Interest (March 2006) (Tailored)	35
Clause B-25:	Advertising of Contract Awards (March 2006)	36
Clause B-30:	Permits and Responsibilities (March 2006) (Tailored)	36
Clause B-39:	Indemnification (March 2006) (Tailored)	36
Clause B-45:	Other Contracts (March 2006) (Tailored)	36
Clause B-65:	Adjustments to Compensation (March 2006) (Tailored)	36
Clause B-69:	Events of Default (March 2006) (Tailored)	37
Clause B-75:	Accountability of the Aviation Supplier (Non-Highway) (March 2006) (Tailored)	37
Clause B-77:	Protection of the Mail (Non-Highway) (March 2006) (Tailored)	38
Clause B-80:	Laws and Regulations Applicable (March 2006) (Tailored)	39
Clause B-81:	Information or Access by Third Parties (March 2006) (Tailored)	39
Clause B-82:	Access by Officials (March 2006) (Tailored)	39
Clause 1-1:	Privacy Protection (July 2007)	40
Clause 1-5:	Gratuities or Gifts (March 2006)	41
Clause 1-6:	Contingent Fees (March 2006)	41
Clause 1-11:	Prohibition Against Contracting with Former Officers or PCES Executives (March 2006) (Tailored)	42
Clause 1-12:	Use of Former Postal Service Employees (March 2006) (Tailored)	42
Clause 2-11:	Postal Service Property - Fixed-Price (March 2006) (Tailored)	42
Clause 2-22:	Value Engineering Incentive (March 2006)	44
Clause 3-1:	Small, Minority, and Woman-owned Business Subcontracting Requirements (March 2006)	47
Clause 3-2:	Participation of Small, Minority, and Woman-owned Businesses (March 2006)	48
Clause 4-1:	General Terms and Conditions (July 2007) (Tailored)	48
Clause 4-2:	Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders (July 2009) (Tailored)	52
Clause 4-7:	Records Ownership (March 2006)	53
Clause 6-1:	Contracting Officer’s Representative (March 2006)	53
Clause 9-1:	Convict Labor (March 2006)	53
Clause 9-2:	Contract Work Hours and Safety Standards Act - Overtime Compensation (March 2006)	54
Clause 9-7:	Equal Opportunity (March 2006) (Tailored)	54
Clause 9-9:	Equal Opportunity Preaward Compliance of Subcontracts (March 2006) (Tailored)	55
Clause 9-10:	Service Contract Act (March 2006)	55
Clause 9-12:	Fair Labor Standards Act and Service Contract Act - Price Adjustment (February 2010)	62
Clause 9-13:	Affirmative Action for Workers with Disabilities (March 2006) (Tailored)	63
Clause 9-14:	Equal Opportunity for Disabled Veterans, Recently Separated Veterans, Other Protected Veterans, and Armed Forces Service Medal Veterans (February 2010) (Tailored)	64
Contract Term		66
Renewal Process		66
Amendments or Modifications		66
Assignment		66
Bankruptcy		67
Confidentiality		67
Entire Agreement		67

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Table of Contents

Force Majeure		68
Frequency Adjustment		68
Notices		69
Severability		69
Third Party Governmental Delays		70
Waiver of Breach		70
Part 4 - List of Attachments and Forms		71
Attachment 1	Postal Service Operating Periods, dated October 4, 2012	72
Attachment 2	Air Stops & Projected Volumes, dated January 8, 2013	74
Attachment 3	Operating Plan, Day Network, dated April 22, 2013	75
Attachment 4	Operating Plan, Night Network, dated April 22, 2013	82
Attachment 5	Reserved
Attachment 6	Postal Furnished Property, April 16, 2013	90
Attachment 7	Electronic Data Interchange Service Requirements, dated September 1, 2012	91
Attachment 8	Investigative / Security Protocol and Guidelines, dated July 2012	92
Attachment 9	Wage Determination, dated October 31, 2012	96
Attachment 10	Pricing, dated April 18, 2013	98
Attachment 11	Perishable Mail and Lives, April 22, 2013	99
Attachment 12	Reserved
Attachment 13	Service Contract Act Wage Determinations, dated April 17, 2013	101

Forms
DOT Form F 5800.1	Hazardous Materials Incident Report
I-9 Form	Employment Eligibility Verification
PS Form 2025	Contract Personnel Questionnaire
PS Form 8203	Order / Solicitation / Offer / Award
US Treasury Form 941	Quarterly Federal Tax Return

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Part 1: Statement of Work

Part 1: Statement of Work

Purpose and Scope

The United States Postal Service is seeking to purchase air transportation and ancillary services for mail to and from destinations within the contiguous forty-eight (48) states as well as non-contiguous areas to include Alaska, Hawaii, and Puerto Rico. This statement of work (SOW) provides for the transportation of mail on any flight in the aviation supplier’s air transportation network. It also provides for services associated with the transportation of mail by the aviation supplier. The air carrier’s network or transportation system may include its own flights, flights of its approved subcontractors, flights that may be dedicated to Postal operations, and Road Feeder Service.

Scale

The volume of mail (expressed in pounds and cubic feet) transported as contracted under this air cargo network contract may increase or decrease significantly over the term of the contract consistent with the needs of the Postal Service.

Services Provided

The aviation supplier shall provide sufficient resources to efficiently and effectively take possession, sort (if necessary), transport, scan, load, and deliver all mail to the designated destination Service Points specified by the Postal Service in Attachment 2: Air Stops & Projected Volumes, Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

The aviation supplier will present scan data for these events electronically to the Postal Service. See Attachment 7: Electronic Data Interchange Service Requirements.

[*]

The aviation supplier will be expected to (this list is not all inclusive):

a. Coordinate and oversee its own operations; supervise and protect its own employees.

b. Ensure that the necessary facility support and administrative functions are performed.

c. Monitor performance.

d. Provide feedback to the Postal Service.

e. Ensure the integrity of data entry.

f. Coordinate the exchange of information.

g. Provide notification of changes or anticipated changes in services provided (including subcontractors) to the Postal Service.

h. Scan material Handling Units.

i. Assist in unloading or loading Unit Load Devices (ULDs) to or from surface transportation.

j. Provide the correct type and quantity of equipment necessary to support the service requirements of this contract.

k. Process mail for dispatch from the aviation supplier’s facility to the Postal Service facility.

l. Close-out, receive, and dispatch all surface vehicles.

m. Handle overflow volumes per Postal Service general directions.

n. Cooperate with all aviation suppliers in the transportation service chain.

o. Enter data timely and accurately.

p. Prepare required reports.

q. Perform verification of security seals on surface transportation.

r. Ensure the security of all mail.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Service Points

Service Points are the locations where tender and / or delivery takes place. The locations and tender and delivery specifications are listed in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

The Day Network will service approximately eighty (80) origin and destination Service Points.

The Night Network will service approximately one hundred forty-five (145) origin and destination Service Points

Management Plan

The aviation supplier shall develop and maintain a current Management Plan for dealing with normal daily operations as well as unscheduled and unexpected events affecting the expeditious operation of the facility, including aviation and surface service failure and delays. The Management Plan must also address the key personnel involved on a day to day basis.

Updates to this plan shall be submitted to the Contracting Officer within ten (10) days of any changes to the plan. The aviation supplier shall review and verify, at least annually, that its management plan is current.

The aviation supplier must train its employees to a level of familiarity that ensures a contingency plan can be exercised without delay. The following items must be addressed by the Management Plan; the list is not all inclusive.

a. Late arriving aircraft and trucks

• Ability to conduct two operations – Originating and Destinating

b. Early arriving aircraft and trucks

c. Mail arriving out of normal sequence

d. Trucks not on-site for dispatch

e. Inclement weather during operations

• Snow issues

• Ice storms

• Airport closures

f. Protection of the mail during inclement weather

g. Labor actions

h. Inadequate staffing

i. An inability to complete all loading in time to meet tender

j. Overflow mail

k. Damaged and / or non air worthy containers

l. Damaged surface containers

m. Damaged or non-labeled mail

n. Plan and schedule changes

o. Loose load mail

p. Hazardous Material (HAZMAT)-acceptable and non-acceptable pieces

q. Handling and staging of live animals

r. Running out of supplies such as placards, bypass tape, etc.

s. Power losses – Describe in detail all steps to be taken in the event of power loss to include specific actions for back up power at the Terminal Handling Service (THS) location such as generators and other systems.

t. Natural disasters

u. Equipment breakdowns

v. Airport closings

w. Air Traffic Control (ATC) impact mitigation plan

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Part 1: Statement of Work

Frequency

The initial frequency of service for the Day Network (Priority Mail / First Class network) is based on six (6) days of Postal Service delivery and shall be Tuesday through Sunday (X1).¹ This will provide for approximately 307 (308 in a leap year) operating days annually. This excludes the widely observed holidays as listed in the sections titled, Volume Commitment – Holiday – Day Network and Volume Commitment – Holiday – Night Network.

The initial frequency of service for the Night Network (Express Mail network) is based on five (5) days of Postal Service delivery and shall be Monday through Friday (X67).² This will provide for approximately 254 (255 in a leap year) operating days annually. This excludes the widely observed holidays as listed in the sections titled, Volume Commitment – Holiday – Day Network and Volume Commitment – Holiday – Night Network.

Mail Assignment and Transport - Day Network

The aviation supplier shall provide flight schedules at least thirty (30) days in advance of the Operating Period. The Postal Service will create dispatch routing instructions based on the aviation supplier’s flight schedule and subsequently shown on the Postal Service Dispatch and Routing (D&R) Tag.

The Postal Service agrees to provide up to seventy-five (75%) percent of the total volume assigned to the outbound flights to the aviation supplier one (1) hour before the scheduled ‘All Mail Due Aviation Supplier’ column as listed in Attachment 3: Operating Plan, Day Network. The Postal Service agrees to provide the remaining twenty-five (25%) percent by the ‘All Mail Due Aviation Supplier’ column listed in Attachment 3: Operating Plan, Day Network.

Mail Assignment and Transport - Night Network

The Postal Service agrees to provide up to seventy-five (75%) percent of the total volume assigned to the outbound flights to the aviation supplier thirty (30) minutes before the scheduled ‘All Mail Due Aviation Supplier’ column as listed in Attachment 4: Operating Plan, Night Network. The Postal Service agrees to provide the remaining twenty-five (25%) percent by the ‘All Mail Due Aviation Supplier’ column listed in Attachment 4: Operating Plan, Night Network.

Local Agreements

No Local Agreement (any informal agreement or working arrangement made between representatives of the aviation supplier, the Postal Service, or their agents who lack authority to bind either company) shall be binding, obligate the Postal Service or the aviation supplier, or otherwise give rise to any claim under this contract.

Postal Service Performs Terminal Handling Service (THS) Operation - Day Network

Mail will be tendered to the aviation supplier in accordance with the Operating Plan provided by the aviation supplier. The aviation supplier’s Operating Plan will be provided thirty (30) days before the start up of the Operating Period. The aviation supplier’s Operating Plan will specify the following information:

Specific Type of Airline ULD per origin / destination

Destination of Airline ULD – Direct (bypass)

Destination of Airline ULD – Mixed (to be sorted at hub)

¹  X1 refers to the day of the week that service will not be performed. The days of the week are numbered consecutively from 1 through 7 beginning with Monday (1). “X1” means that service will operate each day of the week except Monday.

²  X67 refers to the days of the week that service will not be performed. “X67” means that service will operate each day of the week except Saturday and Sunday.

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The Operating Plan will be mutually agreed upon prior to implementation.

The aviation supplier will transport, scan, and deliver the ULDs to the specific Service Points listed in Attachment 3: Operating Plan, Day Network. The Postal Service or its representative will build the ULDs in conformance with the aviation supplier’s Operating Plan.

The aviation supplier will perform the following activities including, but not limited to:

a. Sorting and scanning mail at an aviation supplier hub, as necessary, which also may include re-wrap and reapplication of Distribution & Routing (D&R) Tags to mail requiring such treatment, and dispatch on service responsive transportation

b. In the unlikely event that mail tendered to the aviation supplier is in excess (overflow) of what may be transported, the aviation supplier shall:

i. Secure the mail.

ii. Scan all Handling Units and record the number of pieces, weight, and destination of all overflow Handling Units.

iii. Immediately notify the local Postal official after becoming aware of an overflow situation. The Postal official will direct the aviation supplier to either hold the mail for the next outbound flight or return it to the designated Postal facility.

iv. Prepare all overflow mail for delivery to the local designated Postal facility within twenty (20) minutes of receipt of Postal direction.

v. Provide a written report of the overflow to the local Postal official with a copy to the COR.

When transporting mail in carts, containers, or other vehicles, the mail must be securely enclosed to protect it from loss, depredation, and damage. The aviation supplier will stage mail in a secure area while in its possession. The aviation supplier is not allowed to transport mail in the cabs of its vehicles except for mail containing live animals.

Aviation Supplier Planned Accommodation - Day Network

The aviation supplier will guarantee space to accommodate up to 105% of the Planned Capacity from each origin daily. All mail accepted by the aviation supplier is subject to the service commitments set forth in this contract.

If the Postal Service tenders mail in excess of 105% of the Planned Capacity for that Service Point, the aviation supplier may refuse to transport the excess tender. If the volume is accepted, the same service requirements apply.

If the Postal Service tenders mail to the aviation supplier after the ‘All Mail Due Aviation Supplier’ column as shown in Attachment 3: Operating Plan, Day Network, the aviation supplier has the right to refuse that volume.

Mail accepted after the agreed upon ‘All Mail Due Aviation Supplier’ column in Attachment 3: Operating Plan, Day Network, shall be subject to the same service commitments as mail tendered at or before the ‘All Mail Due Aviation Supplier’ column.

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Aviation Supplier Planned Accommodation - Night Network

The aviation supplier will guarantee space to accommodate up to 120% of the Planned Capacity from each origin daily. All mail accepted by the aviation supplier is subject to the service commitments set forth in this contract.

If the Postal Service tenders mail in excess of 120% of the Planned Capacity for that Service Point, the aviation supplier may refuse to transport the excess tender. If the volume is accepted, the same service requirements apply.

If the Postal Service tenders mail to the aviation supplier after the ‘All Mail Due Aviation Supplier’ column as shown in Attachment 4: Operating Plan, Night Network, the aviation supplier has the right to refuse that volume.

Mail accepted after the agreed upon ‘All Mail Due Aviation Supplier’ column in Attachment 4: Operating Plan, Night Network, shall be subject to the same service commitments as mail tendered at or before the ‘All Mail Due Aviation Supplier’ column.

Delivery - Day Network

The aviation supplier will deliver mail to a destination Service Point by the scheduled ‘Latest Delivery Time to Postal Service’ column in Attachment 3: Operating Plan, Day Network.

Delivery - Night Network

The aviation supplier will deliver mail to a Service Point by the scheduled ’Latest Delivery Time to Postal Service’ column in Attachment 4: Operating Plan, Night Network, on or before the scheduled delivery day (D+1) on Attachment 4: Operating Plan, Night Network. “D+1” is defined as the day following acceptance by the aviation supplier.

At destination, the aviation supplier is required to unload the mail from the ULDs received, scan, and deliver the mail to the Postal Service.

Saturday Delivery - Day Network

See Attachment 3: Operating Plan, Day Network, for details on Saturday delivery.

Specific Delivery Instructions

The aviation supplier shall:

a. Assist in loading and dispatching all outbound surface vehicles, as required

b. Must develop a cooperative line of communication with the Postal Service to ensure the timely delivery and dispatch of mail. All efforts shall be made to provide an efficient and effective delivery to the Postal Service.

Boarding Priority - Day Network

The aviation supplier must board accepted mail using the following mail boarding preference order:

a. Registered (Con-Con) Mail

b. Lives

c. Perishables

d. HAZMAT, regardless of mail class

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e. Domestic Priority and Express Mail

f. First-Class Mail

g. All Other Mail

The Manager, Air Transportation Operations, or a Postal Service designee, will determine if the Postal Service should repossess any mail without exercising rights as described in the section titled Repossession of Mail by the Postal Service.

Boarding Priority - Night Network

The aviation supplier must board accepted mail using the following mail boarding preference order:

a. Express Mail

b. All other classes of mail

Repossession of Mail by the Postal Service

The Postal Service may, at any time, require the aviation supplier to return to the local Postal Service representative or agent at a Service Point, any or all of the mail in its possession at that location or the Postal Service may take possession of such mail from the aviation supplier.

Treatment of Exceptional Types of Mail

1. Tagging of Hazardous Material

The aviation supplier may carry mailable HAZMAT, subject to applicable law, rules and regulations, including, without limitation:

a. ORM-D Air

“ORM-D” stands for “Other Regulated Material-Class D.” ORM-D is a term developed by the Department of Transportation (DOT) that signifies the hazard class associated with a consumer commodity. Most hazardous materials accepted by the Postal Service for mailing are classified as ORM-D. A package marked ORM-D meets the standards for surface transportation only. “ORM-D-Air” signifies that the item meets the requirements for air and surface transportation.

The Postal Service currently accepts limited quantity alternative marking options (square on point) for ORM-D and ORM-D-Air and plans to adopt mandatory effective dates as identified by the Department of Transportation. There are no intended changes to quantity limits, package weights, or documentation requirements for these mailable materials.

b. Division Class 6.2

Division Class 6.2 materials are not permitted in international mail or domestic mail, except when they are intended for medical or veterinary use, research, or laboratory certification related to the public health. These materials are permitted only when they are properly prepared for mailing to withstand shocks, pressure changes, and other conditions related to ordinary handling in transit.

c. Division Class 9

Division Class 9 items are miscellaneous hazardous materials or substance articles that present a hazard during transportation but do not meet the definition of any other hazard class. Examples of miscellaneous hazardous materials (not all of which are mailable) include solid dry ice, elevated temperature substances, environmentally hazardous substances, life-saving appliances, and asbestos.

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Part 1: Statement of Work

d. Hazardous and Dangerous Goods

The aviation supplier will accept all Dangerous Goods as defined in the Domestic Mail Manual, section 601.10. All Dangerous Goods will be tendered on the Night Network. The Postal Service will be in compliance with the current International Air Transport Association (IATA) allowed variations as listed for the aviation supplier. The Postal Service will tender all Dangerous Goods at least two hours prior to the tender time shown in Attachment 4: Operating Plan, Night Network. The Postal Service shall not tender any used sharps. Any future changes to Hazardous and Dangerous Goods requirements will be reviewed and must be acceptable to the aviation supplier prior to implementation of the changes.

e. All other hazardous material that is packaged and distributed in a quantity and form intended or suitable for retail sale and designed for consumption by individuals for their personal care or household use purposes; reference http://pe.usps.gov/text/dmm300/601.htm#wp1065003.

2. Assignment of Hazardous Materials

a. The tender of all hazardous materials will be performed a minimum of two (2) hours prior to the final tender time of the intended flight.

b. The desired flight assignment of HAZMAT is to non-stop or direct flights.

c. No surcharge is offered for the transportation of HAZMAT mail.

d. A copy of the manifest and the assigned item MUST be handed to an aviation supplier representative a minimum of two (2) hours prior to the closeout time of the intended flight. The aviation supplier representative will be responsible for ensuring that the information on the postal manifest which includes the number of pieces, weight, and appropriate shipper’s certification detail is incorporated onto the aircraft load manifest and pilot notification paperwork as outlined in CFR 49, Part 175, Carriage by Aircraft.

e. Aviation supplier Refusal to Accept Hazardous Materials: If the aviation supplier refuses to accept a properly prepared HAZMAT item, it shall document the reasons leading to the refusal. Documentation will include:

i. Name and address of mailer and air carrier;

ii. The type and amount of hazardous material; and

iii. The reason for refusal.

f. HAZMAT Spills, Releases, Incidents, and Emergencies

i. While in the possession of the aviation supplier, but not on board an aircraft:

Hazardous Material items which are damaged must not be boarded on the aircraft. HAZMAT incidents which occur following the tender but prior to boarding of the aircraft, or after unloading from an aircraft and before delivery to the Postal Service, causing injury, illness, significant property damage, or disruption in operations will require the aviation supplier to enter the required information into the Mail Piece Incident Reporting Tool (MIRT), a Postal Service intranet tool for the collection of information on leaking and other non-mailable items.

ii. While on board an aircraft:

Any incident which occurs while on board an aircraft will require the aviation supplier to complete a Department of Transportation (DOT) Form F 5800.1 (01-2004), Hazardous Materials Incident Report. A copy of this form must be sent to the COR within twenty-four (24) hours of the incident with all information available. The incident type is not limited to hazardous material and may include hazardous cargo spills which come in contact with the mail.

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Perishable Mail and Live Mail

The aviation supplier will be required to transport as mail perishable items which the Postal Service has accepted as mailable under Domestic Mail Manual (DMM) 601, sub section 9.0, including live animals as discussed at DMM 601 subsection 9.3. The Postal Service will notify the aviation supplier a minimum of two (2) hours prior to the ‘All Mail Due Aviation Supplier’ time as listed in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network, of the intended flight of known perishable mail, including live animals.

Attachment 11: Perishable Mail and Lives, details the requirements for preparation and tender of perishable mail and live animal shipments.

Registered Mail

The aviation supplier will accept Registered Mail provided in Con-Cons for the Day Network only.

Registered Mail Con-Cons will be a part of the Planned Capacity and will be tendered in accordance with Attachment 3: Operating Plan, Day Network.

Upon request, the aviation supplier shall furnish the Postal Service the following information concerning Registered Mail:

• Aircraft number,

• Aircraft compartment location,

• Actual flight departure time, and

• Any accident or irregularity which occurs to a flight containing Registered Mail.

Registered Mail Handling Units will have a D&R Tag affixed indicating the final destination air stop. This Handling Unit shall remain intact and shall not be opened by the aviation supplier. The desired routing for Registered Mail shipments will be to non-stop or direct flights only.

The aviation supplier shall advise the U.S. Postal Inspection Service, local Postal Service representatives, and will send an email message to the COR of any Registered Mail that does not make its planned dispatch for disposition instructions.

Offshore Capacity Requirement - Day Network

The aviation supplier will make available at least the following daily volumes into and out of the following locations.

Cube Based:

[ * ] cube (Originating) and [ * ] cube Destinating Anchorage (ANC)

[ * ] cube (Originating) and [ * ] cube Destinating Honolulu (HNL)

[ * ] cube (Originating) and [ * ] cube Destinating San Juan (SJU)

The Postal Service may increase this capacity as needed through the planning process through the mutual agreement of the parties.

Volume Commitment - General Information

The Day Network operating week is defined as Tuesday through Sunday inclusive (X1).

The Night Network operating week is defined as Monday through Friday inclusive (X67).

The Postal Service is not obligated to request consistent capacity by day of the week. Requests for capacity are detailed in the Ordering Process sections.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Part 1: Statement of Work

The following constitute the only minimum volume guarantees under this contract:

• Contract Volume Minimum of [ * ] cubic feet on the Day Network.

• The Contract Volume Minimum may be reduced in accordance with Clause 4-1: General Terms and Conditions, paragraph m, and Frequency Adjustment found in Part 3: Contract Clauses.

• [ * ]

• [ * ]

• 90% of Planned Capacity for the Night Network for each Operating Period

Any monies due as a result of the Postal Service not meeting its Contract Volume Minimum or its Operating Period Volume Minimum as measured and calculated at the end of each Operating Period will be included as part of the Operating Period’s reconciliation process.

On operating days where volume for lanes with Planned Capacity is withdrawn, withheld, or not transported under the Repossession of Mail by the Postal Service or Force Majeure sections, that volume will not be included in calculating the Operating Period Volume Minimum. The Contract Volume Minimum will be reduced for the Operating Period by the amount of that volume.

Volume Commitment - Contract Volume Minimum - Day Network

A minimum of [ * ] cubic feet per operational day, averaged across six (6) days per week, and measured across each Operating Period, will constitute the Contract Volume Minimum guaranteed to be paid by the Postal Service.

Operating Period Volume Minimum - Day Network

[ * ]

Operating Period Volume Minimum - Night Network

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Volume Commitment - Holiday - Day Network

Each holiday will be addressed separately between the parties during the Ordering Process. The holidays are:

• New Year’s Day (widely observed)

• Martin Luther King Day

• Presidents’ Day

• Memorial Day (widely observed)

• Independence Day (widely observed)

• Labor Day (widely observed)

• Columbus Day

• Veterans Day

• Thanksgiving (widely observed)

• Christmas (widely observed)

For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the following days will not be included:

• Widely observed holidays

• The day following the widely observed holidays that occur on a Monday

• Non-widely observed holidays that occur on a Monday

For purposes of Contract Volume Minimum and Operating Period Volume Minimum calculations, the following days will be included at a 50% volume level:

• The day following widely observed holidays not occurring on a Monday

• Non-widely observed holidays not occurring on a Monday

• The day after a non-widely observed holiday

Volume Commitment - Holiday - Night Network

Each holiday will be addressed separately between the parties during the Ordering Process. The holidays are:

• New Year’s Day (widely observed)

• Martin Luther King Day

• Presidents’ Day

• Memorial Day (widely observed)

• Independence Day (widely observed)

• Labor Day (widely observed)

• Columbus Day

• Veterans’ Day

• Thanksgiving (widely observed)

• Christmas (widely observed)

The widely observed holidays will not be included in the Operating Period Volume Minimum calculation.

The non-widely observed holidays will be included at a 50% volume level in the Operating Period Volume Minimum calculation.

Operating Periods

The Operating Periods are incorporated as Attachment 1: Postal Service Operating Periods. No Operating Period will exceed five weeks. The Peak Operating Periods are designated in Attachment 1: Postal Service Operating Periods.

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Part 1: Statement of Work

Ordering Process - Non-Peak - Day Network

The Postal Service will provide the aviation supplier mail volumes in accordance with the identified schedule specified below. The forecasting structure will specify each origin / destination lane pair including cubic feet by day of week for the pairs. The Postal Service will request capacity based on specific plans for a Tuesday / Wednesday plan, a Thursday / Friday plan, a Saturday plan, and a Sunday plan.

[ * ]

Over the course of the Ordering Process for two (2) Operating Periods, the Postal Service may reduce volume down to the Contract Volume Minimum.

The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format.

Bypass containers will be allocated in lanes where the requested capacity is greater than one hundred and ten (110) percent of the cubic capacity of the ULD configuration for the aircraft planned for the Service Point provided there is sufficient space to flow the Bypass container from the origin to the final destination on the scheduled flights. To facilitate this process, the Postal Service and the aviation supplier will jointly agree upon both Bypass and Mixed containers to be built at all origins during the Ordering Process.

Ordering Process - Non-Peak - Night Network

The Postal Service will provide the aviation supplier mail volumes in accordance with the identified schedule specified below. The forecasting structure will specify each origin / destination lane pair including weight.

[ * ]

The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format.

Ordering Process - Peak - Day Network

The Peak Operating Period will consist of four or five individual weeks, measured and planned as independent of each other. One of the five weeks of the Peak Operating Period will include the week of Christmas. As such, the requested volume capacity will include the Christmas week. The forecasting structure will specify each origin / destination lane pair including weight or cubic feet by day of week for the pairs. The Postal Service will request capacity based on specific plans for a Tuesday / Wednesday plan, a Thursday / Friday plan, and a Saturday / Sunday plan.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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The aviation supplier will make available at least [ * ] cubic feet of capacity per week for the Peak Operating Period for the Day Network. As a general planning guideline, the historical volume transported per day during the Peak Operating Period ranges between [ * ] to [ * ] cubic feet. The Peak season tab included in Attachment 2: Air Stops & Projected Volumes provides the historic mail volume in pounds by mail class by week during the Peak Operating Period. These volumes are provided for initial planning purposes and do not constitute a guarantee of volume for the Peak Ordering Period.

For the Peak Operating Period, the Postal Service will provide the aviation supplier a request for capacity by lane, expressed in cubic feet, one hundred fifty (150) days prior to the beginning of the Peak Operating Period. The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format. The aviation supplier will reply to the request by providing the Postal Service with its response expressed in cubic feet one hundred twenty (120) days prior to the start of the Peak Operating Period. The Postal Service will communicate its acceptance of the aviation supplier’s response ninety (90) days prior to the commencement of the Peak Operating Period. The Postal Service acceptance establishes the Planned Capacity for the Peak Operating Period.

The Operating Period Minimum Volume for Peak will be [ * ] of the Planned Capacity.

The aviation supplier will guarantee space to accommodate up to 105% of the Planned Capacity from each origin daily.

Ordering Process - Peak - Night Network

The Peak Operating Period will consist four or five individual weeks, measured and planned as independent of each other. One of the five weeks of the Peak Operating Period will include the week of Christmas. As such, the requested volume capacity will include the Christmas week. The forecasting structure will specify each origin / destination lane pair including weight.

For the Peak Operating Period, the Postal Service will provide the aviation supplier a request for capacity by lane, expressed in pounds, one hundred fifty (150) days prior to the beginning of the Peak Operating Period. The request for capacity shall be presented to the aviation supplier in a mutually agreed upon electronic origin / destination format. The aviation supplier will reply to the request by providing the Postal Service with its response expressed in pounds one hundred twenty (120) days prior to the start of the Peak Operating Period. The Postal Service will communicate its acceptance of the aviation supplier’s response ninety (90) days prior to the commencement of the Peak Operating Period. The Postal Service acceptance establishes the Planned Capacity for the Peak Operating Period.

The Operating Period Minimum Volume for Peak will be [ * ] of the Planned Capacity.

The aviation supplier will guarantee space to accommodate up to 120% of the Planned Capacity from each origin daily.

Electronic Data Interchange (EDI)

The aviation supplier will provide status and operational data as specified in Attachment 7: Electronic Data Interchange Service Requirements. The aviation supplier will use the EDI methods specified in the attachment to transmit and receive volume, and appropriate scans from its system to the Postal Service system.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Operational Condition Reports

The aviation supplier shall submit reports of hub and Service Point operating conditions on a daily basis for the Day Network and the Night Network.

Some examples of these daily reports (more may be required) are: service performance reports, operations reports for departures / arrivals late due to mechanical issues, operations reports for departures / arrivals late due to weather and other issues, sort mail volume , mis-sent mail volume, surface truck utilization, etc. The format of the report and the items reported will be mutually agreed upon by the COR and the aviation supplier.

In addition to these daily reports, the aviation supplier will coordinate with and advise the COR of any contingency plans to move mail delayed in transit, as soon as practical.

The table below lists the reports required initially.

Report Type	Name	Frequency
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Prior to Operating Period
Operational Planning	[ * ]	Monthly
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Tuesday / Wednesday / Thursday / Saturday
Operational Reports	[ * ]	Monday through Thursday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday / Wednesday / Thursday / Saturday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Daily
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Monday through Friday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday through Sunday
Operational Reports	[ * ]	Tuesday through Sunday

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Dimensional Weight Reports

The aviation supplier will provide a weekly report electronically for the Day Network of the dimensional weights [ * ]. This report will provide the following information for each Outside Piece’s Handling Unit D&R tag:

• Time of each Handling Unit through the sort

• The length of each Handling Unit

• The width of each Handling Unit

• The height of each Handling Unit

• The D&R tag of each Handling Unit

A sample of the report is below:

Sorter’,‘Time Stamp’,‘Length’,‘Width’,‘Height’,‘D&R Tag’

‘AS002’,‘10170703012011’,‘1863’,‘1663’,‘1005’,‘1GBNP673BF’

‘AS002’,‘10172003012011’,‘2413’,‘1107’,‘0460’,‘1ICK9H2YF/’

‘AS002’,‘10172703012011’,‘3425’,‘1911’,‘0968’,‘15HPP8W7D6’

‘AS002’,‘10175003012011’,‘1864’,‘1200’,‘1149’,‘1FZFOM73BX’

‘AS002’,‘10175103012011’,‘2404’,‘1153’,‘0460’,‘17MKSORVBQ’

Scanning and Data Transmission

All scanning data required to be presented to the Postal Service shall be in an electronic format acceptable to the Postal Service, containing all required data elements, and reported within two (2) hours after the occurrence of a reportable event. Available data will be transmitted in EDI message format at fifteen (15) minute intervals.

Scanning will be used to measure performance and serve as the basis for payment for both the Day Network and the Night Network.

Technical aspects of Electronic Data Interchange and the types of messaging events are discussed in Attachment 7: Electronic Data Interchange Service Requirements.

The aviation supplier will be responsible for providing technology compatible with Postal Service systems for purposes of sending and receiving scanning data.

The aviation supplier will be responsible for performing the following scans of D&R Tags and ULD identification tags.

a. Possession or Load Scan of all Handling Units and ULDs at origin Service Points, including Outside Handling Units

b. Load Scan that associates the ULD to an aircraft

c. [ * ].

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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d. [ * ].

e. [ * ].

f. Delivery Scan of each Handling Unit and ULD at the specified delivery Service Point.

Performance Requirements and Measurement

Mail delivery performance will be measured against the contract requirements based upon transmitted scan data.

Delivery performance requirements are:

Day Network: [ * ]%

Night Network: [ * ]%

Peak Operating Period: [ * ]% for the Day and Night Networks

Delivery performance will be measured across an Operating Period on a lane-by-lane basis, using actual scan delivery time versus Required Delivery Time (RDT), as outlined in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

Delivery performance will be measured using the following methodology:

a. The Postal Service will scan all Handling Units at origin.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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b. The Postal Service will nest all Handling Units into ULDs at origin.

c. The Postal Service will tender the nested ULDs to the aviation supplier at origin.

d. The aviation supplier will scan the ULDs with a Possession Scan at origin.

e. The aviation supplier will scan all Handling Units processed through the sort at the hub.

f. The aviation supplier will nest all Handling Units to ULDs departing from the hub.

g. The aviation supplier will scan the ULDs as delivered to the Postal Service upon arrival at destination.

h. The Postal Service will break the ULDs and scan / de-nest all Handling Units.

Delivery performance will be measured for all ULDs and Handling Units receiving at least a Delivery Scan by the aviation supplier.

The Postal Service will provide data to the aviation supplier via electronic files. The electronic file will show the nested date and time into the ULD, the possession time and date from the aviation supplier, the delivery time and date from the aviation supplier, and the de-nested break time and date from the Postal Service. Additionally, the files will show the weights of each Handling Unit.

Delivery performance on a lane level basis will be calculated as follows:

Total on-time Handling Units, by lane, for the Operating Period, receiving a Delivery Scan

Divided by

Total Handling Units, by lane, for the Operating Period, receiving a Delivery Scan

Reduction of Payment

If the calculated delivery performance is less than the delivery performance requirement, the late D&R tags will be ordered chronologically by the RDT. The percentage of D&R tags corresponding to the difference between [ * ]% and the delivery performance requirement (i.e., [ * ]% (Day Network), [ * ]% (Night Network) or [ * ]% (Peak Operating Period)) will not be assessed a reduction in payment. The remaining late D&R tags will be assessed a reduction in payment as follows:

a. All Handling Units delivered up to thirty (30) minutes late will be subject to a [ * ]% reduction of the Transportation Payment.

b. All Handling Units delivered from thirty-one (31) minutes up to one (1) hour to late will be subject to a [ * ]% reduction of the Transportation Payment.

c. All Handling Units delivered 1 hour and one minute late or later will be subject to a [ * ]% reduction of the Transportation Payment.

The reduction in payment will be based on a conversion of the weight of the late Handling Units to cubic feet by the applicable mail class density and will be applied at the base or the tier in which the late delivery occurred.

Performance Management

The aviation supplier and the Postal Service will meet once a quarter (at a minimum) to discuss items such as the following:

a. Cost Control

b. Holiday Operations and Planning

c. Aviation Supplier Performance

d. Peak Season Planning

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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e. Quality

f. Ramp Operations

g. Reconciliation of Irregularities

h. Security

i. Technology Issues

j. Tender and Delivery Hygiene

k. Volume Planning

l. Other Pertinent Topics

Sustainability

The aviation supplier must provide following sustainability metrics at the times specified below:

a. All greenhouse gas emission estimates that are attributed to the transport of Postal Service mail products via air and (if applicable) ground transport by the aviation supplier.

i. Emissions in a standard unit – CO_2e

ii. Total weight of Postal Service products contributing to the emissions in the Calendar Year.

iii. Total air miles travelled to transport the Postal Service products per Calendar Year.

iv. High level summary describing methodology which could include the basis for the Postal Service emissions allocation such as space, cost, weight, number of packages or other methods used to derive numbers. For example, estimates based on gallons used, flight characteristics, or both.

v. Assurance letter of independent verification of Scope 1, 2, and 3 data.

• Scope 1: Emissions arising from when the aviation supplier burns fuel in its aircraft or its owned buildings

• Scope 2: Emissions from purchased electricity or steam.

• Scope 3: Emissions arising from activities over which the aviation supplier has less control.

b. Fiscal Year (October through September) and Calendar Year (January through December) greenhouse gas emissions data to be received by the Postal Service no later than three (3) months after the close of the fiscal and calendar year.

The aviation supplier will convene a meeting with the Postal Service no later thirty (30) days after contract award to discuss high level greenhouse gas emissions estimation methodologies and network boundaries.

The aviation supplier will hold quarterly meetings with the Postal Service to discuss reporting methodology developments, boundaries and notification of estimation methodology or boundary changes.

Security

See Attachment 8: Investigative / Security Protocol and Guidelines.

Postal Service Employees Allowed Access

The aviation supplier shall allow escorted Postal officials showing proper credentials access to all buildings, field areas, ground equipment being used to sort, stage, or transport mail under this contract or under any subcontract services performed under this contract. Government regulations (e.g., Transportation Security Administration) will supersede this section.

The aviation supplier will allow unescorted access to Postal Service employees stationed on the aviation supplier’s premises pending compliance with all required processes. Photography or video taping will not be permitted except as outlined in the security protocols.

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Personnel Screening

In general, the Postal Service accepts air carrier security program requirements set forth by the Transportation Security Administration (TSA). In addition to these, the Postal Service also mandates additional requirements.

The Postal Service is aware that the aviation supplier must implement its human resources programs in accordance with certain state laws and that in that respect there may be certain deviations to the literal application of some of the Postal Service requirements set forth herein.

In the event the aviation supplier establishes that a state law prohibits it from requesting from its employees or prospective employees any or all of the information requested in responses to questions 21a through 21e of PS Form 2025, Contract Personnel Questionnaire, as required by 1.d below, or from certifying, as the result of a criminal records check, to any of the items requested under 1.b, Criminal History, below, the aviation supplier shall be relieved of its contractual obligation to require employees or prospective employees to respond to the portions of those questions requesting the prohibited information or to provide that information as part of its criminal records check. In these situations, the Postal Service Security Investigations Service Center (SISC) shall conduct the required criminal checks as outlined in 1.b. below.

To establish the existence and the extent of the prohibitory effect of any such state law referenced above, the aviation supplier shall provide to the SISC documentary evidence (including a copy of the state law) demonstrating the stated prohibition. The Postal Service’s concurrence about the prohibitory nature of a state law shall not be unreasonably withheld.

The Contracting Officer may, in consultation with the aviation supplier and the U.S. Postal Inspection Service, grant other appropriate deviations or implement alternate processes to the standard U.S. Postal Inspection Service requirements by letter.

Applicability

Individuals providing services to the Postal Service under this contract (including aviation suppliers, employees of aviation suppliers, and subcontractors and their employees at all levels), hereinafter, “individuals,” who have been hired after the effective date of this contract and whose duties will or likely may involve handing the mail must obtain a security clearance from the Postal Service, as provided herein. Access to the mail as defined by 3.a below is permitted as soon as the security clearance package has been submitted to the SISC in Memphis.

If the aviation supplier commences a new operation (internally or with an aviation supplier) for the purpose of processing Postal volume, the employees hired since the effective date of this contract will be subject to Personnel Screening.

Access to the mail is permitted as soon as the security clearance package has been submitted to the SISC in Memphis. If the aviation supplier has ground handling services performed at air stops by another aviation supplier (subcontractor), and if, to the best knowledge of the prime aviation supplier, that subcontractor is in compliance with the provisions of this clause, the prime aviation supplier may certify that fact to the Contracting Officer in writing, and thereby be relieved of the primary responsibility for personnel screening. Prime aviation suppliers are in all cases responsible for meeting these screening requirements for all persons having access to the mail who are their direct employees. For example, if ABC, Inc. is an aviation supplier, and it performs ground handling services at one or more air stops for CDE, Inc., CDE must certify in writing that:

I certify that at the following air stops ground handling services are being performed by ABC, and that to the best of my knowledge, ABC is an aviation supplier of air transportation services under contract number    . A listing of airports served by ABC is attached hereto as follows.

Aviation suppliers must have clauses in their contracts with subcontractors requiring adherence to the Postal Service screening procedures contained in this contract.

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1. Requirements: The aviation supplier employing individuals to perform duties under this contract must provide the following documentation as early as possible, to the SISC in Memphis, Tennessee, with respect to those individuals whose duties will or likely may involve handling the mail. The items listed in sections (a) through (d) below must be completed prior to the employee being granted permission to handle mail. For purposes of this requirement, the term “completed” means that all tasks have been done, and the required submissions to the SISC in Memphis have been made.

The aviation supplier is required to maintain all certifications required in sections a., b., and d.

a. Drug Screening: The aviation supplier must certify that individuals providing service under this contract have passed a screening test for those substances identified by the Substance Abuse and Mental Health Services Administration (SAMHSA) as the five (5) most abused substances which are cocaine, marijuana, amphetamine / methamphetamine, opiates, and phencyclidine (PCP). The tests must be performed by a SAMHSA approved certified laboratory. The drug test must meet the cut-off levels established by SAMHSA. All drug screening tests must be completed within ninety (90) days prior to having access to the mail since drug tests older than ninety (90) days are invalid and must be redone. The prime aviation suppliers and all subcontractors must maintain the name of the institution conducting the test and a document indicating if the employee passed or tested positive.

b. Criminal History: The aviation supplier must certify, based upon a criminal records check (a state records check) of each employee through local agencies (state, county, or city) where the applicant has resided and worked for the past five (5) years (this may require multiple checks for applicants who live in one location and work in another location, or for applicants who have moved within that time period), that each individual:

i. Has not been convicted of a felony criminal violation in the past five (5) years;

ii. Has not been convicted of serious criminal charges (e.g. murder, rape, robbery, burglary, physical assaults, weapons violations, or drug charges [felony or misdemeanor]);

iii. Does not have any pending felony or serious criminal charges; and

iv. Is not on parole for or probation for any felony or serious criminal charges.

This will be documented on the Certification and Transmittal Cover Sheet. This form is provided under Personnel Security Administrative Instructions, and may be reproduced by the aviation supplier.

c. Fingerprinting: The aviation supplier must obtain two sets of fingerprints for each applicant. Each fingerprint card, FD-258, Applicant Fingerprint Chart, and subsequent supplies will be issued by the Postal Service. The Postal Inspection Service will provide additional original copies for aviation supplier use. These additional forms may be obtained by calling the Memphis office at (901) 747-7712.

A copy of a Case Closing Transmittal (CCT) from the Office of Personnel Management (OPM) may be submitted in lieu of fingerprint cards if the CCT was dated within twelve (12) months of the date the SISC receives the submission.

d. Citizenship: Certification of U.S. citizenship must be documented on PS Form 2025, Contract Personnel Questionnaire, or legal work status authorizing the individual to work in the United States is required. (I-9 Form, Employment Eligibility Verification, is to be used for non-citizens).

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2. Processing:

a. The Postal Service agrees to use reasonable efforts to insure that security clearance decisions are issued within thirty (30) days after the aviation supplier submits the required documents and information to the SISC. The Postal Service, however, cannot guarantee that processing will be complete within thirty (30) days due to circumstances beyond its control.

b. For each individual employed by the aviation supplier or any subcontractor, the aviation supplier will submit to the SISC:

• Full name

• Social security number

• Drug screening data (1.a)

• Criminal history certifications (1.b)

• Both sets of fingerprints (1.c)

• Citizenship certifications (1.d)

Upon receipt of the required documentation, the SISC will submit the fingerprint cards (1.c) to the Federal Bureau of Investigation, and perform a search of the National Crime Information Center (NCIC) Wants and Warrants and Inspection Service databases at its cost.

c. In cases where an individual business entity is predominant at a given airport, the Contracting Officer in consultation with the Inspection Service may approve the receipt of screening documents from that entity.

d. The aviation supplier shall maintain supporting documentation for the drug screening (1.a), criminal history inquiries (1.b), and citizenship verifications (1.d) subject to review by the Postal Service, for the life of this contract in accordance with its internal procedures, advising the Inspection Service SISC on the Certification and Transmittal Cover Sheet.

At the employee’s local station, aviation suppliers are only required to maintain a copy of the Certification and Transmittal Cover Sheet. The Certification and Transmittal Cover Sheet is provided under Personnel Security Administrative Instructions and may be reproduced by the aviation supplier, as needed.

Aviation suppliers currently maintaining security screening files under existing Postal Service contracts shall continue to maintain those files.

Submit all forms and certifications to:

Memphis SISC

Security Investigations Service Center

225 North Humphreys Boulevard

Fourth Floor, South

Memphis, TN 38161-0008

The Postal Service intends to make its best efforts to position itself to eliminate the requirement for its set of FD-258 forms, and other submissions to be determined, through cooperation with the Federal Aviation Administration, Transportation Security Administration, and other agencies or associations to share relevant information for its regulatory purposes.

3. Access to the Mail – Screening Requirements:

“Access to the mail” refers to individuals who scan, transport, sort, load, and unload mail to and from ground equipment and to and from the aircraft. This includes employees handling sealed ULDs. This includes individuals who have direct supervisory duties in directing the

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Contract ACN-13-FX

Part 1: Statement of Work

transporting, sorting, loading, and unloading of mail to and from ground equipment and aircraft. Individuals providing services to the Postal Service under this contract (including aviation suppliers, employees of aviation suppliers, and subcontractors and their employees at any tier), hereinafter, “individuals,” who have access to the mail, must obtain a security clearance from the Postal Service before such access to the mail is granted.

4. Denial:

Persons who meet the following criteria are not permitted to have access to the mail under this contract:

a. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has not received a security screening in accordance with the criteria listed above under Personnel Screening.

b. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has been convicted of, or is on probation or parole for, or under suspended sentence for assault, theft, or weapons charges or for the illegal use, possession, sale, or transfer of controlled substances during the past five (5) years.

c. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has been convicted of any criminal felony violation during the past five (5) years, who is on parole, probation, or suspended sentence for commission of a criminal felony during the past five (5) years.

d. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has ever been convicted of theft of mail or other Postal offense.

e. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has an active warrant or is on probation or is on parole.

f. An aviation supplier, subcontractor, or employee of an aviation supplier or subcontractor who has any pending felony or serious criminal charges.

g. Any other circumstance that in the determination of the Postal Service makes the individual unfit to provide services under this contract.

In the event an employee is disqualified under the above criteria, the aviation supplier has the responsibility to insure that the employee’s duties no longer involve handling mail.

5. Appeal Process:

An individual may appeal a decision to deny access made by the Postal Inspection Service SISC by sending a letter to the Inspector In Charge, Security and Crime Prevention, Washington, DC, within three (3) weeks of the date of the denial letter. An individual may not handle the mail during the appeal process. The letter must contain the following information:

a. A statement that reconsideration of the decision is requested and the basis on which it is sought.

b. Additional information on the appellant’s behalf.

c. A copy of the denial letter.

6. Training: The Postal Service may, but is not required to, provide orientation / training for aviation suppliers during the term of this contract to clarify security clearance requirements, processes, and procedures necessary to fully implement this program.

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Payment Procedures

Rates and Payment General

The aviation supplier will be compensated based upon properly scanned ULDs and Handling Units. The payment for each ULD and Handling Unit will be based on the network (i.e., Day or Night) to which the mail is assigned by the Postal Service. This process will allow for automated payment.

[ * ]

Scan Requirements

All scan requirements listed below are specified in the Scanning and Data Transmission section.

Night Turn Scan Requirements

a. Possession Scan of all ULDs and Handling Units at the origin

b. Delivery Scan of all ULDs and Handling Units delivered at destination

Day Turn Scan Requirements

a. The aviation supplier will conduct a Possession Scan of all ULDs and Handling Units at the origin.

b. The aviation supplier will conduct a Nest Scan associating the Handling Unit with a ULD at the hub.

c. The aviation supplier will conduct a Delivery Scan of all ULDs and Handling Units delivered at destination.

The Hub Sort Scans will be paid in accordance with the pricing listed in Attachment 10: Pricing for Handling Units sorted at the hub on the Day Network for which scans are provided. Hub Sort Scans will not be paid for Handling Units assigned to a Bypass ULD or for the Night Network.

[ * ]

The base and tier pricing from Attachment 10: Pricing will be applied to the volume measured in each Operating Period as follows. Volume within the base will be paid at the Base Rate. The portion of volume exceeding the base volume and falling within the Tier 1 volume will be paid at the Tier 1 rate. A similar incremental process will be applied to volume that falls within subsequent tiers.

Payments will be made by Electronic Funds Transfer (EFT).

[ * ]

The aviation supplier will bill additional charges not covered within the automated payments system on a weekly basis. For correct and sufficient invoices received by noon Wednesday of a given week, the Postal Service will process them so as to generate a payment by Wednesday, three (3) weeks following the receipt of the invoice through the EFT process.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Payment Processing - Day Network - Per Cube

Invoicing

All invoices for the transportation of Handling Units or ULDs under this contract will be paid by the cubic foot and payment will be based on completing the required scans.

Mail Tendered in ULDs

The Line Haul rate for each ULD will be comprised of two components: Non-Fuel Line Haul and Fuel Line Haul. The Non-Fuel Line Haul rate will include all of the transportation and handling associated with a ULD. Hub Sort Scanning rates are separate from the Non-Fuel Line Haul rate.

ULD cubic feet will be paid at the agreed cubic feet size for each ULD type described in Attachment 10: Pricing.

The cubic feet paid will be based on the Postal assigned ULD type. If the Postal ULD type is missing, the aviation supplier’s ULD type will be used for invoicing. Any discrepancies between the types of ULD processed will be resolved during the Reconciliation Process.

The transportation payment for mixed ULDs will be based on the applicable cubic feet of the originating ULD. These transportation payments will be reduced for Handling Units not receiving a Delivery Scan by converting the weight of the Handling Units without a Delivery Scan at the correct destination to cubic feet by the applicable mail class density.

The transportation payment for bypass ULDs will be based on the applicable cubic feet of the originating ULD. These transportation payments will not be made for Bypass ULDs without a Delivery Scan at the correct destination.

Recognizing operational inefficiencies filling the last ULD at every location, the Postal Service will incorporate within the daily invoice a daily credit based on the total cubic feet of the mixed ULDs in the Operating Plan divided by the total number of mixed ULDs in the Operating Plan for each origin air stop per day multiplied by 50%. The rate used will be the applicable base or tier cubic foot rate used at the beginning of the invoice day.

Mail Tendered from Surface Trucks

If mail is tendered to the aviation supplier from a defined truck location as identified in Attachments 3 and 4 at contract award, the invoiced cubic feet will be calculated by dividing the Handling Unit’s Postal Service assigned rounded weight by the applicable mail class density.

Mail Tendered from Ad Hoc Trucks into the Aviation Supplier Hub

The aviation supplier will accept ad hoc trucks from the Postal Service at the proposed hub locations. The invoiced cubic feet for ad hoc trucks will be calculated by dividing the Handling Unit’s Postal Service assigned rounded weight by the applicable mail class density. Recognizing the reduced work content, the aviation supplier will provide an unload rate in Attachment 10: Pricing for the receipt and processing of all ad hoc truck mail volume. The Postal Service will incorporate ad hoc truck payments in the weekly electronic payment.

Aviation Supplier Surface Transportation – Not Included in the Transportation Payment

The aviation supplier will include a separate rate per mile for Highway Transportation in Attachment 10: Pricing which will be applied when the Postal Service requires the aviation supplier to operate unplanned surface transportation of mail.

Hub Sort Scan Charge

The Postal Service will pay a Hub Sort Scan charge for mail sorted and scanned at a hub per Handling Unit (i.e., D&R Tag) as shown in Attachment 10: Pricing. This rate will not be subject to an increase for the full term of the contract.

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Handling Units sorted at a hub must receive a Hub Sort Scan for payment purposes. The Postal Service will not pay a Hub Sort Scan charge for sorts not supported by EDI scan information. The pieces scanned into a tendered Bypass container are not eligible to receive Hub Sort Scan charges.

Re-Labeling Charge

The Postal Service will pay an additional charge to the aviation supplier for re-labeling Postal Service Handling Units at the hub for which the D&R tag is missing or becomes illegible. The Postal Service will also provide all equipment necessary to perform this function. The re-labeling charge per Handling Unit is shown in Attachment 10: Pricing.

This rate will not be subject to an increase for the full term of the contract.

Payment to the aviation supplier for the transport of re-labeled Handling Units will be based upon data received from the Hub Scan plus (combined and matched with) the Delivery Scan for the Handling Unit. An average weight per Handling Unit will be established based upon the previous month’s data for average weight per Handling Unit, and for Handling Units that are not properly scanned due to conditions beyond the aviation supplier’s control.

The equipment to be supplied by the Postal Service for this function will be listed in Attachment 6: Postal Furnished Property, and will be covered by Clause 2-22, Postal Service Property. Attachment 6: Postal Furnished Property will be created upon successful installation of the equipment. Upon reasonable advance notice to the aviation supplier, the Postal Service shall be permitted to perform maintenance on any of the equipment located in an aviation supplier’s facility listed in Attachment 6: Postal Service Furnished Property.

Fuel Adjustment

There will be a monthly fuel adjustment to the Fuel Line Haul rate. Each “month” is defined in Attachment 1: Postal Service Operating Periods. The adjustment will become effective on the first operating day of each operating period after contract commencement. The adjustment may be upward or downward.

The adjustment will be based on the U.S. Gulf Coast (USGC) prices for Kerosene-type jet fuel reported by the U.S. Department of Energy for the month that is two (2) months prior to the adjustment. The adjustment will be calculated and applied monthly.

For example, assume the Fuel Line Haul rate is $0.10. If the June 20XX USGC price for Kerosene-type jet fuel is $2.68 per gallon and the July 20XX price is $3.00 per gallon, then the adjustment for September XX would be calculated as follows:

($3.00 / $2.68) = 1.12

1.12 x $0.10 = $0.11

The new Fuel Line Haul rate would be $0.11 per cubic foot.

In August 20XX, if the USGC price is $2.70 per gallon, the calculation for the October 20XX rate would be:

($2.70 / $3.00) = 0.90

0.90 x $0.11 = $0.10 per cubic foot

This calculation will be rounded after the decimal to four digits.

The proposal pricing should be based on the August 2012 U.S. Gulf Coast Kerosene-type jet fuel reported by the U.S. Department of Energy ($3.156 per gallon).

Fuel will be adjusted for October 2013 based on the August 2013 U.S. Gulf Coast Kerosene-type jet fuel reported by the U.S. Department of Energy.

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Payment Processing - Night Network - Per Pound

Invoicing

All Handling Units tendered to the aviation supplier for the Night Network will be paid by the pound and payment will be based on required scanning. The weight will be derived from the assigned rounded weight of the Handling Unit. The Non-Fuel Line Haul rate will include all of the transportation and handling associated with a Handling Unit. The Fuel Line Haul rate for the Night Network will not be subject to a fuel adjustment.

Re-Labeling Charge

The Postal Service will pay an additional charge to the aviation supplier for re-labeling Postal Service Handling Units for which the D&R tag is missing or becomes illegible. The Postal Service will also provide all equipment necessary to perform this function. The re-labeling charge per Handling Unit is shown in Attachment 10: Pricing. This rate will not be subject to an increase for the full term of the contract.

Payment to the aviation supplier for transport of re-labeled Handling Units will be based upon data received from the Hub Scan plus (combined and matched with) the Delivery Scan for the Handling Unit. An average weight per Handling Unit will be established based upon the previous month’s data for average weight per Handling Unit and for Handling Units that are not properly scanned due to conditions beyond the aviation supplier’s control.

The equipment to be supplied by the Postal Service for this function will be listed in Attachment 6: Postal Furnished Property, and will be covered by Clause 2-22, Postal Service Property. Attachment 6 will be created upon successful installation of the equipment. Upon reasonable advance notice to the aviation supplier, the Postal Service shall be permitted to perform maintenance on any of the equipment located in an aviation supplier’s facility listed in Attachment 6.

The payment for the Night Network re-labeled Handling Units will be adjusted to reflect the percentage of re-labeled Handling Units that have already been scanned. This percentage of previously scanned Handling Units will be mutually agreed upon by the Postal Service and the aviation supplier through an audit sampling of re-labeled Handling Units. Contingency Handling Units are excluded from this adjustment.

Reconciliation Process

Reconciliation of scanning and payment records between the Postal Service and the aviation supplier will be conducted in a scheduled meeting attended by the Postal Service and the aviation supplier on an Operating Period basis not more than ninety (90) days after the close of an Operating Period, or a time frame as agreed mutually by the parties. The following procedures will be observed for the reconciliation process:

a. All data exchanges between the aviation supplier and the Postal Service for the reconciliation process will be performed electronically and sent to specified mailboxes operated by each organization. Each file will have an individually specified transmission interval.

b. For all files exchanged between the aviation supplier and the Postal Service, any changes to layout or data definition must be communicated to the receiving party at a minimum of sixty (60) calendar days prior to implementation, or sooner if mutually agreed.

c. All file transfers must adhere to Postal Service Security and Privacy rules.

d. Supplemental Charges / Assessments may be assessed each Operating Period. The charges shall include but not be limited to the following:

i. Operating Period Volume Minimum and Contract Volume Minimum

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ii. Non-achievement of performance standards

e. Once the parties have mutually agreed on the Operating Period reconciliation, both parties agree that neither can re-open the Operating Period for further adjustments. By mutually agreeing to the Operating Period reconciliation, the parties thereby agree to waive their right to pursue a claim under the Contract Disputes Act based upon the Operating Period reconciliation.

In the event there is a catastrophic equipment or information system failure, the aviation supplier will provide electronic files to the Postal Service identifying all D&R Tags the aviation supplier scanned that were lost. The aviation supplier will notify the Contracting Officer and the COR as soon as the aviation supplier becomes aware of such a failure.

If the Postal Service cannot produce D&R Tags, an emergency contingency will be developed and implemented. Such a plan will include specifications for operational and information technology issues, as well as payment.

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Clause B-1: Definitions (March 2006) (Tailored)

For purposes of this Contract, the following terms shall have the following meanings:

1. Acceptable Dangerous Goods and Acceptable Hazardous Material: Those articles or substances which satisfy the air transportation requirements for the transportation of Hazardous Goods set forth in Chapter 601.10.0 of the Domestic Mail Manual and which are not required by applicable federal regulation to be accessible to crew members during flight.

2. Advertisement: A free or paid mass or targeted communication under the control of a party intended for the general public or a specific potential or existing customer, the ultimate purpose of which is to promote the sale of such party’s products or services, including, but not limited to, television, radio and internet commercials, out-of-home ads (e.g., billboards, sports stadium displays, transit signs), direct mail ads, print ads and free standing inserts in newspapers, magazines, and electronic media.

3. All Mail Due Aviation Supplier: A designated time predetermined when the Postal Service provides all mail to the aviation supplier as shown in Attachments 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network

4. Aviation Supplier: The person or persons, partnership, or corporation named that has been awarded the contract.

5. Bypass Container: A ULD of mail designated for delivery to destination Service Point on the network which is transferred directly from one aircraft to another without going through the sort operation.

6. Con-Con: (Convoy and Conveyance) The concentration in a container of Registered Mail for single, daily, daylight, or authorized night air dispatch

7. Contract Volume Minimum: The volume (in cubic feet) per operational day, averaged across six (6) days per week, and measured across each Operating Period that is guaranteed by the Postal Service for the Day Network

8. Contracting Officer: The person executing this contract on behalf of the Postal Service and any other officer or employee who is a properly designated Contracting Officer; the term includes, except as otherwise provided in the contract, the authorized representative of a Contracting Officer acting within the limits of the authority conferred upon that person.

9. Contracting Officer’s Representative (COR): A person who acts within the limits of authority delegated by the Contracting Officer.

10. Contingency Handling Units: Handling Units entered into the transportation network without an appropriate D&R tag. These Handling Units are subsequently processed at the aviation supplier’s hub through the re-labeling process.

11. Dangerous Goods (Hazardous Material): Articles or substances which are capable of posing a significant risk to health, safety or to property when transported by air and which are classified according to Section 3 (Classification) of the International Air Transport Association (IATA) Dangerous Good Regulations, regardless of variations, exceptions, exemptions, or limited quantity allowances.

12. Day Network: Planned network that operates Tuesday through Sunday primarily for the transportation of the Priority and First Class Mail.

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13. Delivery: The hand-off, at a destination Service Point, of all mail to the Postal Service in accordance with contract requirements.

14. Delivery Scan: A scan performed by the aviation supplier that indicates that the aviation supplier has tendered volume to the Postal Service.

15. D&R (Dispatch and Routing) Tag: Bar coded tag that identifies the origin and destination airports, mail class, Handling Unit weight, and the assigned network air carrier.

16. Exception Sort Scan: A Hub Scan performed on mail Handling Units that require re-labeling due to a missing or unreadable D&R tag.

17. Express Mail: As defined in the U.S. Postal Service Domestic Mail Manual.

18. Failure to Load: A failure to accept and load mail as specified in the contract.

19. Failure to Protect: Is a failure to protect and safeguard mail from depredation, rifling, inclement weather, mistreatment, or other hazard while in the aviation supplier’s control.

20. Failure to Protect Postal Service Equipment: A failure to protect, return or safeguard Postal Service provided equipment. This includes MTE and Postal provided scanning equipment (if supplied by the Postal Service).

21. First-Class Mail: As defined in the U.S. Postal Service Domestic Mail Manual.

22. Feeder: An aircraft normally used for local transport (for carriage of cargo and / or containers) to and from locations not scheduled to be serviced by primary aircraft from a hub, directly connecting these locations to a hub.

23. Ground Handling: Handling of mail, including unloading of mail from aircraft or ground vehicles, drayage, staging of mail, and loading of mail on receiving aircraft or ground vehicles.

24. Handling Unit: A piece of mail (an outside) or a receptacle (such as loose sacks, pouches, trays, flat tubs) that contains multiple pieces of mail which is individually processed.

25. Hub: A central sort facility that supports multiple markets via air and ground networks on a regional or national level by means of connecting flights and ground transportation.

26. Hub Sort Scan: A scan performed by the aviation supplier at a hub location.

27. Line Haul: Transporting mail by air between origin and destination locations.

28. Live Animals: Animals accepted by the Postal Service in accordance with Chapter 601.9.3 of the Domestic Mail Manual.

29. Mail: Product that carries U.S. postage and the receptacles in which it is tendered for transportation. The term includes supplies and empty mail transportation equipment of the U.S. Postal Service.

30. Mail Bags: Postal Service bags which are used by the Postal Service in the transportation of mail.

31. Mis-delivered: Any mail delivered to the wrong destination. This includes, but is not limited to, mail placed in the wrong ULD, ULDs loaded onto an incorrect flight or truck, and ULDs incorrectly placarded.

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32. Mixed Container: A Unit Load Device (ULD) containing mail for multiple destinations that requires sortation at the aviation supplier hub.

33. Nest Scan: The scan that associates the Handling Unit with the ULD (air container).

34. Night Network: Planned network that operates Monday through Friday, primarily for the transportation of Express Mail.

35. Operating Period: A scheduled period ranging from four (4) to five (5) weeks as agreed between the Postal Service and aviation supplier.

36. Operating Period Volume Minimum: The volume minimum resulting from the Planned Capacity established through the Ordering Process for the Day and Night Networks.

37. Overflow Mail: Mail that is tendered in excess of the Planned Capacity.

38. Outsides: Individual mail piece, with dimensions no greater than 108 inches in combined length and girth and with no single dimension greater than 84 inches which is not otherwise containerized and must be processed as a Handling Unit.

39. Package: Any box or envelope that is accepted by the Postal Service for delivery to a consignee.

40. Perishables: Those items which are susceptible to decay, spoilage or destruction.

41. Planned Capacity: Volume that the parties have agreed to by way of the Ordering Process for the Day and Night Networks.

42. Possession Scan: A scan performed by the aviation supplier that indicates the aviation supplier has accepted the volume from the Postal Service.

43. Priority Mail: Priority Mail and First-Class zone rated (Priority) mail as defined in the U.S. Postal Service Domestic Mail Manual, Chapter 3, Section 314.

44. Registered Mail: A mail piece which is mailed in accordance with the requirements of Chapter 501.2.0 of the Domestic Mail Manual. Registered Mail provides added protection for valuable or important mail. Registered Mail provides a receipt to the sender, special security between shipment points, a record of acceptance and delivery maintained by the Postal Service and, at the option of the mailer and for an additional fee, indemnity in case of loss or damage.

45. Re-Possessed: Regain possession of assigned mail.

46. Required Delivery Time (RDT): The latest delivery time to the Postal Service as indicated in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

47. Service Point: The physical location at which the aviation supplier must hand-off mail to the Postal Service or its duly appointed agent as specified in Attachment 3: Operating Plan, Day Network, and Attachment 4: Operating Plan, Night Network.

48. Tender: The drop-off, at an origin Service Point, of mail assigned by the Postal Service to the aviation supplier.

49. Tender Point: The physical location at which the Postal Service or its duly appointed agent provides mail to the aviation supplier.

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50. Tender Time: The latest time at which the aviation supplier is required to accept mail from the Postal Service at an origin Service Point in accordance with contract requirements.

51. Terminal Handling: The receipt, scanning, sorting, delivery and / or tug and dolly transportation of mail tendered under this contract.

52. Trans Log File: The Postal Service data file that contains, for each D&R Tag, the actual weight, origin, and destination market for each Handling Unit.

53. Transportation Payment:: Four items are included in the Transportation Payment:

a. Non-Fuel Line Haul

b. Fuel Line Haul

c. Aircraft Ground Handling

d. Scanning

54. Trucking Location: Those Service Points to which mail volume is transported via highway.

55. Unit Load Device (ULD): Airline container or pallet provided by the aviation supplier

Clause B-3: Contract Type (March 2006) (Tailored)

This Contract is a fixed-price, indefinite quantity with adjustments contract for the purchase of commercial services pursuant to 39 Code of Federal Regulations, Part 601 et seq.

This is not a requirements-type contract.

Clause B-9: Claims and Disputes (March 2006) (Tailored)

a. This contract is subject to the Contract Disputes Act of 1978 (41 U.S.C. 601-613) (“the Act” or “CDA”).

b. Except as provided in the Act, all disputes arising under or relating to this contract must be resolved under this clause.

c. “Claim,” as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. However, a written demand or written assertion by the aviation supplier seeking the payment of money exceeding $100,000 is not a claim under the Act until certified as required by subparagraph d.2 below. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under the Act. The submission may be converted to a claim under the Act by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount is not acted upon in a reasonable time.

d.

1. A claim by the aviation supplier must be made in writing and submitted to the Contracting Officer for a written decision. A claim by the Postal Service against the aviation supplier is subject to a written decision by the Contracting Officer.

2. For aviation supplier claims exceeding $100,000, the aviation supplier must submit with the claim the following certification:

“I certify that the claim is made in good faith, that the supporting data are accurate and complete to the best of my knowledge and belief, that the amount requested accurately reflects the contract adjustment for which the aviation supplier believes the Postal Service is liable, and that I am duly authorized to certify the claim on behalf of the aviation supplier.”

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3. The certification may be executed by any person duly authorized to bind the aviation supplier with respect to the claim.

e. For aviation supplier claims of $100,000 or less, the Contracting Officer must, if requested in writing by the aviation supplier, render a decision within 60 days of the request. For aviation supplier-certified claims over $100,000, the Contracting Officer must, within 60 days, decide the claim or notify the aviation supplier of the date by which the decision will be made.

f. The Contracting Officer’s decision is final unless the aviation supplier appeals or files a suit as provided in the Act.

g. When a CDA claim is submitted by or against an aviation supplier, the parties shall make a good faith attempt to resolve the dispute, including an exchange of relevant information toward a mutual resolution. Accordingly, by mutual consent, the parties may agree to use an alternative dispute resolution (ADR) process to assist in resolving the claim. A certification as described in d(2) of this clause must be provided for any claim, regardless of dollar amount, before ADR is used. If either party declares the matter to be at an impasse, the dispute will be resolved through the CDA process as contemplated by Clause B-9.

h. The Postal Service will pay interest in the amount found due and unpaid from:

1. The date the Contracting Officer receives the claim (properly certified, if required); or

2. The date payment otherwise would be due, if that date is later, until the date of payment.

i. Simple interest on claims will be paid at a rate determined in accordance with the Interest clause.

j. The aviation supplier must proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract regardless of the initiating party, and comply with any decision of the Contracting Officer.

Clause B-10: Pricing of Adjustments (March 2006) (Tailored)

When costs are a factor in determining any contract price adjustment under the Changes clause, the process set forth in Clause 4-1.c will be followed. For any other provision of this contract, the parties agree to use the process set forth in Attachment 10: Pricing and in the Payment Processing sections of Part 1 for negotiating the adjustment.

Clause B-15: Notice of Delay (March 2006) (Tailored)

Immediately upon becoming aware of any difficulties that might delay deliveries under this contract, the aviation supplier will notify the Postal Service in writing. The notification must identify the difficulties, the reasons for them, and the estimated period of delay anticipated. Failure to give notice may preclude later consideration of any request for an extension of contract time.

Clause B-22: Interest (March 2006) (Tailored)

The Postal Service will pay interest on late payments and unearned prompt payment discounts in accordance with the Prompt Payment Act, 31 U.S.C. 3901 et. seq., as amended by the Prompt Payment Act Amendments of 1988, P.L. 100-496. The aviation supplier will pay interest on any payment to the Postal Service at a rate equivalent to the prevailing Contract Disputes Act interest rate.

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Clause B-25: Advertising of Contract Awards (March 2006)

Except with the Contracting Officer’s prior approval, the aviation supplier agrees not to refer in its commercial advertising to the fact that it was awarded a Postal Service contract or to imply in any manner that the Postal Service endorses its products.

Clause B-30: Permits and Responsibilities (March 2006) (Tailored)

The aviation supplier is responsible, without additional expense to the Postal Service, for obtaining any necessary licenses and permits, and for complying with any applicable federal, state, and municipal laws, codes, and regulations in connection with the performance of the contract. The aviation supplier is responsible for all damage to persons or property, including environmental damage that occurs as a result of its omission(s) or negligence. While in performance of the contract, the aviation supplier must take proper safety and health precautions to protect the work, the workers, the public, the environment, and the property of others.

Clause B-39: Indemnification (March 2006) (Tailored)

The aviation supplier must save harmless and indemnify the Postal Service and its officers, agents, representatives, and employees from all claims, losses, damage, actions, causes of action, expenses, and/or liability resulting from, brought forth, or on account of any personal injury or property damage received or sustained by any person, persons, or property growing out of, occurring, or attributable to any work performed under or related to this contract, resulting in whole or in part from negligent acts or omissions of the aviation supplier, any subcontractor of the aviation supplier, or any employee, agent, or representative of the aviation supplier or of the aviation supplier’s subcontractor.

The Postal Service must save harmless and indemnify the aviation supplier and its officers, agents, representatives, and employees from all claims, losses, damage, actions, causes of action, expenses, and / or liability resulting from, brought forth, or on account of any personal injury or property damage received or sustained by any person, persons, or property growing out of, occurring, or attributable to any work performed under or related to this contract, resulting in whole or in part from negligent acts or omissions of the Postal Service, or any employee, agent, or representative of the Postal Service.

Clause B-45: Other Contracts (March 2006) (Tailored)

The Postal Service may award other contracts for additional work, and the aviation supplier must cooperate fully with the other aviation suppliers and Postal Service employees. The aviation supplier must not commit or permit any act that will interfere with the performance of work by any other aviation supplier or by Postal Service employees.

Clause B-65: Adjustments to Compensation (March 2006) (Tailored)

Contract compensation may be adjusted, from time to time, by mutual agreement of the aviation supplier and the Contracting Officer. No adjustment to compensation will be made for changes arising from Clause 9-10: Service Contract Act or from Clause 9-12: Fair Labor Standards Act and Service Contract Act – Price Adjustment. Adjustments in compensation pursuant to this clause shall be memorialized by formal modification to the contract. All negotiations between the parties shall be conducted with respect to the implied covenant of good faith and fair dealing.

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Clause B-69: Events of Default (March 2006) (Tailored)

The aviation supplier’s right to perform this contract is subject to termination, in whole or in part, in the event of any of the following events of default.

a. The aviation supplier’s failure to perform service according to the terms of the contract;

b. If the aviation supplier has been administratively determined to have violated Postal laws and regulations and other laws related to the performance of the service;

c. Failure to follow the instructions of the Contracting Officer that fall within the scope of the contract;

d. If the aviation supplier transfers or assigns his contract, except as authorized herein, or sublets the whole or a portion of this contract contrary to the applicable provisions of the U.S. Postal Service Supplying Principles and Practices or without any required approval of the Contracting Officer;

e. If the aviation supplier combines to prevent others from proposing for the performance of Postal Service contracts;

f. If the aviation supplier or corporate officer has been or is, during the term of the contract, convicted of a crime affecting his or her reliability or trustworthiness as a mail transportation aviation supplier, such as any form of fraud or embezzlement that has impacted the Postal Service or the U.S. Government;

g. If at any time the aviation supplier, its principal owners, corporate officers or personnel are disqualified by law or regulation from performing services under this contract, and upon notice thereof, the aviation supplier fails to remove any such disqualification;

h. If the aviation supplier fails to provide any notification of a change in corporate officers which this contract may require; or

i. If the aviation supplier materially breaches any other requirement or clause of this contract.

Clause B-75: Accountability of the Aviation Supplier (Non-Highway) (March 2006) (Tailored)

a. The aviation supplier shall supervise its operations and the operations of its subcontractors that provide services under this contract personally or through representatives. The aviation supplier or its supervising representatives must be easily accessible in the event of emergencies or interruptions in service.

b. In all cases, the aviation supplier shall be liable to the Postal Service for the Postal Service’s damages if mail is subject to loss, rifling, damage, wrong delivery, depredation, and other mistreatment while in the custody and control of the aviation supplier or its subcontractors. The aviation supplier shall also be accountable and answerable in damages for the faithful performance of all other obligations assumed under this contract, whether or not it has entrusted part or all of its performance to another, except for any failure to perform that is excused by the Force Majeure clause of this contract.

c. The aviation supplier shall faithfully account for and deliver to the Postal Service all:

1. Mail,

2. Moneys, and

3. Other property of any kind belonging to or entrusted to the care of the Postal Service, that come into the possession of the aviation supplier during the term of this contract.

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d. The aviation supplier shall, promptly upon discovery, refund (i) any overpayment made by the Postal Service for service performed, or (ii) any payment made by the Postal Service for service not rendered.

Clause B-77: Protection of the Mail (Non-Highway) (March 2006) (Tailored)

The aviation supplier must protect and safeguard the mail from loss, theft, or damage while it is in the aviation supplier’s custody or control, and prevent unauthorized persons from having access to the mail.

a. Classification of Irregularities

The following classifications of irregularities are those that preclude the Postal Service from accomplishing its mission. The damage caused from these irregularities result in actual damage and degradation to its brand, and therefore, is associated with liquidated damages as stated:

1. Failure to Protect

Failure to protect the mail consists of: failure to protect or safeguard the mail from inclement weather, from damage caused by the mechanized sort, from acts of the aviation supplier’s employees or contractors, and from loss, depredation, or other hazards while in the control or custody of the aviation supplier.

2. Theft of Mail

The theft of mail can cause immeasurable damage to the Postal Service, both in terms of actual economic loss to our customers and to the competitive standing of our products and services. The aviation supplier will support law enforcement efforts to prevent theft of mail, and will support enforcement officials in the apprehension of those who may be perpetrating such crimes.

b. Damages and Liquidated Damages

The following liquidated damages for damaged and unprotected mail are applicable to the associated classifications of irregularities:

1. Damaged and Unprotected Mail

Liquidated damages may be assessed for damaged and unprotected mail. For purposes of this section, damaged mail will consist of mail pieces whether inside or outside of Postal Service MTE. This category includes but may not be limited to:

i. Failure to Protect – Causing Damage to Mail

Failure to protect causing physical damage to the U.S. Mail or MTE for which there may be damage assessed equal to the actual costs incurred by the Postal Service necessary to remedy the situation and forward the mail onward to its next processing or delivery operation. Such actual costs may include items such as administrative time at an appropriate hourly rate for documenting the irregular condition and implementing the damage, labor time used to repossess the mail, unpack, sort, dry, repack / repackage, and re-dispatch to a subsequent destination or processing operation.

If actual damages are not ascertainable, a liquidated damage may be assessed as follows, taking into account the actual damage that may typically result from such situations:

Per Letter Tray:	[ * ] per letter tray
Per Flat Tub:	[ * ] per flat tub
Per Mail Sack or Pouch:	[ * ] per sack or pouch
Per Outside Parcel:	[ * ] per piece

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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ii. Failure to Protect – Dropped or Abandoned Pouch or Piece

When U.S. Mail is discovered unprotected in an unsecured location or on the airport ramp, Liquidated Damages may be assessed at $50.00 per incident.

c. Investigative Costs for Theft of Mail

In cases where a mail theft is committed by the aviation supplier’s or its subcontractor’s personnel, actual investigative costs to the U.S. Postal Inspection Service and/or the Office of the Inspector General may be assessed as actual damages. These costs will be reasonably determined and may begin accruing only when a specific investigation begins on the basis of probable cause. The costs of routine surveillance not associated with a specific theft or series of thefts will not be assessed. In addition to allocable investigative expenses, the Postal Service may assess actual damages for loss of product value resulting from insurance claims where payouts to postal customers can be traced to the incident(s).

In addition to the above, in cases where mail theft occurs and the Postal Service determines that the aviation supplier’s failure to properly execute the mail handling employee screening requirements set forth in the Contract was a proximate cause of the theft, and that by reason of the theft it is necessary to conduct a complete audit of the aviation supplier’s adherence to the screening requirements with respect to the employment of other employees subject to those requirements, the Postal Service may assess an administrative damage in the amount of $5,000 in lieu of actual costs associated with that audit.

Depending upon the circumstances of the incident, the Vice President, Network Operations, in consultation with the Postal Inspection Service or Office of the Inspector General, and the Contracting Officer, may determine that damages pursuant to this section are not appropriate, and may waive all or a portion of the amounts that may otherwise be due the Postal Service hereunder. Factors such as the seriousness of the misconduct, the aviation supplier’s level of cooperation in investigations, implementing corrective actions, and efforts directed at loss recovery will be considered in reaching that determination.

Clause B-80: Laws and Regulations Applicable (March 2006) (Tailored)

This contract and the services performed under it are subject to all applicable federal, state, and local laws and regulations. The aviation supplier assumes sole responsibility to faithfully discharge all duties and obligations imposed by such laws and regulations, and shall obtain and pay for all permits, licenses, and other authorities required to perform this contract. The aviation supplier shall hold harmless, save, and defend the Postal Service from any consequence of the aviation supplier’s failure to abide by all applicable federal, state, and local laws and regulations (including but not limited to regulations promulgated by the DOL and IRS) relating to the contract and throughout the term of the contract and any subsequent renewal periods.

Clause B-81: Information or Access by Third Parties (March 2006) (Tailored)

The Postal Service retains exclusive authority to release any or all information about mail matter in the custody of the aviation supplier and to permit access to that mail in the custody of the aviation supplier. All requests by non-postal individuals for information about mail matter in the custody of the aviation supplier or for access to mail in the custody of the aviation supplier must be referred to the Contracting Officer or his or her designee.

Clause B-82: Access by Officials (March 2006) (Tailored)

The aviation supplier shall deny access to the cargo compartment of aircrafts or a vehicle containing mail therein to state or local officials except at a postal facility or in the presence of a postal employee or a Postal Inspection Service officer, unless to prevent immediate damage to the aircraft, vehicle, or their contents. If authorized Federal law enforcement seeks access to the cargo compartment of

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aircrafts or vehicles contained mail therein, the aviation supplier shall notify the Postal Inspection Service before permitting access, unless to prevent immediate damage to the aircraft, vehicle, or their contents.

Clause 1-1: Privacy Protection (July 2007)

In addition to other provisions of this contract, the aviation supplier agrees to the following:

a. Privacy Act. If the aviation supplier operates a system of records on behalf of the Postal Service, the Privacy Act (5 U.S.C. 522a) and Postal Service regulations at 39 CFR Parts 266-267 apply to those records. The aviation supplier is considered to operate a system of records if it manages records (including collecting, revising, or disseminating records) from which information is retrieved by the name of an individual or by some number, symbol, or other identifier assigned to the individual. The aviation supplier agrees to comply with the Act and the Postal Service regulations in designing, developing, and operating the system of records, including ensuring that records are current and accurate for their intended use, and incorporating adequate safeguards to prevent misuse or improper disclosure of personal information. Violations of the Act may subject the violator to criminal penalties.

b. Customer or Employee Information. If the aviation supplier has access to Postal Service customer or employee information, including address information, whether collected online or offline by the Postal Service or by a aviation supplier acting on its behalf, the aviation supplier must comply with the following:

1. General. With regard to the Postal Service customer information to which it has access pursuant to this contract, the aviation supplier has that access as an agent of the Postal Service and must adhere to its postal privacy policy at www.usps.com/common/docs/privpol.htm.

2. Use, Ownership, and Nondisclosure. The aviation supplier may use Postal Service customer or employee information solely for purposes of this contract, and may not collect or use such information for non-Postal Service marketing, promotion, or any other purpose without the prior written approval of the Contracting Officer. The aviation supplier must restrict access to such information to those employees who need the information to perform work under this contract, and must ensure that each such employee (including subcontractors’ employees) sign a nondisclosure agreement, in a form suitable to the Contracting Officer, prior to being granted access to the information. The Postal Service retains sole ownership and rights to its customer or employee information. Unless the contract states otherwise, upon completion of the contract, the aviation supplier must turn over all Postal Service customer or employee information in its possession to the Postal Service, and must certify that no Postal Service customer or employee information has been retained unless otherwise authorized in writing by the Contracting Officer.

3. Security Plan. When applicable, and unless waived in writing by the Contracting Officer, the aviation supplier must work with the Postal Service to develop and implement a security plan that addresses the protection of customer or employee information. The plan will be incorporated into the contract and followed by the aviation supplier, and must, at a minimum, address notification to the Postal Service of any security breach. If the contract does not include a security plan at the time of contract award, it must be added within 60 days after contract award.

4. Breach Notification. If there is a breach of any nature in the security of Postal Service data, including customer or employee data, the aviation supplier must follow the breach notification requirements included in the security plan discussed in (3) above. The aviation supplier will be required to follow Postal Service policies regarding breach notification to customers and/or employees.

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5. Legal Demands for Information. If a legal demand is made for Postal Service customer or employee information (such as by subpoena), the aviation supplier must immediately notify the Contracting Officer and the nearest office of the Postal Inspection Service. After notification, the Postal Service will determine whether and to what extent to comply with the legal demand. Should the Postal Service agree to or unsuccessfully resist a legal demand, the aviation supplier may, with the written permission of the Contracting Officer, release the information specifically demanded.

c. Online Assistance. If the aviation supplier assists in the design, development, or operation of a Postal Service customer Web site, or if it designs or places an ad banner, button, or link on a Postal Service Web site or any Web site on the Postal Service’s behalf, the aviation supplier must comply with the limitations in subparagraph b (1) above relating to ad banners, buttons, or links, and the use of cookies, web beacons, or other web analysis tools. Exceptions to these limitations require the prior written approval of the Contracting Officer and the Postal Service’s chief privacy officer.

d. Marketing E-Mail. If the aviation supplier assists the Postal Service in conducting a marketing e-mail campaign, the aviation supplier does so as an agent of the Postal Service and must adhere to the Postal Service policies set out in Postal Service Management Instruction AS-350-2004-4, Marketing E-mail. Aviation suppliers wishing to conduct marketing email campaigns to postal employees must first obtain the prior written approval of the Contracting Officer.

e. Audits. The Postal Service may audit the aviation supplier’s compliance with the requirements of this clause, including through the use of online compliance software.

f. Indemnification. The aviation supplier will indemnify the Postal Service against all liability (including costs and fees) for damages arising out of violations of this clause.

g. Flow-down. The aviation supplier will flow this clause down to subcontractors that would be covered by any portion of this clause if they were the aviation supplier.

Clause 1-5: Gratuities or Gifts (March 2006)

a. The Postal Service may terminate this contract for default if, after notice and a hearing, the Postal Service Board of Contract Appeals determines that the aviation supplier or the aviation supplier’s agent or other representative:

1. Offered or gave a gratuity or gift (as defined in 5 CFR 2635) to an officer or employee of the Postal Service; and

2. Intended by the gratuity or gift to obtain a contract or favorable treatment under a contract.

b. The rights and remedies of the Postal Service provided in this clause are in addition to any other rights and remedies provided by law or under this contract.

Clause 1-6: Contingent Fees (March 2006)

a. The aviation supplier warrants that no person or selling agency has been employed or retained to solicit or obtain this contract for a commission, percentage, brokerage, or contingent fee, except bona fide employees or bona fide, established commercial or selling agencies employed by the aviation supplier for the purpose of obtaining business.

b. For breach or violation of this warranty, the Postal Service has the right to annul this contract without liability or to deduct from the contract price or otherwise recover the full amount of the commission, percentage, brokerage fee, or contingent fee.

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Clause 1-11: Prohibition Against Contracting with Former Officers or PCES Executives (March 2006) (Tailored)

During the performance of this contract, former Postal officers or Postal Career Executive Service (PCES) executives are prohibited from employment by the contractor as key personnel, experts or consultants, if such individuals, within two years after their retirement from the Postal Service, would be performing substantially the same duties as they performed during their career with the Postal Service.

Clause 1-12: Use of Former Postal Service Employees (March 2006) (Tailored)

During the term of this contract, the aviation supplier must identify any former Postal Service officers or Postal Career Executive Service (PCES) employees it proposes to be engaged, directly or indirectly, in contract performance. Such individuals may not commence performance without the Contracting Officer’s prior approval. If the Contracting Officer does not provide such approval, the aviation supplier must replace the proposed individual former employee with another individual equally qualified to provide the services called for in the contract.

Clause 2-11: Postal Service Property - Fixed-Price (March 2006) (Tailored)

a. Postal Service-Furnished Property

1. The Postal Service will deliver to the aviation supplier, for use in connection with and under the terms of this contract, the property described as Postal Service-furnished property in the Schedule or specifications, together with any related information the aviation supplier may request that may reasonably be required for the intended use of the property (hereinafter referred to as “Postal Service-furnished property”).

2. The contract delivery or performance dates are based on the expectation that Postal Service-furnished property suitable for use (except for property furnished “as is”) will be delivered at the times stated in the Schedule or, if not so stated, in sufficient time to enable the aviation supplier to meet these delivery or performance dates. If Postal Service-furnished property is not delivered by these times, the Contracting Officer will, upon timely written request from the aviation supplier, make a determination of any delay occasioned the aviation supplier and will equitably adjust the delivery or performance dates or the contract price, or both, and any other contractual provision affected by the delay, in accordance with the Changes clause.

3. Except for Postal Service-furnished property furnished “as is,” if the Postal Service-furnished property is received in a condition not suitable for its intended use, the aviation supplier must notify the Contracting Officer and (as directed by the Contracting Officer) either (a) return it at the expense of the Postal Service or otherwise dispose of it, or (b) effect repairs or modifications. Upon the completion of (a) or (b), the Contracting Officer (upon written request from the aviation supplier) will equitably adjust the delivery or performance dates or the contract price, or both, and any other affected contractual provision, in accordance with the Changes clause.

4. The provisions for adjustment in this paragraph a are exclusive, and the Postal Service is not liable to suit for breach of contract by reason of any delay in delivery of Postal Service-furnished property or its delivery in a condition not suitable for its intended use.

b. Changes in Postal Service-Furnished Property

1. By written notice, the Contracting Officer may (a) decrease the property provided or to be provided by the Postal Service under this contract, or (b) substitute other Postal Service-owned property for the property to be provided by the Postal Service, or to be acquired by the aviation supplier for the Postal Service under this contract. The aviation supplier must promptly take any action the Contracting Officer may direct regarding the removal and shipping of the property covered by this notice.

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2. In the event of any decrease in or substitution of property pursuant to subparagraph b.1 above, or any withdrawal of authority to use property provided under any other contract or lease, which property the Postal Service had agreed in the Schedule to make available for the performance of this contract, the Contracting Officer, upon the aviation supplier’s written request (or - if substitution causes a decrease in the cost of performance - on the Contracting Officer’s own initiative), will equitably adjust any contractual provisions affected by the decrease, substitution, or withdrawal, in accordance with the Changes clause.

c. Use of Postal Service Property. The Postal Service property, unless otherwise provided in this contract or approved by the Contracting Officer, must be used only for performing this contract.

d. Utilization, Maintenance, and Repair of Postal Service Property. The aviation supplier must maintain and administer, in accordance with sound industrial practice, a program or system for the utilization, maintenance, repair, protection, and preservation of Postal Service property until it is disposed of in accordance with this clause. If any damage occurs to Postal Service property, the risk of which has been assumed by the Postal Service under this contract, the Postal Service will replace the items or the aviation supplier must make such repairs as the Postal Service directs; provided, however, that if the aviation supplier cannot effect these repairs within the time required, the aviation supplier will dispose of the property in the manner directed by the Contracting Officer. The contract price includes no compensation to the aviation supplier for performing any repair or replacement for which the Postal Service is responsible, and an equitable adjustment will be made in any contractual provisions affected by such repair or replacement made at the direction of the Postal Service, in accordance with the Changes clause. Any repair or replacement for which the aviation supplier is responsible under the provisions of this contract must be accomplished by the aviation supplier at the aviation supplier’s own expense.

e. Risk of Loss. Unless otherwise provided in this contract, the aviation supplier assumes the risk of, and becomes responsible for, any loss or damage to Postal Service property provided under this contract upon its delivery to the aviation supplier or upon passage of title to the Postal Service as provided in paragraph i below, except for reasonable wear and tear and except to the extent that it is consumed in performing this contract.

f. Access. The Postal Service, and any persons designated by it, must at reasonable times have access to premises where any Postal Service property is located, for the purpose of inspecting it.

g. Final Accounting for and Disposition of Postal Service Property. Upon completion, or at such earlier dates as may be fixed by the Contracting Officer, the aviation supplier must submit, in a form acceptable to the Contracting Officer, inventory schedules covering all items of Postal Service property not consumed in performing this contract (including any resulting scrap) or not previously delivered to the Postal Service, and will prepare for shipment, deliver f.o.b. origin, or dispose of this property, as the Contracting Officer may direct or authorize. The net proceeds of disposal will be credited to the contract price or will be paid in such other manner as the Contracting Officer may direct.

h. Restoration of Aviation Supplier’s Premises and Abandonment. Unless otherwise provided in this contract, the Postal Service:

1. May abandon any Postal Service property in place, whereupon all obligations of the Postal Service regarding it will cease; and

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2. Has no obligation with regard to restoration or rehabilitation of the aviation supplier’s premises, either in case of abandonment, disposition on completion of need or of the contract, or otherwise, except for restoration or rehabilitation costs properly included in an equitable adjustment under paragraph b or e above.

i. Title.

1. Title to all Postal Service-furnished property remains in the Postal Service. To define the obligations of the parties under this clause, title to each item of facilities, special test equipment, or special tooling (other than that subject to a special-tooling clause) acquired by the aviation supplier on behalf of the Postal Service under this contract will pass to and vest in the Postal Service when its use in the performance of this contract begins, or upon payment for it by the Postal Service, whichever is earlier, whether or not title was previously vested.

2. Title to all material purchased by the aviation supplier for whose cost the aviation supplier is entitled to be reimbursed as a direct item of cost under this contract will pass to and vest in the Postal Service upon delivery of the material to the aviation supplier by the vendor.

3. Title to other material whose cost is reimbursable to the aviation supplier under this contract will pass to and vest in the Postal Service upon:

a) Its issuance for use in the performance of this contract; or

b) Reimbursement of its cost by the Postal Service, whichever occurs first.

4. All Postal Service-furnished property, together with all property acquired by the aviation supplier, title to which vests in the Postal Service under this subsection i, is subject to the provisions of this clause and is hereinafter collectively referred to as “Postal Service property.” Title to Postal Service property is not affected by its incorporation into or attachment to any property not owned by the Postal Service, nor does Postal Service property become a fixture or lose its identity as personal property by being attached to any real property.

Clause 2-22: Value Engineering Incentive (March 2006)

a. General.

The right of each party to improve its own methods for its own benefit, absent a change to the obligations of the other party which requires an modification to this Contract, and to retain such savings for itself is not affected by this clause.

The aviation supplier is encouraged to develop and submit Value Engineering Change Proposals (VECPs) voluntarily. The aviation supplier will share in savings realized from an accepted VECP as provided in paragraph (h) below. No document submitted by the aviation supplier shall be considered to be a VECP unless the aviation supplier specifically marks on the document that it is to be considered a VECP and contains a statement that the aviation supplier intends the document to be a VECP subject to the provisions of this Clause of the Contract.

b. Definitions

1. Value Engineering Change Proposal (VECP). A proposal that:

i. Requires a change to the instant contract;

ii. Results in savings to the instant contract; and

iii. Does not involve a change in:

a) Deliverable end items only;

b) Test quantities due solely to results of previous testing under the instant contract; or

c) Contract type only.

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2. Instant Contract. The contract under which a VECP is submitted. It does not include additional contract quantities.

3. Additional Contract Quantity. An increase in quantity after acceptance of a VECP due to contract modification, exercise of an option, or additional orders (except orders under indefinite-delivery contracts within the original maximum quantity limitations).

4. Postal Service Costs. Costs to the Postal Service resulting from developing and implementing a VECP, such as net increases in the cost of testing, operations, maintenance, logistics support, or property furnished. Normal administrative costs of processing the VECP are excluded.

5. Instant Contract Savings. The estimated cost of performing the instant contract without implementing a VECP minus the sum of: (a) the estimated cost of performance after implementing the VECP, and (b) Postal Service costs.

6. Additional Contract Savings. The estimated cost of performance or delivering additional quantities without the implementation of a VECP minus the sum of (a) the estimated cost of performance after the VECP is implemented and (b) Postal Service cost.

7. Aviation Supplier’s Development and Implementation Costs. Aviation supplier’s cost in developing, testing, preparing, and submitting a VECP. Also included are the aviation supplier’s cost to make the contractual changes resulting from the Postal Service acceptance of the VECP.

c. Content. A VECP must include the following:

1. A description of the difference between the existing contract requirement and that proposed, the comparative advantages and disadvantages of each, a justification when an item’s function or characteristics are being altered, the effect of the change on the end item’s performance, and any pertinent objective test data.

2. A list and analysis of the contract requirements that must be changed if the VECP is accepted, including any suggested specification revisions.

3. A separate, detailed cost estimate for: (a) the affected portions of the existing contract requirement and, (b) the VECP. The cost reduction associated with the VECP must take into account the aviation supplier’s allowable development and implementation costs.

4. A description and estimate of costs the Postal Service may incur in implementing the VECP, such as test and evaluation and operating and support costs.

5. A prediction of any effects the proposed change would have on Postal Service costs.

6. A statement of the time by which a contract modification accepting the VECP must be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule.

7. Identification of any previous submissions of the VECP to the Postal Service, including the dates submitted, purchasing offices, contract numbers, and actions taken.

d. Submission. The aviation supplier must submit VECPs to the Contracting Officer.

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e. Postal Service Action

1. The Contracting Officer will give the aviation supplier written notification of action taken on a VECP within 60 days after receipt. If additional time is needed, the Contracting Officer will notify the aviation supplier, within the 60-day period, of the expected date of a decision. The Postal Service will process VECPs expeditiously but will not be liable for any delay in acting upon a VECP.

2. If a VECP is not accepted, the Contracting Officer will so notify the aviation supplier, explaining the reasons for rejection.

f. Withdrawal. The aviation supplier may withdraw a VECP, in whole or in part, at any time before its acceptance.

g. Acceptance

1. Acceptance of a VECP, in whole or in part, will be by execution of a supplemental agreement modifying this contract and citing this clause. If agreement on price (see paragraph h below) is reserved for a later supplemental agreement, and if such agreement cannot be reached, the disagreement is subject to the Claims and Disputes clause of this contract, or another clause of the contract dealing with disputes.

2. Until a VECP is accepted by contract modification, both parties must perform in accordance with the existing contract.

3. The Contracting Officer’s decision to accept or reject all or any part of a VECP is final and not subject to the Claims and Disputes clause or otherwise subject to litigation under the Contract Disputes Act of 1978.

h. Sharing. If a VECP is accepted, the aviation supplier and the Postal Service shall negotiate their respective shares of the contract savings. The contract savings are calculated by subtracting the estimated cost of performing the contract with the VECP, Postal Service costs, and the allowable development and implementation costs from the estimated cost of performing the contract without the VECP. Profit is excluded when calculating contract savings.

i. Data

1. The aviation supplier may restrict the Postal Service’s right to use any part of a VECP or the supporting data by marking the following legend on the affected parts:

“These data, furnished under the Value Engineering Incentive clause of contract, may not be disclosed outside the Postal Service or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. This restriction does not limit the Postal Service’s right to use information contained in these data if it has been obtained or is otherwise available from the aviation supplier or from another source without limitation.”

2. If a VECP is accepted, the aviation supplier hereby grants the Postal Service unlimited rights in the VECP and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the Postal Service will have the rights specified in the contract modification implementing the VECP and will appropriately mark the data.

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Clause 3-1: Small, Minority, and Woman-owned Business Subcontracting Requirements (March 2006)

a. All aviation suppliers, except small businesses, must submit a subcontracting plan that is specific to this contract and that separately addresses subcontracting with small, minority, and woman-owned businesses. A plan approved by the Postal Service must be included in and made a part of the contract. Lack of an approved plan may make the aviation supplier ineligible for award. A subcontract is defined as any agreement (other than one involving an employer-employee relationship) entered into by a Postal Service aviation supplier or subcontractor calling for supplies or services required for performance of the contract or subcontract.

b. The aviation supplier’s subcontracting plan must include the following:

1. Goals, in terms of percentages of the total amount of this contract that the aviation supplier will endeavor to subcontract to small, minority, and woman-owned businesses. The aviation supplier must include all subcontracts that contribute to contract performance, and may include a proportionate share of supplies and services that are normally allocated as indirect costs.

2. A statement of the:

i. Total dollars planned to be subcontracted under this contract; and

ii. Total of that amount planned to be subcontracted to small, minority, and woman-owned businesses.

3. A description of the principal types of supplies and services to be subcontracted under this contract, identifying the types planned for subcontracting to small, minority, and woman-owned businesses.

4. A description of the method used to develop the subcontracting goals for this contract.

5. A description of the method used to identify potential sources for solicitation purposes and a description of efforts the aviation supplier will make to ensure that small, minority, and woman-owned businesses have an equitable opportunity to compete for subcontracts.

6. A statement as to whether the offer included indirect costs in establishing subcontracting goals for this contract and a description of the method used to determine the proportionate share of indirect costs to be incurred with small, minority, and woman-owned businesses.

7. The name of the individual employed by the aviation supplier who will administer the subcontracting program and a description of the individual’s duties.

8. Assurances that the aviation supplier will require all subcontractors receiving subcontracts in excess of $1,000,000 to adopt a plan similar to the plan agreed to by the aviation supplier.

9. A description of the types of records the aviation supplier will maintain to demonstrate compliance with the requirements and goals in the plan for this contract. The records must include at least the following:

i. Source lists, guides, and other data identifying small, minority, and woman-owned businesses;

ii. Organizations contacted in an attempt to locate sources that are small, minority, and woman-owned businesses;

iii. Records on each subcontract solicitation resulting in an award of more than $100,000, indicating whether small, minority, or woman-owned businesses were solicited and if not, why not; and

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iv. Records to support subcontract award data, including the name, address, and business size of each subcontractor.

c. Reports. The aviation supplier must provide reports on subcontracting activity under this contract on a calendar-quarter basis. The report must be one of the types described in Clause 3-2, Participation of Small, Minority, and Woman-owned Businesses.

Clause 3-2: Participation of Small, Minority, and Woman-owned Businesses (March 2006)

a. The policy of the Postal Service is to encourage the participation of small, minority, and woman-owned business in its purchases of supplies and services to the maximum extent practicable consistent with efficient contract performance. The aviation supplier agrees to follow the same policy in performing this contract.

b. Subject to the agreement of the aviation supplier and the Postal Service, the aviation supplier will report subcontracting activity on one of the following bases:

1. Showing the amount of money paid to subcontractors during the reporting period;

2. Showing subcontracting activity that is allocable to this contract using generally accepted accounting practices; or

3. A combination of the methods listed above.

c. The aviation supplier will submit a report to the Contracting Officer within 15 calendar days after the end of each calendar-year quarter, describing all subcontract awards to small, minority, or woman-owned businesses. The Contracting Officer may require more frequent reports.

Clause 4-1: General Terms and Conditions (July 2007) (Tailored)

a. Inspection and Acceptance. Not applicable

b. Assignment. If this contract provides for payments aggregating $10,000 or more, claims for monies due or to become due from the Postal Service under it may be assigned to a bank, trust company, or other financing institution, including any federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any assignment or reassignment must cover all amounts payable and must not be made to more than one party, except that assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in financing this contract. No assignment or reassignment will be recognized as valid and binding upon the Postal Service unless a written notice of the assignment or reassignment, together with a true copy of the instrument of assignment, is filed with:

1. The Contracting Officer;

2. The surety or sureties upon any bond; and

3. The office, if any, designated to make payment, and the Contracting Officer has acknowledged the assignment in writing.

4. Assignment of this contract or any interest in this contract other than in accordance with the provisions of this clause will be grounds for termination of the contract for default at the option of the Postal Service.

c. Changes

1. The Contracting Officer may, in writing, without notice to any sureties, order changes within the general scope of this contract in the following:

i. Drawings, designs, or specifications when supplies to be furnished are to be specially manufactured for the Postal Service in accordance with them;

ii. Statement of work or description of services;

iii. Method of shipment or packing;

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iv. Places of delivery of supplies or performance of services;

v. Delivery or performance schedule;

vi. Postal Service furnished property or facilities.

2. Changes pursuant to the Ordering Process and the Operating Period Volume Minimum sections in Part 1- Statement of Work are not applicable under this clause.

3. Any other written or oral order (including direction, instruction, interpretation, or determination) from the Contracting Officer that causes a change will be treated as a change order under this paragraph, provided that the aviation supplier gives the Contracting Officer written notice stating: (a) the date, circumstances, and source of the order and (b) that the aviation supplier regards the order as a change order.

4. If any such change affects the cost of performance or the delivery schedule, the contract may be modified to effect an equitable adjustment.

5. The aviation supplier’s claim for equitable adjustment must be asserted within 60 days of receiving a written change order, or on a date otherwise agreed to by the parties in writing. A later claim may be acted upon — but not after final payment under this contract — if the Contracting Officer decides that the facts justify such action.

6. Failure to agree to any adjustment is a dispute under Clause B-9, Claims and Disputes.

d. Reserved

e. Reserved

f. Reserved

g. Invoices

The Postal Service intends to certify payment for services based, in part, upon collected scanned data. For services based upon scanned data, the aviation supplier need not submit an invoice for payment. Rather, payment will be automatically processed, on a weekly basis, based on the scan data. In addition, certain supplemental charges (including, but not limited to, charges related to minimum guaranteed volumes, surface transportation, and non-achievement of performance standards) may be assessed under the contract.

Any service requiring invoicing must meet the requirements specified herein. The aviation supplier shall submit an original invoice (or electronic invoice if authorized) to the Contracting Officer’s Representative. All invoices must be submitted within ninety (90) days from completion of the service or the applicable Operating Period to be eligible for payment. Invoices received after ninety (90) days from completion of the service or Operating Period will be subject to a 10% deduction or a deduction of $10,000, whichever is less, as a liquidated damage. The aviation supplier shall allow at least twenty-eight (28) calendar days before submitting a second invoice to the Postal Service for the same service.

To ensure prompt payment, an original paper invoice (or electronic invoice, if authorized) must contain:

1. Aviation supplier’s name, remit to address (including ZIP+4), contact person and phone number;

2. Unique invoice number and invoice date;

3. Contract number;

4. A description of the supplies or services and the dates delivered or performed;

5. Points (air stops or facility) of shipment tender and delivery; if applicable;

6. Quantity, unit of measure, unit price(s) and extension(s) of the items delivered; if applicable;

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7. Payment terms, including any discounts offered;

8. Name, title, and phone number of the person to be notified in the event of a defective invoice; and

9. Any additional information required by the contract or specified by the Contracting Officer.

Invoices will be handled in accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) Circular A-125, Prompt Payment. Further guidelines may be found in the Payment Processing and Reconciliation Process sections of Part I – Statement of Work.

h. Patent Indemnity. The aviation supplier will indemnify the Postal Service and its officers, employees and agents against liability, including costs for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark, or copyright, arising out of the performance of this contract, provided the aviation supplier is reasonably notified of such claims and proceedings.

i. Payment

Payment will only be made for:

1. Items that have been properly scanned and delivered to the correct delivery destination Service Points set forth in this contract, and

2. Other services and charges agreed upon by the parties.

The Postal Service will make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and 5 CFR 1315. Payments under this contract may be made by the Postal Service either by electronic funds transfer or other method agreed upon by the parties.

j. Risk of Loss. The Postal Service shall be liable for all third-party customer claims arising from or in connection with the loss, damage, or delay of any mail transported under this contract, except to the extent of any insurance proceeds received by the aviation supplier as a result of a catastrophic loss of an aircraft or other transport vehicle and attributable to Postal Service mail.

k. Taxes. The contract price includes all applicable federal, state, and local taxes and duties except the applicable Federal excise tax on the transportation of property via air. The aviation supplier is required to report to the Postal Service on an annual basis (October 1), the portion of the rates listed in Attachment 10: Pricing that are subject to federal excise tax. The Postal Service shall hold harmless, save, and defend the aviation supplier from any demand or claim of, or on behalf of, the IRS or the United States based on the application of federal excise taxes applicable to the transportation services performed by the aviation supplier under this contract.

l. Termination on Notice.

1. This contract does not contain a Termination for Convenience clause. In lieu of a Termination for Convenience, either party may terminate this contract without cause by providing advanced written notice to the non-terminating party and a termination fee as follows:

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Advanced Notice Provided	Postal Service Termination Fee	Aviation Supplier Termination Fee
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

2. The terminating party must pay the termination fee corresponding to the advanced written notice within ninety (90) of the written notice of termination.

3. If the aviation supplier terminates the contract under this provision, the aviation supplier guarantees to provide the Postal Service a daily average capacity through the effective date of the termination of not less than the daily average capacity offered in the two most recently completed Operating Periods prior to the date of the receipt of the notice of termination, or, if two Operating Periods have not been completed when the notice of termination is received, the daily average capacity offered shall be at least equal to the average daily capacity transported prior to the receipt of the written notice of termination.

4. Either party’s termination under this provision shall not prejudice the aviation supplier’s right to payment for services rendered, but neither party shall be liable to the other for any other damages, fees, or payment except for the termination fee above.

5. This clause does not apply to changes in service resulting from the Postal Service changing from six (6) days to less than six (6) days of delivery per week. If such a scenario should occur, refer to the Frequency Adjustment clause of this contract.

m. Termination for Default. The Postal Service may terminate this contract, or any part hereof, for default if the aviation supplier fails to cure such default within thirty (30) days of being advised in writing of such by the Postal Service, or if the aviation supplier fails to provide the Postal Service, upon request, with adequate assurances of future performance. In the event of termination for default, the Postal Service will not be liable to the aviation supplier for any amount for supplies or services not provided, and the Postal Service shall have any and all rights and remedies provided by law, including the right to assess reasonable excess re-procurement costs. The Postal Service may withhold payment otherwise due the aviation supplier for services already performed in order to protect its interest in recouping excess re-procurement costs, and will promptly determine such costs so as to mitigate damage to the aviation supplier.

n. Title. Not applicable

o. Warranty. The aviation supplier warrants and represents that the services delivered under this contract shall be in accordance with the requirements and performance standards set forth in the contract. With respect to services for which performance standards are set forth in the contract, the Postal Service’s exclusive remedy (other than termination for default) shall be price adjustments as provided in this contract. With respect to all other services, the Postal Service’s exclusive remedy (other than termination for default) shall be for the aviation supplier to promptly correct, replace, or otherwise cure such performance at no cost to the Postal Service.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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p. Limitation of Liability. Except as otherwise provided by an express or implied warranty, the supplier will not be liable to the Postal Service for consequential damages resulting from any defect or deficiencies in accepted items or services.

q. Other Compliance Requirements. The aviation supplier will comply with all applicable Federal, State, and local laws, executive orders, rules and regulations applicable to its performance under this contract.

r. Order of Precedence. Any inconsistencies in this solicitation or contract will be resolved by giving precedence in the following order:

1. Contract clauses;

2. Statement of Work;

3. Attachments to the Statement of Work;

4. Solicitation provisions

5. Form 8203;

6. Other documents and attachments associated with the contract.

s. Incorporation by Reference. Not applicable

t. Shipping. Not applicable

Clause 4-2: Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders (July 2009) (Tailored)

a. Incorporation by Reference. Not applicable

b. Examination of Records.

1. Records. “Records” includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form.

2. Examination of Costs. If this is a cost-type contract, the aviation supplier must maintain, and the Postal Service will have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of this contract. This right of examination includes inspection at all reasonable times of the aviation supplier’s plants, or parts of them, engaged in the performance of this contract.

3. Cost or Pricing Data. If the aviation supplier is required to submit cost or pricing data in connection with any pricing action relating to this contract, the Postal Service, in order to evaluate the accuracy, completeness, and currency of the cost or pricing data, will have the right to examine and audit all of the aviation supplier’s records, including computations and projections directly, related to:

a. The proposal for the contract, subcontract, or modification;

b. Pricing of the contract, subcontract, or modification; or

c. Performance of the contract, subcontract or modification.

4. Reports. If the aviation supplier is required to furnish cost, funding or performance reports, the Contracting Officer or any authorized representative of the Postal Service will have the right to examine and audit the supporting records and materials, for the purposes of evaluating:

a. The effectiveness of the aviation supplier’s policies and procedures to produce data compatible with the objectives of these reports; and

b. The data reported.

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5. Availability. The aviation supplier must maintain and make available at its office at all reasonable times the records, materials, and other evidence described in (b)(1)-(4) of this clause, for examination, audit, or reproduction, until three years after final payment under this contract or any longer period required by statute or other clauses in this contract. In addition:

a. If this contract is completely or partially terminated, the aviation supplier must make available the records related to the work terminated until three years after any resulting final termination settlement; and

b. The aviation supplier must make available records relating to appeals under the claims and disputes clause or to litigation or the settlement of claims arising under or related to this contract. Such records must be made available until such appeals, litigation or claims are finally resolved.

Clause 4-7: Records Ownership (March 2006)

Notwithstanding any state law providing for retention of rights in the records, the aviation supplier agrees that the Postal Service may, at its option, demand and take without additional compensation all records relating to the services provided under this agreement. The aviation supplier must turn over all such records upon request but may retain copies of documents produced by the aviation supplier.

Clause 6-1: Contracting Officer’s Representative (March 2006)

The Contracting Officer will appoint a Contracting Officer’s representative (COR), responsible for the day-to-day administration of the contract, who will serve as the Postal Service’s point of contact with the aviation supplier on all routine matters. A copy of the notice of appointment defining the COR’s authority will be furnished to the aviation supplier upon award of the contract.

a. The COR may be changed at any time by the Postal Service without prior notice to the aviation supplier, but notification of the change, including the name and address of the successor COR, will be promptly provided to the aviation supplier by the Contracting Officer in writing.

b. The responsibilities and limitations of the COR are as follows:

1. The COR is responsible for the operational and administrative aspects of the contract and technical liaison with the aviation supplier. The COR is responsible also for the final inspection and acceptance of aviation supplier performance and submitted reports and has other responsibilities as specified by the contract.

2. The COR is not authorized to make any commitments or otherwise obligate the Postal Service or authorize any changes affecting the contract price, terms, or conditions. Any aviation supplier request for changes must be referred to the Contracting Officer directly or through the COR. No such changes may be made without the Contracting Officer’s express prior authorization.

3. The COR may place orders for the aviation supplier to transport and process mail in accordance with the provisions of the contract at the agreed-upon rate only.

Clause 9-1: Convict Labor (March 2006)

In connection with the work under this contract, the aviation supplier agrees not to employ any person undergoing sentence of imprisonment, except as provided by E.O. 11755, December 28, 1973, as amended and 18 USC 3621 and 3622.

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Clause 9-2: Contract Work Hours and Safety Standards Act - Overtime Compensation (March 2006)

a. No aviation supplier or subcontractor contracting for any part of the contract work may require or permit any laborer or mechanic to work more than 40 hours in any workweek on work subject to the provisions of the Contract Work Hours and Safety Standards Act, unless the laborer or mechanic receives compensation at a rate not less than one-and-one-half times the laborer’s or mechanic’s basic rate of pay for all such hours worked in excess of 40 hours.

b. Violation, Liability for Unpaid Wages, and Liquidated Damages. In the event of any violation of paragraph a above, the aviation supplier and any subcontractor responsible for the violation are liable to any affected employee for unpaid wages. The aviation supplier and subcontractor are also liable to the Postal Service for liquidated damages, which will be computed for each laborer or mechanic at $10 for each day on which the employee was required or permitted to work in violation of paragraph a above.

c. Withholding for Unpaid Wages and Liquidated Damages. The Contracting Officer may withhold from the aviation supplier, from any moneys payable to the aviation supplier or subcontractor under this or any other contract with the same aviation supplier, or any other federally assisted contract subject to the Contract Work Hours and Safety Standards Act held by the same aviation supplier, sums as may administratively be determined necessary to satisfy any liabilities of the aviation supplier or subcontractor for unpaid wages and liquidated damages pursuant to paragraph b above.

d. Records. The aviation supplier or subcontractor must maintain for 3 years from the completion of the contract for each laborer and mechanic (including watchmen and guards) working on the contract payroll records which contain the name, address, social security number, and classification(s) of each such employee, hourly rates of wages paid, number of daily and weekly hours worked, deductions made, and actual wages paid. The aviation supplier or subcontractor must make these records available for inspection, copying, or transcription by authorized representatives of the Contracting Officer and the Department of Labor, and must permit such representatives to interview employees during working hours on the job. (The Department of Labor information collection and record keeping requirements in this paragraph d have been approved by the Office of Management and Budget under OMB control numbers 1215-0140 and 1215-0017.)

e. Subcontracts. The aviation supplier must insert paragraphs a through d of this clause in all subcontracts, and must require their inclusion in all subcontracts at any tier.

Clause 9-7: Equal Opportunity (March 2006) (Tailored)

During the performance of this contract, the contractor agrees as follows:

1. The contractor may not discriminate against employees or applicants for employment because of race, color, religion, sex, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to race, color, religion, sex, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of this nondiscrimination clause.

2. The contractor, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin.

3. The contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, provided by the

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agency Contracting Officer, advising the labor union or workers’ representative of the contractor’s commitments under section 202 of Executive Order 11246 of September 24, 1965, and must post copies of the notice in conspicuous places available to employees and applicants for employment.

4. The contractor will comply with all provisions of Executive Order (EO) 11246 of September 24, 1965, as amended, and of the rules, regulations, and relevant orders of the Secretary of Labor.

5. The contractor will furnish all information and reports required by Executive Order, 11246 of September 24, 1964, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

6. In the event of the contractor’s non-compliance with the non-discrimination clauses of this contract or with any of such rules, regulations, or orders, this contract may be canceled, terminated, or suspended, in whole or in part and the contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

7. The contractor will include the provisions of paragraphs (1) through (7) in every subcontract or purchase order under this contract unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as may be directed by the Secretary of Labor as a means of enforcing such provisions including sanctions for noncompliance, provided, however, that in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction, the contractor may request the United States to enter into such litigation to protect the interest of the United States.

Clause 9-9: Equal Opportunity Preaward Compliance of Subcontracts (March 2006) (Tailored)

The aviation supplier may not enter into a first-tier subcontract for an estimated or actual amount of $1 million or more without obtaining in writing from the Contracting Officer a clearance that the proposed subcontractor is in compliance with equal opportunity requirements and therefore eligible for award.

Clause 9-10: Service Contract Act (March 2006)

a. This contract is subject to the Service Contract Act of 1965, as amended (41 U.S.C. 351 et seq.), and to the following provisions and all other applicable provisions of the Act and regulations of the Secretary of Labor issued under the Act (29 CFR Part 4).

b.

1) Each service employee employed in the performance of this contract by the aviation supplier or any subcontractor must be: a) paid not less than the minimum monetary wages and b) furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor or an authorized representative, as specified in any wage determination attached to this contract.

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2)

a) If a wage determination is attached to this contract, the Contracting Officer must require that any class of service employees not listed in it and to be employed under the contract (that is, the work to be performed is not performed by any classification listed in the wage determination) be classified by the aviation supplier so as to provide a reasonable relationship (that is, appropriate level of skill comparison) between the unlisted classifications and the classifications in the wage determination. The conformed class of employees must be paid the monetary wages and furnished the fringe benefits determined under this clause. (The information collection requirements contained in this paragraph b have been approved by the Office of Management and Budget under OMB control number 1215-0150.)

b) The conforming procedure must be initiated by the aviation supplier before the performance of contract work by the unlisted class of employees. A written report of the proposed conforming action, including information regarding the agreement or disagreement of the authorized representative of the employees involved or, if there is no authorized representative, the employees themselves, must be submitted by the aviation supplier to the Contracting Officer no later than 30 days after the unlisted class of employees performs any contract work. The Contracting Officer must review the proposed action and promptly submit a report of it, together with the agency’s recommendation and all pertinent information, including the position of the aviation supplier and the employees, to the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, for review. Within 30 days of receipt, the Wage and Hour Division will approve, modify, or disapprove the action, render a final determination in the event of disagreement, or notify the Contracting Officer that additional time is necessary.

c) The final determination of the conformance action by the Wage and Hour Division will be transmitted to the Contracting Officer, who must promptly notify the aviation supplier of the action taken. The aviation supplier must give each affected employee a written copy of this determination, or it must be posted as a part of the wage determination.

d)

i. The process of establishing wage and fringe benefit rates bearing a reasonable relationship to those listed in a wage determination cannot be reduced to any single formula. The approach used may vary from determination to determination, depending on the circumstances. Standard wage and salary administration practices ranking various job classifications by pay grade pursuant to point schemes or other job factors may, for example, be relied upon. Guidance may also be obtained from the way various jobs are rated under federal pay systems (Federal Wage Board Pay System and the General Schedule) or from other wage determinations issued in the same locality. Basic to the establishment of conformable wage rates is the concept that a pay relationship should be maintained between job classifications on the basis of the skill required and the duties performed.

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ii. If a contract is modified or extended or an option is exercised, or if a contract succeeds a contract under which the classification in question was previously conformed pursuant to this clause, a new conformed wage rate and fringe benefits may be assigned to the conformed classification by indexing (that is, adjusting) the previous conformed rate and fringe benefits by an amount equal to the average (mean) percentage increase change in the wages and fringe benefits specified for all classifications to be used on the contract that are listed in the current wage determination, and those specified for the corresponding classifications in the previously applicable wage determination. If these conforming actions are accomplished before the performance of contract work by the unlisted class of employees, the aviation supplier must advise the Contracting Officer of the action taken, but the other procedures in b.2(c) above need not be followed.

iii. No employee engaged in performing work on this contract may be paid less than the currently applicable minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended.

e) The wage rate and fringe benefits finally determined pursuant to b.2(a) and (b) above must be paid to all employees performing in the classification from the first day on which contract work is performed by them in the classification. Failure to pay unlisted employees the compensation agreed upon by the interested parties and/or finally determined by the Wage and Hour Division retroactive to the date the class of employees began contract work is a violation of the Service Contract Act and this contract.

f) Upon discovery of failure to comply with b.2(a) through (e) above, the Wage and Hour Division will make a final determination of conformed classification, wage rate, and / or fringe benefits that will be retroactive to the date the class of employees commenced contract work.

3) If, as authorized pursuant to section 4(d) of the Service Contract Act, the term of this contract is more than one year, the minimum monetary wages and fringe benefits required to be paid or furnished to service employees will be subject to adjustment after one year and not less often than once every two years, pursuant to wage determinations to be issued by the Wage and Hour Division, Employment Standards Administration of the Department of Labor.

c. The aviation supplier or subcontractor may discharge the obligation to furnish fringe benefits specified in the attachment or determined conformably to it by furnishing any equivalent combinations of bona fide fringe benefits, or by making equivalent or differential payments in cash in accordance with the applicable rules set forth in Subpart D of 29 CFR Part 4, and not otherwise.

d.

1) In the absence of a minimum-wage attachment for this contract, neither the aviation supplier nor any subcontractor under this contract may pay any person performing work under the contract (regardless of whether they are service employees) less than the minimum wage specified by section 6(a)(1) of the Fair Labor Standards Act of 1938. Nothing in this provision relieves the aviation supplier or any subcontractor of any other obligation under law or contract for the payment of a higher wage to any employee.

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2)

a) If this contract succeeds a contract subject to the Service Contract Act, under which substantially the same services were furnished in the same locality, and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, in the absence of a minimum wage attachment for this contract setting forth collectively bargained wage rates and fringe benefits, neither the aviation supplier nor any subcontractor under this contract may pay any service employee performing any of the contract work (regardless of whether or not the employee was employed under the predecessor contract), less than the wages and fringe benefits provided for in the agreement, to which the employee would have been entitled if employed under the predecessor contract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for under the agreement.

b) No aviation supplier or subcontractor under this contract may be relieved of the foregoing obligation unless the limitations of section 4.1(b) of 29 CFR Part 4 apply or unless the Secretary of Labor or an authorized representative finds, after a hearing as provided in section 4.10 of 29 CFR Part 4, that the wages and/or fringe benefits provided for in the agreement vary substantially from those prevailing for services of a similar character in the locality, or determines, as provided in section 4.11 of 29 CFR Part 4, that the agreement applicable to service employees under the predecessor contract was not entered into as a result of arm’s-length negotiations.

c) If it is found in accordance with the review procedures in 29 CFR 4.10 and/or 4.11 and Parts 6 and 8 that wages and/or fringe benefits in a predecessor aviation supplier’s collective bargaining agreement vary substantially from those prevailing for services of a similar character in the locality, and/or that the agreement applicable to service employees under the predecessor contract was not entered into as a result of arm’s-length negotiations, the Department will issue a new or revised wage determination setting forth the applicable wage rates and fringe benefits. This determination will be made part of the contract or subcontract, in accordance with the decision of the Administrator, the Administrative Law Judge, or the Board of Service Contract Appeals, as the case may be, irrespective of whether its issuance occurs before or after award (53 Comp. Gen. 401 (1973)). In the case of a wage determination issued solely as a result of a finding of substantial variance, it will be effective as of the date of the final administrative decision.

e. The aviation supplier and any subcontractor under this contract must notify each service employee starting work on the contract of the minimum monetary wage and any fringe benefits required to be paid pursuant to the contract, or must post the wage determination attached to this contract. The poster provided by the Department of Labor (Publication WH 1313) must be posted in a prominent and accessible place at the worksite. Failure to comply with this requirement is a violation of section 2(a)(4) of the Act and of this contract. (Approved by the Office of Management and Budget under OMB control number 1215-0150.)

f. The aviation supplier or subcontractor may not permit services called for by this contract to be performed in buildings or surroundings or under working conditions provided by or under the control or supervision of the aviation supplier or subcontractor that are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to furnish these services, and the aviation supplier or subcontractor must comply with the safety and health standards applied under 29 CFR Part 1925.

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g.

1) The aviation supplier and each subcontractor performing work subject to the Act must maintain for 3 years from the completion of the work records containing the information specified in (a) through (f) following for each employee subject to the Service Contract Act and must make them available for inspection and transcription by authorized representatives of the Wage and Hour Division, Employment Standards Administration of the U.S. Department of Labor (approved by the Office of Management and Budget under OMB control numbers 1215-0017 and 1215-0150):

a) Name, address, and social security number of each employee.

b) The correct work classification, rate or rates of monetary wages paid and fringe benefits provided, rate or rates of fringe benefit payments in lieu thereof, and total daily and weekly compensation of each employee.

c) The number of daily and weekly hours so worked by each employee.

d) Any deductions, rebates, or refunds from the total daily or weekly compensation of each employee.

e) A list of monetary wages and fringe benefits for those classes of service employees not included in the wage determination attached to this contract but for whom wage rates or fringe benefits have been determined by the interested parties or by the Administrator or authorized representative pursuant to paragraph b above. A copy of the report required by b.2(b) above is such a list.

f) Any list of the predecessor aviation supplier’s employees furnished to the aviation supplier pursuant to section 4.6(1)(2) of 29 CFR Part 4.

2) The aviation supplier must also make available a copy of this contract for inspection or transcription by authorized representatives of the Wage and Hour Division.

3) Failure to make and maintain or to make available the records specified in this paragraph g for inspection and transcription is a violation of the regulations and this contract, and in the case of failure to produce these records, the Contracting Officer, upon direction of the Department of Labor and notification of the aviation supplier, must take action to suspend any further payment or advance of funds until the violation ceases.

4) The aviation supplier must permit authorized representatives of the Wage and Hour Division to conduct interviews with employees at the worksite during normal working hours.

h. The aviation supplier must unconditionally pay to each employee subject to the Service Contract Act all wages due free and clear and without subsequent deduction (except as otherwise provided by law or regulations, 29 CFR Part 4), rebate, or kickback on any account. Payments must be made no later than one pay period following the end of the regular pay period in which the wages were earned or accrued. A pay period under the Act may not be of any duration longer than semimonthly.

i. The Contracting Officer must withhold or cause to be withheld from the Postal Service aviation supplier under this or any other contract with the aviation supplier such sums as an appropriate official of the Department of Labor requests or the Contracting Officer decides may be necessary to pay underpaid employees employed by the aviation supplier or subcontractor. In the event of failure to pay employees subject to the Act wages or fringe benefits due under the Act, the Postal Service may, after authorization or by direction of the Department of Labor and written notification to the aviation supplier, suspend any further

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payment or advance of funds until the violations cease. Additionally, any failure to comply with the requirements of this clause may be grounds for termination of the right to proceed with the contract work. In this event, the Postal Service may enter into other contracts or arrangements for completion of the work, charging the aviation supplier in default with any additional cost.

j. The aviation supplier agrees to insert this clause in all subcontracts subject to the Act. The term “aviation supplier,” as used in this clause in any subcontract, is deemed to refer to the subcontractor, except in the term “aviation supplier.”

k. Service employee means any person engaged in the performance of this contract other than any person employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in Part 541 of Title 29, Code of Federal Regulations, as of July 30, 1976, and any subsequent revision of those regulations. The term includes all such persons regardless of any contractual relationship that may be alleged to exist between an aviation supplier or subcontractor and them.

l.

1) If wages to be paid or fringe benefits to be furnished service employees employed by the aviation supplier or a subcontractor under the contract are provided for in a collective bargaining agreement that is or will be effective during any period in which the contract is being performed, the aviation supplier must report this fact to the Contracting Officer, together with full information as to the application and accrual of these wages and fringe benefits, including any prospective increases, to service employees engaged in work on the contract, and furnish a copy of the agreement. The report must be made upon starting performance of the contract, in the case of collective bargaining agreements effective at the time. In the case of agreements or provisions or amendments thereof effective at a later time during the period of contract performance, they must be reported promptly after their negotiation. (Approved by the Office of Management and Budget under OMB control number 1215-0150.)

2) Not less than 10 days before completion of any contract being performed at a Postal facility where service employees may be retained in the performance of a succeeding contract and subject to a wage determination containing vacation or other benefit provisions based upon length of service with a aviation supplier (predecessor) or successor (section 4.173 of Regulations, 29 CFR Part 4), the incumbent aviation supplier must furnish to the Contracting Officer a certified list of the names of all service employees on the aviation supplier’s or subcontractor’s payroll during the last month of contract performance. The list must also contain anniversary dates of employment on the contract, either with the current or predecessor aviation suppliers of each such service employee. The Contracting Officer must turn over this list to the successor aviation supplier at the commencement of the succeeding contract. (Approved by the Office of Management and Budget under OMB control number 1215-0150.)

m. Rulings and interpretations of the Service Contract Act of 1965, as amended, are contained in Regulations, 29 CFR Part 4.

n.

1) By entering into this contract, the aviation supplier and its officials certify that neither they nor any person or firm with a substantial interest in the aviation supplier’s firm are ineligible to be awarded government contracts by virtue of the sanctions imposed pursuant to section 5 of the Act.

2) No part of this contract may be subcontracted to any person or firm ineligible for award of a government contract pursuant to section 5 of the Act.

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3) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001.

o. Notwithstanding any of the other provisions of this clause, the following employees may be employed in accordance with the following variations, tolerances, and exemptions, which the Secretary of Labor, pursuant to section 4(b) of the Act before its amendment by Public Law 92-473, found to be necessary and proper in the public interest or to avoid serious impairment of the conduct of government business:

1) Apprentices, student-learners, and workers whose earning capacity is impaired by age, or physical or mental deficiency or injury may be employed at wages lower than the minimum wages otherwise required by section 2(a)(1) or 2(b)(1) of the Service Contract Act without diminishing any fringe benefits or cash payments in lieu thereof required under section 2(a)(2) of the Act, in accordance with the conditions and procedures prescribed for the employment of apprentices, student-learners, handicapped persons, and handicapped clients of sheltered workshops under section 14 of the Fair Labor Standards Act of 1938, in the regulations issued by the Administrator (29 CFR Parts 520, 521, 524, and 525).

2) The Administrator will issue certificates under the Service Contract Act for the employment of apprentices, student-learners, handicapped persons, or handicapped clients of sheltered workshops not subject to the Fair Labor Standards Act of 1938, or subject to different minimum rates of pay under the two Acts, authorizing appropriate rates of minimum wages (but without changing requirements concerning fringe benefits or supplementary cash payments in lieu thereof), applying procedures prescribed by the applicable regulations issued under the Fair Labor Standards Act of 1938 (29 CFR Parts 520, 521, 524, and 525).

3) The Administrator will also withdraw, annul, or cancel such certificates in accordance with the regulations in Parts 525 and 528 of Title 29 of the Code of Federal Regulations.

p. Apprentices will be permitted to work at less than the predetermined rate for the work they perform when they are employed and individually registered in a bona fide apprenticeship program registered with a State Apprenticeship Agency recognized by the U.S. Department of Labor, or if no such recognized agency exists in a state, under a program registered with the Bureau of Apprenticeship and Training, Employment and Training Administration, U.S. Department of Labor. Any employee not registered as an apprentice in an approved program must be paid the wage rate and fringe benefits contained in the applicable wage determination for the journeyman classification of work actually performed. The wage rates paid apprentices may not be less than the wage rate for their level of progress set forth in the registered program, expressed as the appropriate percentage of the journeyman’s rate contained in the applicable wage determination. The allowable ratio of apprentices to journeymen employed on the contract work in any craft classification may not be greater than the ratio permitted to the aviation supplier for its entire workforce under the registered program.

q. An employee engaged in an occupation in which he or she customarily and regularly receives more than $30 a month tips may have the amount of tips credited by the employer against the minimum wage required by section 2(a)(1) or section 2(b)(1) of the Act in accordance with section 3(m) of the Fair Labor Standards Act and Regulations, 29 CFR Part 531. However, the amount of this credit may not exceed $1.24 per hour beginning January 1, 1980, and $1.34 per hour after December 31, 1980. To utilize this proviso:

1) The employer must inform tipped employees about this tip credit allowance before the credit is utilized;

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2) The employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether the employer elects to take a credit for tips received);

3) The employer must be able to show by records that the employee receives at least the applicable Service Contract Act minimum wage through the combination of direct wages and tip credit (approved by the Office of Management and Budget under OMB control number 1214-0017); and

4) The use of tip credit must have been permitted under any predecessor collective bargaining agreement applicable by virtue of section 4(c) of the Act.

r. Disputes arising out of the labor standards provisions of this contract are not subject to the Claims and Disputes clause but must be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 4, 6, and 8. Disputes within the meaning of this clause include disputes between the aviation supplier (or any of its subcontractors) and the Postal Service, the U.S. Department of Labor, or the employees or their representatives.

Clause 9-12: Fair Labor Standards Act and Service Contract Act - Price Adjustment (February 2010)

a. The aviation supplier warrants that the contract prices do not include allowance for any contingency to cover increased costs for which adjustment is provided under this clause.

b. The minimum prevailing wage determination, including fringe benefits, issued under the Service Contract Act of 1965 by the Department of Labor (DOL), current at least every two years after the original award date, current at the beginning of any option or renewal period, or in the case of a significant change in labor requirements, applies to this contract and any exercise of an option or renewal of this contract. When no such determination has been made as applied to this contract, the minimum wage established in accordance with the Fair Labor Standards Act applies to any exercise of an option or renewal of this contract.

c. When, as a result of the determination of minimum prevailing wages and fringe benefits applicable (1) every two years after original award date, (2) at the beginning of any option or renewal period, or (3) in the case of a significant change in labor requirements, an increased or decreased wage determination is applied to this contract, or when as a result of any amendment to the Fair Labor Standards Act enacted after award that affects minimum wage, and whenever such a determination becomes applicable to this contract under law, the aviation supplier increases or decreases wages or fringe benefits of employees working on the contract to comply, the aviation supplier and the Contracting Officer will negotiate whether and to what extent either party will absorb the costs of the wage change. Any resulting change in contract price is limited to increases or decreases in wages or fringe benefits, and the concomitant increases or decreases in Social Security, unemployment taxes, and workers’ compensation insurance, but may not otherwise include any amount for general and administrative costs, overhead, or profit.

d. The aviation supplier or Contracting Officer may request a contract price adjustment within 30 days of the effective date of a wage change. If a request for contract price adjustment has been made, and the parties have not reached an agreement within thirty days of that request, the Contracting Officer should issue a unilateral change order in the amount considered to be a fair and equitable adjustment. The aviation supplier may then either accept the amount, or the aviation supplier may file a claim under Clause B-9: Claims and Disputes unless the Contracting Officer and aviation supplier extend this period in writing. Upon agreement of the parties, the contract price or unit price labor rates will be modified in writing. Pending agreement on or determination of any such adjustment and its effective date, the aviation supplier must continue performance.

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e. The Contracting Officer or the Contracting Officer’s authorized representative must, for 3 years after final payment under the contract, be given access to and the right to examine any directly pertinent books, papers, and records of the aviation supplier.

Clause 9-13: Affirmative Action for Workers with Disabilities (March 2006) (Tailored)

a. The contractor will not discriminate against any employee or applicant for employment because of physical or mental disability in regard to any position for which the employee or applicant for employment is qualified. The contractor agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified individuals with disabilities without discrimination based on their physical or mental disability in all employment practices, including the following:

1. Recruitment, advertising, and job application procedures;

2. Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff and rehiring

3. Rates of pay or any other form of compensation and changes in compensation

4. Job assignments, job classifications, organizational structures, position descriptions, lines of progression, and seniority lists

5. Leaves of absence, sick leave, or any other leave

6. Fringe benefits available by virtue of employment, whether or not administered by the contractor

7. Selection and financial support for training, including apprenticeship, professional meetings, conferences, and other related activities, and selection for leaves of absence to pursue training

8. Activities sponsored by the contractor including social or recreational programs; and

9. Any other term, condition, or privilege of employment.

b. The contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Rehabilitation Act of 1973, as amended.

c. In the event of the contractor’s noncompliance with the requirements, actions for noncompliance may be taken in accordance with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the act.

d. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices in a form to be prescribed by the Deputy Assistant Secretary for Federal Contract Compliance Programs, provided by or through the Contracting Officer. Such notices shall state the rights of applicants and employees as well as the contractor’s obligation under the law to take affirmative action to employ and advance in employment qualified employees and applicants with disabilities. The contractor must ensure that applicants and employees with disabilities are informed of the contents of the notice (e.g., the contractor may have the notice read to a visually disabled individual, or may lower the posted notice so that it might be read by a person in a wheelchair).

e. The contractor will notify each labor organization or representative of workers with which it has a collective bargaining agreement or other understanding that the contractor is bound by the terms of section 503 of the Rehabilitation Act of 1973, as amended, and is committed to take affirmative action to employ and advance in employment individuals with physical or mental disabilities.

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f. The contractor must include the provisions of this clause in every subcontract or purchase order in excess of $10,000, unless exempted by the rules, regulations, or orders of the Secretary issued pursuant to section 503 of the Act, as amended, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the Deputy Assistant Secretary for Federal Contract Compliance Programs may direct to enforce such provisions, including action for noncompliance.

Clause 9-14: Equal Opportunity for Disabled Veterans, Recently Separated Veterans, Other Protected Veterans, and Armed Forces Service Medal Veterans (February 2010) (Tailored)

a. The contractor will not discriminate against any employee or applicant for employment because he or she is a disabled veteran, recently separated veteran, other protected veteran, or Armed Forces service medal veteran in regard to any position for which the employee or applicant for employment is qualified. The contractor agrees to take affirmative action to employ, advance in employment and otherwise treat qualified individuals without discrimination based on their status as a disabled veteran, recently separated veteran, other protected veteran, or Armed Forces service medal veteran in all employment practices, including the following:

1. Recruitment, advertising, and job application procedures;

2. Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff and rehiring;

3. Rates of pay or any other form of compensation and changes in compensation;

4. Job assignments, job classifications, organizational structures, position descriptions, lines of progression, and seniority lists;

5. Leaves of absence, sick leave, or any other leave;

6. Fringe benefits available by virtue of employment, whether or not administered by the contractor;

7. Selection and financial support for training, including apprenticeship, and on-the-job training under 38 U.S.C. 3687, professional meetings, conferences, and other related activities, and selection for leaves of absence to pursue training;

8. Activities sponsored by the contractor including social or recreational programs; and

9. Any other term, condition, or privilege of employment.

b. The contractor agrees to immediately list all employment openings which exist at the time of the execution of this contract and those which occur during the performance of this contract, including those not generated by this contract and including those occurring at an establishment of the contractor other than the one where the contract is being performed, but excluding those of independently operated corporate affiliates, with the appropriate employment service delivery system where the opening occurs. Listing employment openings with the state workforce agency job bank or with the local employment service delivery system where the opening occurs will satisfy the requirement to list jobs with the appropriate employment service delivery system.

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c. Listing of employment openings with the appropriate employment service delivery system pursuant to this clause shall be made at least concurrently with the use of any other recruitment source or effort and shall involve the normal obligations which attach to the placing of a bona fide job order, including the acceptance of referrals of veterans and nonveterans. The listing of employment openings does not require the hiring of any particular job applicants or from any particular group of job applicants, and nothing herein is intended to relieve the contractor from any requirements in Executive orders or regulations regarding nondiscrimination in employment.

d. Whenever a contractor, other than a state or local governmental contractor, becomes contractually bound to the listing provisions in paragraphs 2 and 3 of this clause, it shall advise the state workforce agency in each state where it has establishments of the name and location of each hiring location in the state. As long as the contractor is contractually bound to these provisions and has so advised the state agency, there is no need to advise the state agency of subsequent contracts. The contractor may advise the state agency when it is no longer bound by this contract clause.

e. The provisions of paragraphs 2 and 3 of this clause do not apply to the listing of employment openings which occur and are filled outside of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, Wake Island, and the Trust Territories of the Pacific Islands.

f. As used in this clause:

1. All employment openings includes all positions except executive and senior management, those positions that will be filled from within the contractor’s organization, and positions lasting three days or less. This term includes full-time employment, temporary employment of more than three days’ duration, and part-time employment.

2. Executive and senior management means: (1) Any employee (a) compensated on a salary basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities; (b) whose primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (c) who customarily and regularly directs the work of two or more other employees; and (d) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight; or (2) any employee who owns at least a bona fide 20-percent equity interest in the enterprise in which the employee is employed, regardless of whether the business is a corporate or other type of organization, and who is actively engaged in its management.

3. Positions that will be filled from within the contractor’s organization means employment openings for which no consideration will be given to persons outside the contractor’s organization (including any affiliates, subsidiaries, and parent companies) and includes any openings which the contractor proposes to fill from regularly established “recall” lists. The exception does not apply to a particular opening once an employer decides to consider applicants outside of his or her own organization.

g. The contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Act.

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h. In the event of the contractor’s noncompliance with the requirements of this clause, actions for noncompliance may be taken in accordance with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Act.

i. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices in a form to be prescribed by the Deputy Assistant Secretary for Federal Contract Compliance, provided by or through the Contracting Officer. Such notices shall state the rights of applicants and employees as well as the contractor’s obligation under the law to take affirmative action to employ and advance in employment qualified employees and applicants who are disabled veterans, recently separated veterans, other protected veterans, or Armed Forces service medal veterans. The contractor must ensure that applicants or employees who are disabled veterans are informed of the contents of the notice (e.g., the contractor may have the notice read to a visually disabled individual, or may lower the posted notice so that it might be read by a person in a wheelchair).

j. The contractor will notify each labor organization or representative of workers with which it has a collective bargaining agreement or other contract understanding, that the contractor is bound by the terms of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended, and is committed to take affirmative action to employ and advance in employment qualified disabled veterans, recently separated veterans, other protected veterans, and Armed Forces service medal veterans.

k. The contractor will include the provisions of this clause in every subcontract or purchase order of $100,000 or more, unless exempted by the rules, regulations, or orders of the Secretary issued pursuant to the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the Deputy Assistant Secretary for Federal Contract Compliance may direct to enforce such provisions, including action for noncompliance.

Contract Term

The contract base period of performance will be October 1, 2013, through September 30, 2020, with two, five year renewal periods to be exercised by mutual agreement of the parties. The Night Network will begin operation on September 30, 2013; the Day Network will begin operation on October 1, 2013.

Renewal Process

[ * ]

Amendments or Modifications

In order to be binding upon the Postal Service or the aviation supplier, any amendment or modification of this Contract must be in writing signed by the Contracting Officer on behalf of the Postal Service and an officer of the aviation supplier authorized to bind the company.

Assignment

Neither Party shall, directly or indirectly (whether by succession, merger, or otherwise) assign, delegate, novate, or otherwise transfer this Contract or any of its rights or obligations hereunder, without the prior written approval of the other. However, the aviation supplier may assign this contract to any of its internal business affiliates upon written notice to the Postal Service.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Bankruptcy

In the event the aviation supplier enters into proceedings relating to bankruptcy, whether voluntary or involuntary, the aviation supplier will furnish, by certified mail, written notification of the bankruptcy to the Contracting Officer responsible for administering the contract. The notification must be furnished within five days of the initiation of the bankruptcy proceedings. The notification must include the date on which the bankruptcy petition was filed, the court in which the petition was filed, and a list of Postal Service contracts and Contracting Officers for all Postal Service contracts for which final payment has not yet been made. This obligation remains in effect until final payment under this contract.

Confidentiality

a. During the term of this contract and until the earlier of five (5) years after such termination or until such time as the information is no longer confidential as described below, each party shall treat as confidential and appropriately safeguard and shall not use for the benefit of any person or corporation other than the other party:

1. Written information identified in writing as confidential or oral information promptly confirmed in writing as being confidential;

2. Written information or oral information disclosed by the parties during the negotiation of this contract and written information or oral information promptly confirmed in writing as confidential pertaining to a party’s pricing, business or assets which is received at any time from a party that is identified in writing; or

3. Any information or knowledge concerning the methods of operation, promotion, sale, or distribution used by a party which may be communicated to the other party or which a party may otherwise acquire by virtue of its performance of this Agreement.

b. Notwithstanding the provisions of subparagraphs 1 through 3, above, neither party shall be required to obtain prior written approval before providing information regarding this contract:

1. To Members of Congress serving on a committee or subcommittee with oversight responsibility of the Postal Service;

2. In response to legal process or otherwise required by law;

3. In response to a request from the Department of Justice Antitrust Division attorneys or economists in pursuit of a non-public investigation; or

4. In response to requests submitted to the Postal Service under the Freedom of Information Act. In this regard, the Postal Service shall follow the procedures promulgated at 39 CFR Section 265.8.

c. Information shall not be considered confidential if it is:

1. Generally known to the trade or public;

2. Rightfully possessed by a party prior to the effective date of this contract;

3. Received by a party from a third party which rightfully possesses it;

4. Independently developed by the other party; or

5. Releasable pursuant to Postal Service regulations addressing how information is maintained by the Postal Service.

Entire Agreement

This Contract, together with all Attachments, constitutes the entire agreement and understanding between the Parties in connection with the subject matter described, and supersedes and cancels all previous negotiations, commitments, and writings related to the subject matter.

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Force Majeure

Both the Postal Service and the aviation supplier shall be excused from their obligations for volume guarantees or service performance, respectively, under this Contract, and neither Party shall be liable to the other or any other person or entity for loss, damage, delay, mis-delivery or non-delivery of shipments transported pursuant to this Contract, resulting in whole or in part from any of the following:

a. When there occurs a State or Federal government-declared State of Emergency and / or instructions by a government agency that has actual or apparent powers or authority (including, but not limited to, the Federal Aviation Administration (FAA) or the Transportation Security Administration (TSA)) to order airport closures or limitations on airport activity;

b. When the failure to meet contractual obligations results in whole or in part from public enemies, terrorist acts, criminal acts of any person or entity, public authorities acting with actual or apparent authority (including U.S. Postal Inspectors), civil commotion, hazards incident to a state of war, national disruptions in transportation networks or operations (of any mode) of the aviation supplier, Postal Service, or any other entity, strikes, natural disasters, or disruption or failure of third-party communication and information systems; or

c. When there exist any conditions that present a danger to each Party’s personnel.

d. In every case the failure to perform must be beyond the control and without the fault or negligence of the party claiming that its performance is excused. Each Party is required to continue and attempt to recommence performance to the greatest extent possible without delay.

It is the responsibility of the Party asserting the Force Majeure event to formally declare that a Force Majeure event has taken place within twenty-four (24) hours of the event. The party declaring the Force Majeure event must document the circumstances of the event in writing to the Contracting Officer, who will review the information with the Manager, Air Transportation Operations, and relevant aviation supplier officials. In the absence of a formal request for relief under this clause, all appropriate volume guarantees and performance standards will remain in force. Except for the calculation of the service levels, nothing in this section shall relieve or excuse the aviation supplier of its service obligations. Subsequent to a Force Majeure event being declared, the declaring party must provide reasonable, written documentation with sufficient detail to support the declaration.

If, as a result of the occurrence of one of the foregoing events, the aviation supplier is excused from performance, and the Postal Service is excused from meeting its minimum volume commitment for the identified period, the Parties will meet to agree upon the pro-rata adjustments to be made.

On days where mail volume is withdrawn, withheld, or not transported under this provision, the minimum volume commitment for the identified period will be reduced for that period by the amount of that volume.

Frequency Adjustment

If, during the term of this contract, the Postal Service decides to reduce, in whole or in part, the number of delivery days, for any mail type it provides, to fewer than six (6) per week, the Postal Service reserves the right to effectuate a change in delivery days by adjusting the Statement of Work of this contract, including, but not limited to, the annual number of operating days or the frequency of service hereunder. The parties agree that such an adjustment does not constitute a partial termination of the contract, nor will it give rise to an equitable adjustment.

If the number of delivery days is reduced, in whole or in part, to five (5) and the Postal Service decides to reduce the number of operating days under this contract, in whole or in part, to five (5), the parties agree to reduce the Contract Volume Minimum calculation. The Contract Volume Minimum calculation

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will be reduced by the average daily volume for the previous twelve (12) months excluding the weeks of Peak associated with the removed day of service without adjustment to the tier structure, the contract rate, or be subject to any other price-related adjustment. The monies associated with the volume removed from the calculation will be eliminated.

If the number of delivery days is reduced to fewer than five (5), and the Postal Service decides to reduce the number of operating days under this contract, in whole or in part, to fewer than five (5), the parties will negotiate an equitable adjustment if necessary.

No later than 120 days prior to the effective date of such reduction in delivery days, the parties shall commence discussions as to how to implement the change. Within 90 days of such notice, the supplier must implement the changes outlined above.

Notices

Any notice, report, demand, acknowledgement or other communication which under the terms of this Contract or otherwise must be given or made by either Party, unless specifically otherwise provided in this Contract, shall be in the English language and in writing, and shall be given or made by express delivery service with proof of delivery, certified air mail (return receipt requested). The parties may also send a copy of the same communication through electronic mail, facsimile with acknowledgement of receipt/proof of receipt, or personal delivery. If a party sends a copy of the official correspondence by electronic mail or facsimile, the correspondence shall not be deemed received until the receiving party confirms receipt.

Such notice, report, demand, acknowledgement or other communication shall be deemed to have been given or made in the case of express delivery service with tracking and tracing capability on the date of signature of the proof of delivery, and in the case of certified mail on the fifth business day in the place of receipt after the date sent.

The notice address for the Postal Service shall be:

U.S. Postal Service

Air Transportation CMC

Attention: Manager

475 L’Enfant Plaza SW, Room 1P 650

Washington, DC 20260-0650

The notice address for the aviation supplier shall be:

Federal Express Corporation

Attention: Vice President, Postal Transportation Management

3610 Hacks Cross Road

Building A 1st Floor

Memphis, TN 38125-8800

Severability

a. If any term, provision, covenant or condition of this Contract is held by a court or Board of competent jurisdiction or by a request, direction or indication of an agency or department of a Governmental Body having subject matter jurisdiction to be invalid or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation or unenforceability.

b. If a material provision of this Contract is materially altered or abridged as the result of a final and binding order of a Governmental Body having subject matter jurisdiction, then the Postal Service and the aviation supplier will meet to negotiate in good faith to reach a mutually satisfactory modification to this Contract. If the Parties are unable to reach a mutually satisfactory resolution, then either Party may declare the negotiations to be at an impasse and the parties shall resolve the dispute in accordance with the provisions of this contract.

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c. Notwithstanding the foregoing, the Parties agree to make their best efforts to oppose any changes requested by a Governmental Body to any material provision of this Contract.

Third Party Governmental Delays

If, during the term of this contract, a governmental entity with subject matter jurisdiction enacts laws, promulgates regulations, or issues orders mandating that the aviation supplier screen mail dispatched for transportation by aircraft within the United States for bombs, explosives, or other hazardous materials, and aviation supplier does not have a method for otherwise complying at no additional cost to the Postal Service, either party may, at no cost to the other party, suspend performance under the contract during the period in which such screening is actually required to be accomplished.

Within fourteen (14) days of the enactment of any law, promulgation of any regulation, or issuance of any order referenced above, the parties shall commence negotiations in an attempt to modify this contract to address any adverse impacts and / or other concerns asserted by one or both parties that may arise as a result of additional screening requirements.

If the parties cannot agree upon such a modification within 180 days, or within such longer period as the parties may mutually agree, the contract and all orders hereunder may be terminated at no cost to either party.

Waiver of Breach

No waiver of breach of any of the provisions of this Contract shall be construed to be a waiver of any succeeding breach of the same or any other provision.

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Part 4: List of Attachments

Part 4 - List of Attachments and Forms

Attachments:
	Attachment 1	Postal Service Operating Periods, dated October 4, 2012
	Attachment 2	Air Stops & Projected Volumes, dated January 8, 2013
	Attachment 3	Operating Plan, Day Network, dated April 22, 2013
	Attachment 4	Operating Plan, Night Network, dated April 22, 2013
	Attachment 5	Reserved
	Attachment 6	Postal Furnished Property, April 16, 2013
	Attachment 7	Electronic Data Interchange Service Requirements, dated September 1, 2012
	Attachment 8	Investigative / Security Protocol and Guidelines, dated July 2012
	Attachment 9	Wage Determination, dated October 31, 2012
	Attachment 10	Pricing, dated April 18, 2013
	Attachment 11	Perishable Mail and Lives, April 22, 2013
	Attachment 12	Reserved
	Attachment 13	Service Contract Act Wage Determinations, dated April 17, 2013
Forms:
	DOT Form F 5800.1	Hazardous Materials Incident Report
	I-9 Form	Employment Eligibility Verification
	PS Form 2025	Contract Personnel Questionnaire
	PS Form 8203	Order / Solicitation / Offer / Award
	US Treasury Form 941	Quarterly Federal Tax Return

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Attachment 1: Postal Service Operating Periods

Attachment 1

Postal Service Operating Periods

October 4, 2012

Operating Period: Monday – Sunday

*All Operating Periods begin with the Monday Night Network

Operating Period	Begin	End	Number of Weeks	Month	Peak Periods
1	09/30/13	11/03/13	5	OCT
2	11/04/13	12/01/13	4	NOV
3	12/02/13	01/05/14	5	DEC	2013 PEAK
4	01/06/14	02/02/14	4	JAN
5	02/03/14	03/02/14	4	FEB
6	03/03/14	03/30/14	4	MAR
7	03/31/14	04/27/14	4	APR
8	04/28/14	06/01/14	5	MAY
9	06/02/14	06/29/14	4	JUN
10	06/30/14	07/27/14	4	JUL
11	07/28/14	08/31/14	5	AUG
12	09/01/14	09/28/14	4	SEP
13	09/29/14	10/26/14	4	OCT
14	10/27/14	11/30/14	5	NOV
15	12/01/14	01/04/15	5	DEC	2014 PEAK
16	01/05/15	02/01/15	4	JAN
17	02/02/15	03/01/15	4	FEB
18	03/02/15	03/29/15	4	MAR
19	03/30/15	04/26/15	4	APR
20	04/27/15	05/31/15	5	MAY
21	06/01/15	06/28/15	4	JUN
22	06/29/15	08/02/15	5	JUL
23	08/03/15	08/30/15	4	AUG
24	08/31/15	09/27/15	4	SEP
25	09/28/15	11/02/15	5	OCT
26	11/03/15	11/29/15	4	NOV
27	11/30/15	01/03/16	5	DEC	2015 PEAK
28	01/04/16	01/31/16	4	JAN
29	02/01/16	02/28/16	4	FEB
30	02/29/16	04/03/16	5	MAR
31	04/04/16	05/01/16	4	APR
32	05/02/16	05/29/16	4	MAY
33	05/30/16	06/26/16	4	JUN
34	06/27/16	07/31/16	5	JUL
35	08/01/16	08/28/16	4	AUG
36	08/29/16	10/02/16	5	SEP
37	10/03/16	10/30/16	4	OCT
38	10/31/16	12/04/16	5	NOV
39	12/05/16	01/01/17	4	DEC	2016 PEAK
40	01/02/17	01/29/17	4	JAN
41	01/30/17	02/26/17	4	FEB

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Attachment 1: Postal Service Operating Periods

42	02/27/17	04/02/17	5	MAR
43	04/03/17	04/30/17	4	APR
44	05/01/17	06/04/17	5	MAY
45	06/05/17	07/02/17	4	JUN
46	07/03/17	07/30/17	4	JUL
47	07/31/17	08/27/17	4	AUG
48	08/28/17	10/01/17	5	SEP
49	10/02/17	10/29/17	4	OCT
50	10/30/17	11/27/17	4	NOV
51	11/28/17	12/30/17	5	DEC	2017 PEAK
52	12/31/17	01/28/18	4	JAN
53	01/29/18	02/25/18	4	FEB
54	02/26/18	04/01/18	5	MAR
55	04/02/18	04/29/18	4	APR
56	04/30/18	06/03/18	5	MAY
57	06/04/18	07/01/18	4	JUN
58	07/02/18	07/29/18	4	JUL
59	07/30/18	08/26/18	4	AUG
60	08/27/18	09/30/18	5	SEP
61	10/01/18	10/28/18	4	OCT
62	10/29/18	12/02/18	5	NOV
63	12/03/18	01/06/19	5	DEC	2018 PEAK
64	01/07/19	02/03/19	4	JAN
65	02/04/19	03/03/19	4	FEB
66	03/04/19	03/31/19	4	MAR
67	04/01/19	04/28/19	4	APR
68	04/29/14	06/02/19	5	MAY
69	06/03/19	06/30/19	4	JUN
70	07/01/19	07/28/19	4	JUL
71	07/29/19	09/01/19	5	AUG
72	09/02/19	09/29/19	4	SEP
73	09/30/19	10/27/19	4	OCT
74	10/30/19	12/01/19	5	NOV
75	12/02/19	01/05/20	5	DEC	2019 PEAK
76	01/06/20	02/02/20	4	JAN
77	02/03/20	03/01/20	4	FEB
78	03/02/20	03/29/20	4	MAR
79	03/30/20	05/03/20	5	APR
80	05/04/20	05/31/20	4	MAY
81	06/01/20	06/28/20	4	JUN
82	06/29/20	08/02/20	5	JUL
83	08/03/20	08/30/20	4	AUG
84	08/31/20	09/30/20	5	SEP

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Attachment 2: Air Stops & Projected Volumes

Attachment 2

Air Stops & Projected Volumes

January 8, 2013

Refer to the Excel file provided with the awarded contract.

** Attachment 2 contains an Excel file totaling approximately 2000 pages that outlines daily air stops and projected volumes by USPS service product for each air stop. Because this information is not material, it has been omitted from this exhibit. FedEx Corporation will furnish supplementally a copy of this Attachment 2 to the Securities and Exchange Commission upon request.

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Attachment 4: Operating Plan, Night Network

Modification 1

Exercised Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]
8	BOISE ID AMF	BOI	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]
22	FARGO ND	GFK	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]
38	MEMPHIS TN	MEM	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Attachment 4: Operating Plan, Night Network

Modification 1

		Originating Operation
	Air Cargo Network Origin City	Service Point	ALL Mail Due Aviation Supplier Tuesday through Saturday	ALL Mail Due Aviation Supplier Sunday
40	MILWAUKEE WI	MKE	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]
42	MOBILE AL	MOB	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]
62	ROCHESTER NY	ROC	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]
64	SALT LAKE CITY UT	SLC	[ * ]	[ * ]
65	SAN ANTONIO TX	SAT	[ * ]	[ * ]
66	SAN DIEGO CA	SAN	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]
79	TULSA OK	TUL	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 76 of 101

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

Exercised Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tuesday through Sunday

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
1	ALBUQUERQUE NM	ABQ	[ * ]	[ * ]	[ * ]
2	ANCHORAGE AK	ANC	[ * ]	[ * ]	[ * ]
3	ATLANTA GA	ATL	[ * ]	[ * ]	[ * ]
4	AUSTIN TX	AUS	[ * ]	[ * ]	[ * ]
5	BALTIMORE MD	BWI	[ * ]	[ * ]	[ * ]
6	BILLINGS MT	BIL	[ * ]	[ * ]	[ * ]
7	BIRMINGHAM AL	BHM	[ * ]	[ * ]	[ * ]
8	BOISE ID	BOI	[ * ]	[ * ]	[ * ]
9	BOSTON MA	BOS	[ * ]	[ * ]	[ * ]
10	CHARLESTON WV	CRW	[ * ]	[ * ]	[ * ]
11	CHARLOTTE NC	CLT	[ * ]	[ * ]	[ * ]
12	CHICAGO IL	ORD	[ * ]	[ * ]	[ * ]
13	CINCINNATI OH	CVG	[ * ]	[ * ]	[ * ]
14	CLEVELAND OH	CLE	[ * ]	[ * ]	[ * ]
15	COLUMBUS OH	CMH	[ * ]	[ * ]	[ * ]
16	DALLAS TX	DFW	[ * ]	[ * ]	[ * ]
17	DENVER CO	DEN	[ * ]	[ * ]	[ * ]
18	DES MOINES IA	DSM	[ * ]	[ * ]	[ * ]
19	DETROIT MI	DTW	[ * ]	[ * ]	[ * ]
20	DULLES VA	IAD	[ * ]	[ * ]	[ * ]
21	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
22	FARGO ND P&DC	GFK	[ * ]	[ * ]	[ * ]
23	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
24	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
25	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
26	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
27	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
28	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
29	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
30	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
31	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
32	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
33	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
34	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
35	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
36	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
37	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 77 of 101

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Attachment 4: Operating Plan, Night Network

Modification 1

		Destinating Operation
	Air Cargo Network Destination City	Service Point	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday	Required Delivery Time to Postal Service Sunday
38	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
39	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
40	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
41	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
42	MOBILE AL	BFM	[ * ]	[ * ]	[ * ]
43	NASHUA NH	MHT	[ * ]	[ * ]	[ * ]
44	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
45	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
46	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
47	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
48	NY METRO	JFK	[ * ]	[ * ]	[ * ]
49	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
50	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
51	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
52	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
53	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
54	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
55	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
56	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
57	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
58	QUAD CITIES IL	MLI	[ * ]	[ * ]	[ * ]
59	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
60	RENO NV	RNO	[ * ]	[ * ]	[ * ]
61	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
62	ROCHESTER	ROC	[ * ]	[ * ]	[ * ]
63	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
64	SALT LAKE CITY	SLC	[ * ]	[ * ]	[ * ]
65	SAN ANTONIO	SAT	[ * ]	[ * ]	[ * ]
66	SAN DIEGO	SAN	[ * ]	[ * ]	[ * ]
67	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
68	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
69	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
70	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
71	SIOUX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
72	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
73	SPRINGFIELD MA	BDL	[ * ]	[ * ]	[ * ]
74	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
75	SPRINGFIELD IL	SPI	[ * ]	[ * ]	[ * ]
76	ST. LOUIS MO	STL	[ * ]	[ * ]	[ * ]
77	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
78	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 78 of 101

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

79	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
80	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]

* All mail is delivered on Sunday at 07:00. The offshore locations have additional time.

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 79 of 101

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

Exercised Option 1

Attachment 3

Operating Plan, Day Network

April 22, 2013

Tender and Delivery Process Codes

A	Postal Service Builds ULDs	F	Aviation Supplier Unloads ULD into MTE
B	Postal Service Transports ULDs to Ramp	G	Aviation Supplier Builds ULDs
C	Postal Service Tenders in MTE	H	Aviation Supplier Delivers ULDs to Ramp
D	Postal Service Picks Up MTE	I	Aviation Supplier Picks Up ULDs from Plant
E	Postal Service Deck loads	J	Aviation Supplier Delivers ULDs to Plant

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBUQUERQUE NM	ABQ	A , B	H
2	ANCHORAGE AK	ANC	A , B	H
3	ATLANTA GA	ATL	A , B	H
4	AUSTIN TX	AUS	A , B	H
5	BALTIMORE MD	BWI	A , B	H
6	BILLINGS MT	BIL	A , B	H
7	BIRMINGHAM AL	BHM	E	K
8	BOISE ID	BOI	A , B	H
9	BOSTON MA	BOS	A , B	H
10	CHARLESTON WV	CRW	A , B	H
11	CHARLOTTE NC	CLT	A , B	H
12	CHICAGO IL	ORD	A , B	H
13	CINCINNATI OH	CVG	A , B	H
14	CLEVELAND OH	CLE	A , B	H
15	COLUMBUS OH	CMH	A , B	H
16	DALLAS TX	DFW	A , B	H
17	DENVER CO	DEN	A , B	H
18	DES MOINES IA	DSM	A , B	H
19	DETROIT MI	DTW	A , B	H
20	DULLES VA	IAD	A , B	H
21	EL PASO TX	ELP	A , B	H
22	FARGO ND	GFK	A , B	H
23	GRAND RAPIDS MI	GRR	A , B	H
24	GREAT FALLS MT	GTF	A , B	Origin Only
25	GREENSBORO NC	GSO	A , B	H
26	HONOLULU HI	HNL	A , B	H
27	HOUSTON TX	IAH	A , B	H
28	INDIANAPOLIS IN	IND	A , B	H
29	JACKSON MS	JAN	E	K
30	JACKSONVILLE FL	JAX	A , B	H
31	KANSAS CITY MO	MCI	A , B	H
32	KNOXVILLE TN	TYS	A , B	H
33	LAS VEGAS NV	LAS	A , B	H
34	LITTLE ROCK AR	LIT	A , B	H

Page 80 of 101

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Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
35	LOS ANGELES CA	LAX	A , B	H
36	LOUISVILLE KY	SDF	A , B	H
37	LUBBOCK TX	LBB	A , B	H
38	MEMPHIS TN	MEM	A , B	H
39	MIAMI FL	MIA	A , B	H
40	MILWAUKEE WI	MKE	A , B	H
41	MINNEAPOLIS MN	MSP	A , B	H
42	MOBILE AL	MOB	A , B	H
43	NASHUA NH	MHT	A , I	J
44	NASHVILLE TN	BNA	E	K
45	NEW ORLEANS LA	MSY	A , B	H
46	NEWARK NJ	EWR	A , B	H
47	NORFOLK VA	ORF	A , B	H
48	NY METRO	JFK	A , I	J
49	OAKLAND CA	OAK	A , B	H
50	OKLAHOMA CITY OK	OKC	A , B	H
51	OMAHA NE	OMA	A , B	H
52	ONTARIO CA	ONT	A , B	H
53	ORLANDO FL	MCO	A , B	H
54	PHILADELPHIA PA	PHL	A , B	H
55	PHOENIX AZ	PHX	A , B	H
56	PITTSBURGH PA	PIT	A , B	H
57	PORTLAND OR	PDX	A , B	H
58	QUAD CITIES IL	MLI	E	Origin Only
59	RALEIGH NC	RDU	A , B	H
60	RENO NV	RNO	A , B	H
61	RICHMOND VA	RIC	A , B	H
62	ROCHESTER NY	ROC	A , I	J
63	SACRAMENTO CA	SMF	A , B	H
64	SALT LAKE CITY	SLC	A , B	H
65	SAN ANTONIO TX	SAT	A , B	H
66	SAN DIEGO CA	SAN	A , B	H
67	SAN FRANCISCO CA	SFO	A , B	H
68	SAN JUAN PR	SJU	A , B	H
69	SEATTLE WA	SEA	A , B	H
70	SHREVEPORT LA	SHV	A , B	H
71	SIOUX FALLS SD	FSD	A , B	H
72	SPOKANE WA	GEG	A , B	H
73	SPRINGFIELD MA	BDL	A , B	H
74	SPRINGFIELD MO	SGF	E	Origin Only
75	SPRINGFIELD IL	SPI	E	Origin Only
76	ST. LOUIS MO	STL	E	K
77	TAMPA FL	TPA	A , B	H
78	TUCSON AZ	TUS	A , B	H
79	TULSA OK	TUL	A , B	H
80	WICHITA KS	ICT	A , B	H

Page 81 of 101

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Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

Exercised Option 1

Attachment 4

Operating Plan, Night Network

April 22, 2013

				Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point		ALL Mail Due  Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
1	ALBANY NY		ALB	[ * ]	[ * ]	[ * ]
2	ALBUQUERQUE NM		ABQ	[ * ]	[ * ]	[ * ]
3	ALLENTOWN PA		ABE	[ * ]	[ * ]	[ * ]
4	ANCHORAGE AK		ANC	[ * ]	[ * ]	[ * ]
5	APPLETON WI		ATW	[ * ]	[ * ]	[ * ]
6	ATLANTA GA		ATL	[ * ]	[ * ]	[ * ]
7	AUSTIN TX		AUS	[ * ]	[ * ]	[ * ]
8	BALTIMORE MD		BWI	[ * ]	[ * ]	[ * ]
9	BANGOR ME		BGR	[ * ]	[ * ]	[ * ]
10	BATON ROUGE LA		BTR	[ * ]	[ * ]	[ * ]
11	BEND OR		RDM	[ * ]	[ * ]	[ * ]
12	BILLINGS MT		BIL	[ * ]	[ * ]	[ * ]
13	BIRMINGHAM AL		BHM	[ * ]	[ * ]	[ * ]
14	BISMARK ND		BIS	[ * ]	[ * ]	[ * ]
15	BOISE ID		BOI	[ * ]	[ * ]	[ * ]
16	BOSTON MA		BOS	[ * ]	[ * ]	[ * ]
17	BOZEMAN MT		BZN	[ * ]	[ * ]	[ * ]
18	BRISTOL TN / VA		TRI	[ * ]	[ * ]	[ * ]
19	BUFFALO NY		BUF	[ * ]	[ * ]	[ * ]
20	BURBANK CA		BUR	[ * ]	[ * ]	[ * ]
21	BURLINGTON VT		BTV	[ * ]	[ * ]	[ * ]
22	BUTTE MT		BTM	[ * ]	[ * ]	[ * ]
23	CASPER WY		CPR	[ * ]	[ * ]	[ * ]
24	CEDAR RAPIDS IA		CID	[ * ]	[ * ]	[ * ]
25	CHARLESTON WV		CRW	[ * ]	[ * ]	[ * ]
26	CHARLOTTE NC		CLT	[ * ]	[ * ]	[ * ]
27	CHATTANOOGA TN		CHA	[ * ]	[ * ]	[ * ]
28	CHEYENNE WY		CYS	[ * ]	[ * ]	[ * ]
29	CHICAGO IL (O’Hare)		ORD	[ * ]	[ * ]	[ * ]
30	CINCINNATI OH		CVG	[ * ]	[ * ]	[ * ]
31	CLEVELAND OH		CLE	[ * ]	[ * ]	[ * ]
32	COLORADO SPRINGS CO		COS	[ * ]	[ * ]	[ * ]
33	COLUMBIA SC		CAE	[ * ]	[ * ]	[ * ]
34	COLUMBUS OH		CMH	[ * ]	[ * ]	[ * ]
35	DALLAS TX		DFW	[ * ]	[ * ]	[ * ]
36	DAYTON OH		DAY	[ * ]	[ * ]	[ * ]
37	DENVER CO		DEN	[ * ]	[ * ]	[ * ]
38	DES MOINES IA		DSM	[ * ]	[ * ]	[ * ]
39	DETROIT MI		DTW	[ * ]	[ * ]	[ * ]
40	DULLES VA		IAD	[ * ]	[ * ]	[ * ]
41	DULUTH MN		DLH	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 82 of 101

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Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due  Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
42	DURANGO CO	DRO	[ * ]	[ * ]	[ * ]
43	EL PASO TX	ELP	[ * ]	[ * ]	[ * ]
44	ELMIRA NY	ELM	[ * ]	[ * ]	[ * ]
45	EUGENE OR	EUG	[ * ]	[ * ]	[ * ]
46	FAIRBANKS AK	FAI	[ * ]	[ * ]	[ * ]
47	FLINT MI	FNT	[ * ]	[ * ]	[ * ]
48	FORT MYERS FL	RSW	[ * ]	[ * ]	[ * ]
49	FORT WAYNE IN	FWA	[ * ]	[ * ]	[ * ]
50	FRESNO CA	FAT	[ * ]	[ * ]	[ * ]
51	FT LAUDERDALE FL	FLL	[ * ]	[ * ]	[ * ]
52	GRAND FORKS ND	GFK	[ * ]	[ * ]	[ * ]
53	GRAND JUNCTION CO	GJT	[ * ]	[ * ]	[ * ]
54	GRAND RAPIDS MI	GRR	[ * ]	[ * ]	[ * ]
55	GREAT FALLS MT	GTF	[ * ]	[ * ]	[ * ]
56	GREENSBORO NC	GSO	[ * ]	[ * ]	[ * ]
57	GREENVILLE SC	GSP	[ * ]	[ * ]	[ * ]
58	HARRISBURG PA	MDT	[ * ]	[ * ]	[ * ]
59	HARTFORD CT	BDL	[ * ]	[ * ]	[ * ]
60	HONOLULU HI	HNL	[ * ]	[ * ]	[ * ]
61	HOUSTON TX	IAH	[ * ]	[ * ]	[ * ]
62	HUNTSVILLE AL	HSV	[ * ]	[ * ]	[ * ]
63	INDIANAPOLIS IN	IND	[ * ]	[ * ]	[ * ]
64	JACKSON MS	JAN	[ * ]	[ * ]	[ * ]
65	JACKSONVILLE FL	JAX	[ * ]	[ * ]	[ * ]
66	JFK NY	JFK	[ * ]	[ * ]	[ * ]
67	KALISPELL MT	FCA	[ * ]	[ * ]	[ * ]
68	KANSAS CITY MO	MCI	[ * ]	[ * ]	[ * ]
69	KNOXVILLE TN	TYS	[ * ]	[ * ]	[ * ]
70	LAS VEGAS NV	LAS	[ * ]	[ * ]	[ * ]
71	LITTLE ROCK AR	LIT	[ * ]	[ * ]	[ * ]
72	LONG BEACH CA	LGB	[ * ]	[ * ]	[ * ]
73	LOS ANGELES CA	LAX	[ * ]	[ * ]	[ * ]
74	LOUISVILLE KY	SDF	[ * ]	[ * ]	[ * ]
75	LUBBOCK TX	LBB	[ * ]	[ * ]	[ * ]
76	MADISON WI	MSN	[ * ]	[ * ]	[ * ]
77	MANCHESTER NH	MHT	[ * ]	[ * ]	[ * ]
78	MCALLEN TX	MFE	[ * ]	[ * ]	[ * ]
79	MEDFORD OR	MFR	[ * ]	[ * ]	[ * ]
80	MEMPHIS TN	MEM	[ * ]	[ * ]	[ * ]
81	MIAMI FL	MIA	[ * ]	[ * ]	[ * ]
82	MILWAUKEE WI	MKE	[ * ]	[ * ]	[ * ]
83	MINNEAPOLIS MN	MSP	[ * ]	[ * ]	[ * ]
84	MINOT ND	MOT	[ * ]	[ * ]	[ * ]
85	MISSOULA MT	MSO	[ * ]	[ * ]	[ * ]
86	MOBILE AL	MOB	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 83 of 101

Air Cargo Network

Contract ACN-13-FX

Attachment 4: Operating Plan, Night Network

Modification 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due  Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
87	NASHVILLE TN	BNA	[ * ]	[ * ]	[ * ]
88	NEW ORLEANS LA	MSY	[ * ]	[ * ]	[ * ]
89	NEWARK NJ	EWR	[ * ]	[ * ]	[ * ]
90	NORFOLK VA	ORF	[ * ]	[ * ]	[ * ]
91	OAKLAND CA	OAK	[ * ]	[ * ]	[ * ]
92	OKLAHOMA CITY OK	OKC	[ * ]	[ * ]	[ * ]
93	OMAHA NE	OMA	[ * ]	[ * ]	[ * ]
94	ONTARIO CA	ONT	[ * ]	[ * ]	[ * ]
95	ORANGE COUNTY AIRPORT	SNA	[ * ]	[ * ]	[ * ]
96	ORLANDO FL	MCO	[ * ]	[ * ]	[ * ]
97	PALM BEACH FL	PBI	[ * ]	[ * ]	[ * ]
98	PASCO WA	PSC	[ * ]	[ * ]	[ * ]
99	PEORIA IL	PIA	[ * ]	[ * ]	[ * ]
100	PHILADELPHIA PA	PHL	[ * ]	[ * ]	[ * ]
101	PHOENIX AZ	PHX	[ * ]	[ * ]	[ * ]
102	PITTSBURGH PA	PIT	[ * ]	[ * ]	[ * ]
103	POCATELLO ID	PIH	[ * ]	[ * ]	[ * ]
104	PORTLAND ME	PWM	[ * ]	[ * ]	[ * ]
105	PORTLAND OR	PDX	[ * ]	[ * ]	[ * ]
106	PRESQUE ISLE ME	PQI	[ * ]	[ * ]	[ * ]
107	PROVIDENCE RI	PVD	[ * ]	[ * ]	[ * ]
108	RALEIGH NC	RDU	[ * ]	[ * ]	[ * ]
109	RAPID CITY SD	RAP	[ * ]	[ * ]	[ * ]
110	RENO NV	RNO	[ * ]	[ * ]	[ * ]
111	RICHMOND VA	RIC	[ * ]	[ * ]	[ * ]
112	ROANOKE VA	ROA	[ * ]	[ * ]	[ * ]
113	ROCHESTER MN	RST	[ * ]	[ * ]	[ * ]
114	ROCHESTER NY	ROC	[ * ]	[ * ]	[ * ]
115	ROCK SPRINGS WY	RKS	[ * ]	[ * ]	[ * ]
116	SACRAMENTO CA	SMF	[ * ]	[ * ]	[ * ]
117	SALT LAKE CITY UT	SLC	[ * ]	[ * ]	[ * ]
118	SAN ANTONIO TX	SAT	[ * ]	[ * ]	[ * ]
119	SAN DIEGO CA	SAN	[ * ]	[ * ]	[ * ]
120	SAN FRANCISCO CA	SFO	[ * ]	[ * ]	[ * ]
121	SAN JOSE CA	SJC	[ * ]	[ * ]	[ * ]
122	SAN JUAN PR	SJU	[ * ]	[ * ]	[ * ]
123	SAVANNAH GA	SAV	[ * ]	[ * ]	[ * ]
124	SEATTLE WA	SEA	[ * ]	[ * ]	[ * ]
125	SHREVEPORT LA	SHV	[ * ]	[ * ]	[ * ]
126	SIOUX CITY IA	SUX	[ * ]	[ * ]	[ * ]
127	SOUIX FALLS SD	FSD	[ * ]	[ * ]	[ * ]
128	SOUTH BEND IN	SBN	[ * ]	[ * ]	[ * ]
129	SPOKANE WA	GEG	[ * ]	[ * ]	[ * ]
130	SPRINGFIELD MO	SGF	[ * ]	[ * ]	[ * ]
131	ST CLOUD MN	STC	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Attachment 4: Operating Plan, Night Network

Modification 1

			Originating Operations	Destinating Operations
	Air Cargo Network City	Service Point	ALL Mail Due  Aviation Supplier Monday - Friday	Required Delivery Time to Postal Service Tuesday - Friday	Required Delivery Time to Postal Service Saturday
132	ST LOUIS MO	STL	[ * ]	[ * ]	[ * ]
133	STEWART NY	SWF	[ * ]	[ * ]	[ * ]
134	SYRACUSE NY	SYR	[ * ]	[ * ]	[ * ]
135	TALLAHASSEE FL	TLH	[ * ]	[ * ]	[ * ]
136	TAMPA FL	TPA	[ * ]	[ * ]	[ * ]
137	TRAVERSE CITY MI	TVC	[ * ]	[ * ]	[ * ]
138	TUCSON AZ	TUS	[ * ]	[ * ]	[ * ]
139	TULSA OK	TUL	[ * ]	[ * ]	[ * ]
140	TWIN FALLS ID	TWF	[ * ]	[ * ]	[ * ]
141	WATERLOO IA	ALO	[ * ]	[ * ]	[ * ]
142	WAUSAU WI	CWA	[ * ]	[ * ]	[ * ]
143	WENATCHEE WA	EAT	[ * ]	[ * ]	[ * ]
144	WICHITA KS	ICT	[ * ]	[ * ]	[ * ]
145	YAKIMA WA	YKM	[ * ]	[ * ]	[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Attachment 4: Operating Plan, Night Network

Modification 1

Exercised Option 1

Attachment 4

Operating Plan, Night Network

April 22, 2013

Tender and Delivery Process Codes

A Postal Service Builds ULDs

B Postal Service Transports ULDs to Ramp

C Postal Service Transports Loose Volume to and from Aviation Supplier Location other than Airport Ramp

D Postal Service Transports Loose Volumes to and from Aviation Supplier Ramp

E Aviation Supplier Picks Up ULDs

F Aviation Supplier Delivers in ULDs

G Aviation Supplier Delivers Volume Loose to a Postal Service Designated Location

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
1	ALBANY NY	ALB	D	D
2	ALBURQUERQUE NM	ABQ	D	D
3	ALLENTOWN PA	ABE	D	Origin Only
4	ANCHORAGE AK	ANC	D	D
5	APPLETON WI	ATW	D	D
6	ATLANTA GA	ATL	E	D
7	AUSTIN (Air Stop) TX	AUS	D	D
8	BALTIMORE MD	BWI	D	D
9	BANGOR ME	BGR	D	D
10	BATON ROUGE LA	BTR	D	D
11	BEND OR	RDM	D	Origin Only
12	BILLINGS MT	BIL	D	D
13	BIRMINGHAM AL	BHM	D	D
14	BISMARK ND	BIS	D	Origin Only
15	BOISE ID	BOI	E	F
16	BOSTON MA	BOS	D	D
17	BOZEMAN MT	BZN	D	Origin Only
18	BRISTOL TN / VA	TRI	D	Origin Only
19	BUFFALO NY	BUF	D	D
20	BURBANK CA	BUR	D	D
21	BURLINGTON VT	BTV	D	D
22	BUTTE MT	BTM	D	Origin Only
23	CASPER WY	CPR	D	Origin Only
24	CEDAR RAPIDS IA	CID	D	D
25	CHARLESTON WV	CRW	D	D
26	CHARLOTTE NC	CLT	D	D
27	CHATTANOOGA P&DC TN	CHA	D	D
28	CHEYENNE WY	CYS	D	Origin Only
29	CHICAGO IL	ORD	D	D
30	CINCINNATI OH	CVG	D	D
31	CLEVELAND OH	CLE	D	D

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Attachment 4: Operating Plan, Night Network

Modification 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
32	COLORADO SPRINGS CO	COS	D	D
33	COLUMBIA SC	CAE	D	D
34	COLUMBUS OH	CMH	D	D
35	DALLAS TX	DFW	D	D
36	DAYTON OH	DAY	D	D
37	DENVER CO	DEN	D	D
38	DES MOINES IA	DSM	D	D
39	DETROIT MI	DTW	D	D
40	DULLES VA	IAD	D	D
41	DULUTH MN	DLH	D	D
42	DURANGO CO	DRO	D	Origin Only
43	EL PASO TX	ELP	D	D
44	ELM NY	ELM	D	D
45	EUGENE OR	EUG	D	Origin Only
46	FAIRBANKS AK	FAI	D	Origin Only
47	FLINT P&DC MI	FNT	D	D
48	FORT MYERS P&DC FL	RSW	E	F
49	FORT WAYNE IN P&DC	FWA	D	D
50	FRESNO CA	FAT	D	D
51	FT LAUDERDALE FL	FLL	D	F
52	GRAND FORKS ND	GFK	D	D
53	GRAND JUNCTION CO	GJT	D	Origin Only
54	GRAND RAPIDS MI	GRR	D	D
55	GREAT FALLS MT	GTF	D	D
56	GREENSBORO NC	GSO	D	D
57	GREENVILLE SC	GSP	D	D
58	HARRISBURG PA	MDT	D	D
59	HARTFORD CT	BDL	D	D
60	HONOLULU HI	HNL	D	D
61	HOUSTON TX	IAH	D	D
62	HUNTSVILLE P&DF AL	HSV	D	D
63	INDIANAPOLIS IN	IND	D	D
64	JACKSON MS	JAN	C	C
65	JACKSONVILLE FL	JAX	E	F
66	JFK NY	JFK	BD	D
67	KALISPELL MT	FCA	D	Origin Only
68	KANSAS CITY MO	MCI	D	D
69	KNOXVILLE TN	TYS	D	D
70	LAS VEGAS NV	LAS	D	D
71	LITTLE ROCK AR	LIT	C	C
72	LONG BEACH CA	LGB	D	Origin Only
73	LOS ANGELES CA	LAX	D	D
74	LOUISVILLE KY	SDF	D	D
75	LUBBOCK TX	LBB	D	D
76	MADISON WI	MSN	D	D
77	MANCHESTER NH	MHT	D	D
78	MCALLEN TX	MFE	D	Origin Only
79	MEDFORD OR	MFR	D	Origin Only

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Attachment 4: Operating Plan, Night Network

Modification 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
80	MEMPHIS TN	MEM	D	D
81	MIAMI FL	MIA	D	F/D
82	MILWAUKEE WI	MKE	D	D
83	MINNEAPOLIS MN	MSP	D	D
84	MINOT ND	MOT	D	Origin Only
85	MISSOULA MT	MSO	D	Origin Only
86	MOBILE AL	MOB	D	D
87	NASHVILLE TN	BNA	D	D
88	NEW ORLEANS LA	MSY	D	D
89	NEWARK NJ	EWR	E	F
90	NORFOLK VA	ORF	D	D
91	OAKLAND CA	OAK	D	D
92	OKLAHOMA CITY OK	OKC	D	D
93	OMAHA NE	OMA	D	D
94	ONTARIO CA	ONT	D	D
95	ORANGE COUNTY AIRPORT	SNA	D	Origin Only
96	ORLANDO FL	MCO	A	D
97	PALM BEACH FL	PBI	D	D (T-F) / G (Sat)
98	PASCO WA	PSC	D	Origin Only
99	PEORIA MPO IL	PIA	D	D
100	PHILADELPHIA PA	PHL	D	D
101	PHOENIX AZ	PHX	D	D
102	PITTSBURGH PA	PIT	D/E	D
103	POCATELLO ID	PIH	D	Origin Only
104	PORTLAND ME	PWM	D	D
105	PORTLAND OR	PDX	D	D
106	PRESQUE ISLE ME	PQI	D	D
107	PROVIDENCE RI	PVD	D	D
108	RALEIGH NC	RDU	D	D
109	RAPID CITY SD	RAP	D	Origin Only
110	RENO NV	RNO	D	D
111	RICHMOND VA	RIC	D	D
112	ROANOKE VA	ROA	D	D
113	ROCHESTER MN	RST	D	D
114	ROCHESTER NY	ROC	D	D
115	ROCK SPRINGS WY	RKS	D	Origin Only
116	SACRAMENTO CA	SMF	D	D
117	SALT LAKE CITY UT	SLC	E	F
118	SAN ANTONIO TX	SAT	D	D
119	SAN DIEGO CA	SAN	D	D
120	SAN FRANCISCO CA	SFO	E/D	F/D
121	SAN JOSE CA	SJC	D	D
122	SAN JUAN PR	SJU	D	D
123	SAVANNAH P&DF GA	SAV	D	D
124	SEATTLE WA	SEA	D	D
125	SHREVEPORT LA	SHV	D	D
126	SIOUX CITY IA	SUX	D	Origin Only
127	SOUIX FALLS SD	FSD	D	D

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Attachment 4: Operating Plan, Night Network

Modification 1

	Air Cargo Network City	Service Point	Tender Code	Delivery Code
128	SOUTH BEND IN P&DC	SBN	D	D
129	SPOKANE WA	GEG	D	D
130	SPRINGFIELD MO	SGF	D	D
131	ST CLOUD MN	STC	D	Origin Only
132	ST LOUIS MO	STL	D	D
133	STEWART NY 125	SWF	D	D
134	SYRACUSE NY	SYR	D	D
135	TALLAHASSEE P&DF FL	TLH	D	D
136	TAMPA FL	TPA	A	D
137	TRAVERSE CITY MI	TVC	D	D
138	TUCSON AZ	TUS	D	D
139	TULSA OK	TUL	D	D
140	TWIN FALLS ID	TWF	D	Origin Only
141	WATERLOO IA	ALO	D	Origin Only
142	WAUSAU WI	CWA	D	D
143	WENATCHEE WA	EAT	D	Origin Only
144	WICHITA KS	ICT	D	D
145	YAKIMA WA	YKM	D	Origin Only

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Attachment 6: Postal Furnished Property

Attachment 6

Postal Furnished Property

April 16, 2013

Description	Quantity Memphis:	Quantity Indianapolis	Quantity Oakland
Computer Workstation	1*
Hand Scanners	14
Intermec Printers	14	8
Keyboards / Mouse	14	9	6
Keyboards / Mouse	1
Monitor	1
Monitors	14
MSWYB-2 HP Computers	14
Router	1	1	1
S-AMS Computer & Monitor	1**	9	6
Scales	4

* TIMES computer located at the Truck Gate office

** Located at FedEx administrative offices

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Attachment 7: Electronic Data Interchange Service Requirements

Attachment 7

Electronic Data Interchange Service Requirements

September 1, 2012

Part I - RESDIT

Part II - CARDIT

Part III - INVOIC

Part IV - Claims

Refer to the rtf files provided with the contract.

**The Electronic Data Interchange Service Requirements referred to above have not yet been provided by the USPS. Because this information in Attachment 7 is not material, it will continue to be omitted when provided by the USPS. FedEx Corporation will furnish supplementally a copy of this Attachment 7 (once it has been provided to FedEx Express by the USPS) to the Securities and Exchange Commission upon request.

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Attachment 8: Investigative / Security Protocol and Guidelines

Attachment 8

Investigative / Security Protocol and Guidelines

U.S. Postal Inspection Service

July 2012

This document contains a statement of principles which will be used by the U.S. Postal Inspection Service (“Inspection Service”) and the aviation supplier to address U.S. Mail investigations and security matters related to contract ACN-13-FX (“the Agreement”) between the aviation supplier and the United States Postal Service (“the Postal Service”). This statement of principles is not intended to be all-inclusive but is designed to provide a broad framework that will allow flexibility for the parties to accomplish their respective security and investigative missions. In no event should this statement of principles be construed as an expansion of the aviation supplier’s obligations or the Inspection Service’s authority under any applicable law or regulation or to expand either party’s rights or obligations under the Agreement. For purposes of this statement of principles, the term “mail” shall hereinafter mean any item that is tendered to the aviation supplier by the Postal Service for transportation. This statement of principles is based on open communication and cooperation between the parties at each organizational level to the fullest extent possible in postal-related matters.

Coordination

1. The local contact points for the coordination of any mail related investigations and security issues related to this agreement will be at the aviation supplier’s Security Director level and the Inspection Service Division level. (Attachment A: Postal Contact Listing and Attachment B: Aviation supplier Contact Listing for Postal Service Inspectors)

2. The aviation supplier’s Corporate Security and the Inspection Service, Deputy Chief Inspector, Headquarters Operations, will address all policy issues and any investigative or operational issues not resolved at the local level.

Communication

1. The aviation supplier Security will notify the appropriate Inspection Service Division of any known theft, vandalism or criminal activity involving the mail while in the custody of the aviation supplier.

2. The Inspection Service Division will notify the appropriate aviation supplier representative of any criminal activity or security issues related issues to the mail that is handled by the aviation supplier.

3. The parties will cooperate and assist, with relevant security and investigative information related to the transportation and handling of the mail and with the aviation supplier facilities and equipment on postal owned or leased property.

Security of U.S. Mails

1. While in the custody of the aviation supplier, its employees or agents, mail may not be opened, searched or seized unless (a) expressly authorized by a Postal Inspector or (b) as required by a properly executed federal search warrant. The aviation supplier shall notify a Postal Inspector of any warrants served for mail in the custody of the aviation supplier before coordinating the warrant execution.

2. Address information from the mail in the custody and control of the aviation supplier may not be recorded or disclosed by the aviation supplier employees, except as required for operational purposes regarding the sortation and transportation of the mail. Address

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Attachment 8: Investigative / Security Protocol and Guidelines

information from the mail may only be disclosed to another law enforcement or government agency upon express approval by a Postal Inspector in accordance with postal regulations. The aviation supplier shall notify a Postal Inspector of all requests from law enforcement for information about mail in the custody of the aviation supplier.

3. In situations where the aviation supplier has reason to believe that mail contains dangerous or injurious contents (including hazmat) that pose potential danger to the aviation supplier’s employees, customers, equipment, products or facilities, the aviation supplier may take actions necessary to secure the item and minimize the risk. In these situations, the Inspection Service immediately will be notified and the aviation supplier and the Inspection Service will coordinate the disposition of the item.

4. In situations where the Inspection Service identifies dangerous or hazardous mail that was transported by the aviation supplier that posed a risk to the aviation supplier’s employees, equipment, products or facilities, the Inspection Service immediately will notify the aviation supplier’s Security.

5. Mail security regulations from the Administrative Support Manual, section 274, apply to this contract.

Investigations

1. The aviation supplier’s Security will notify the Inspection Service of all investigative and security issues affecting the mail in the custody of the aviation supplier.

2. The Inspection Service will be responsible for conducting all criminal investigations involving the theft or obstruction of mail or contraband found in the mail while in the aviation supplier’s system and for criminal activities directed at the aviation supplier’s equipment, facilities, customers, or employees on postal owned or leased property. The Inspection Service will give, as much notice to the aviation supplier involving the aviation supplier’s property or employees, and will coordinate with the aviation supplier to prevent disruption to the aviation supplier’s business operations consistent with the obligation under the Noninterference section of this document.

Criminal and Administrative Proceedings

1. The aviation supplier (subject to the receipt of a properly issued subpoena or other compulsory process) and Inspection Service personnel may serve as witnesses in criminal and administrative proceedings that result from these investigations.

Access to the Aviation Supplier’s Operations, Facilities, Personnel and Loss Data

1. The Inspection Service acknowledges that the prime responsibility of the aviation supplier lies in the safe and expeditious movement of cargo. The Inspection Service agrees not to direct any aviation supplier personnel to facilitate the operations of a law enforcement agency.

2. Subject always to the matters addressed under the heading Noninterference below, the aviation supplier will provide the Inspection Service with reasonable access to its facilities, operations, and records when necessary for investigations involving the mail, as mutually agreed upon by the local Postal Inspector and local security.

3. The aviation supplier will coordinate interviews of its employees with the Inspection Service relevant to their investigations involving the mail. Except as otherwise agreed upon, it is within the aviation supplier’s sole discretion, whether investigative interviews of the aviation supplier’s employees by the Inspection Service shall occur on the aviation supplier’s facilities or property. The aviation supplier may not participate in custodial interviews conducted by Postal Inspectors.

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Attachment 8: Investigative / Security Protocol and Guidelines

4. Investigative reports prepared by the aviation supplier will be provided to the Inspection Service in response to a validly issued subpoena after the aviation supplier’s investigation has been completed. The aviation supplier’s management will make independent determinations about the discipline or discharge of any of the aviation supplier’s employee. The Inspection Service shall not attempt to dictate, direct or carry out such actions.

5. The Inspection Service will provide its investigative reports to the aviation supplier through the Postal Service Contracting Officer and will provide an information copy directly to the aviation supplier.

Surveillance Operations

1. The aviation supplier will provide access to its own CCTV systems and will assist the Inspection Service with the installation of temporary camera systems required in investigations involving the mail. The installation of Inspection Service camera systems will be in compliance with federal and state laws governing video surveillance investigations, and the aviation supplier’s privacy policies.

2. Upon request of the aviation supplier, the Inspection Service will share the information obtained from the use of its investigative camera systems installed in the aviation supplier’s facilities and other surveillance equipment used in their investigations.

Undercover Operations

1. The aviation supplier may, subject to the heading Noninterference below, authorize the temporary placement of Inspection Service undercover personnel in its facilities where deemed necessary for investigations involving the mail, provided, however, in no circumstances will the aviation supplier be responsible for any controlled deliveries.

2. The Postal Service will defend and indemnify the aviation supplier for any loss, damage or other liability arising from the use of undercover personnel in the aviation supplier’s facilities.

Contingency Planning and Notification

1. The aviation supplier will ensure the Inspection Service is listed as a party to be notified in its critical incident or contingency plans related to the loss, destruction, or delay of the mail caused by catastrophic losses of an aircraft or other vehicle transporting the mail, or at the aviation supplier’s facility. The aviation supplier will cooperate with the Inspection Service in the recovery of the mail where reasonable.

Overgoods Operations

1. The aviation supplier will provide security to any identified mail or mail contents processed in its overgoods operations and will ensure its transfer to the Postal Service in accordance with standard operating plans.

2. When directly relevant to mail security and investigations, the aviation supplier may, in its sole discretion, provide information to the Inspection Service regarding losses of the aviation supplier’s product identified in its overgoods operations.

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Attachment 8: Investigative / Security Protocol and Guidelines

Protection and Disclosure of Information from Investigations

1. The aviation supplier and the Inspection Service agree to protect all information obtained in the course of their respective investigations from any unauthorized disclosure. Any confidential, proprietary, privileged, or otherwise sensitive information obtained during the course of an investigation will be handled under mutual agreement between the Inspection Service and the aviation supplier.

2. All information related to Inspection Service investigations involving mail in the aviation supplier’s system or investigations of the aviation supplier’s employees will be maintained in the Inspection Service Investigative File System as prescribed by the Privacy Act of 1974, 5 U.S.C. 552a. Any requests by third parties for records maintained in this system will be processed in accordance with requirements of the Privacy Act and applicable privacy policies of the aviation supplier.

3. All public disclosures of information related to investigations conducted by the Inspection Service and THE AVIATION SUPPLIER Security, including media requests or press releases, will be coordinated between and approved by the Inspection Service and the aviation supplier in accordance with a mutually agreed communications plan and the aviation supplier’s privacy policies.

Noninterference

1. The Inspection Service agrees that in the exercise of its rights under this protocol it will not disrupt or interfere with any of the aviation supplier’s operations.

Modifications

1. This protocol and guidelines may be modified based on the mutual agreement of the aviation supplier and the Inspection Service.

Postal Contact for Inspectors

Contact Number: 877-876-2455

Option 2 Emergency

Option 3 Mail Theft

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Attachment 9: Wage Determination

Attachment 9

Wage Determination

October 31, 2012

Due to the size and complexity of this solicitation, it is impracticable to attach all relevant wage determinations to the solicitation packet. In lieu of a physical attachment, the Postal Service has worked with the Department of Labor to provide instructions to potential contractors for accessing the wage determination(s) on the Department of Labor website. The instructions are as follows:

Current wage determinations can be found at www.wdol.gov. This is the official Department of Labor website from which to access wage determinations. To access wage determinations, enter the website and click “Selecting SCA WDs” under the column heading “Service Contract Act.” Use the drop down menu to select the state and county for the designated wage determination, and then click “Continue.” Answer “No” for the question “Were these services previously performed at this locality under an SCA-covered contract?” Answer “No” for the question “Are the contract services to be performed listed below as Non-Standard Services?” Click on the Printer Friendly Version for a full view and printable Wage Determination. Identify the SCA wage determination(s), including determination number, revision date, and state and counties that were used to determine that the rates offered are in compliance on Attachment 13: Service Contract Act Wage Determinations.* The revision numbers of the wage determinations listed in the solicitation index of wage determinations should be used in the comparisons. For all the identified SCA eligible labor categories, map the SCA equivalent labor category title (titles/descriptions available at http://www.wdol.gov. Click on the “library” link, then download the SCA Directory of Occupations, 5th Edition). Also identify the Wage Determination number that the labor categories in your offer are predicated. Note that the applicable revision number for all Wage Determination numbers is the revision number identified in the solicitation index of wage determinations. In those instances where the aviation supplier has a non-standard classification (a standard wage does not fit the work category) that requires a special SCA wage determination, the aviation supplier must contact the Postal Service Contracting Officer at:

Manager, Air Transportation CMC

475 L’ Enfant Plaza SW, Room 1P650

Washington, DC 20260-0650

Although the aviation supplier assumes sole responsibility to faithfully discharge all duties and obligations with regards to wage determinations imposed by the Department of Labor, the Postal Service will assist the aviation supplier upon the aviation supplier’s request, to the extent necessary, in selecting the appropriate wage determinations.

The aviation supplier should review the Service Contract Act Directory of Occupations to confirm whether the positions the aviation supplier wishes to offer fit into the currently published occupation titles under the wage determination. If the position will not fit into any of the currently published occupation titles, please review the instructions in the wage determination entitled “The process for preparing a conformance request.” In accordance with the Department of Labor instructions (that can be found at www.wdol.gov) in each wage determination, entitled Conformance Process, any class of service employee that is not listed therein and that is to be employed under the contract (i.e., the work to be performed is not performed by any classification listed in the wage determination) must be classified by the contractor so as to provide a reasonable relationship (i.e., appropriate level of skill comparison) between such unlisted classifications and the classifications listed in the wage determination. Such conformed classes of employees shall be paid the monetary wages and furnished the fringe benefits as are determined. Such conforming process shall be initiated by the contractor prior to the

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Attachment 9: Wage Determination

performance of contract work by such unlisted class(es) of employees. The conformed classification, wage rate, and/or fringe benefits shall be retroactive to the commencement date of the contract.

* Given the desire of the offerors to seek additional information from the Department of Labor regarding the applicability of the Service Contract Act to the contract(s) that may result from this solicitation, the completed submission of Attachment 13: Service Contract Act Wage Determination may be delayed until a mutually agreeable date prior to contract award. As a condition of acceptance of the offeror’s proposal(s), the offeror must explicitly state that the proposed pricing will hold firm irrespective of any determination made by the Department of Labor.

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Attachment 10: Pricing

Modification 1

Exercised Option 1

Attachment 10

Pricing

April 18, 2013

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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Attachment 11: Perishable Mail and Lives

Attachment 11

Perishable Mail and Lives

April 22, 2013

The aviation supplier will accept perishable mail and live animals as specified under Domestic Mail Manual 601, subsection 9.3, effective on June 19, 2006. All live animal shipments are designated as ‘air only’ shipments.

The Postal Service will tender perishable mail and live animal shipments to the aviation supplier for the Day Network, Tuesday through Saturday, and for the Night Network, Monday through Friday. Due to potential extended delivery times, the Postal Service will not tender any live animal shipments the day before a holiday.

All volume for perishable mail and live animals will be planned during the Ordering Process.

The Postal Service will be required to supply each air stop with a determined number of coverings of loosely woven material for covering the live animal shipments in weather events.

The Postal Service shall ensure that its Terminal Handling Suppliers follow the procedures established by the aviation supplier for the proper loading and securing of live animal shipments.

For the Day and Night Networks, all bee shipments must be tendered separately from all other shipments. Bee shipments are prohibited on the aviation supplier’s Feeder Network.

The aviation supplier will provide specific details on the pallet building for live animal shipments.

The Postal Service will tender all live animals with a ULD D&R tag attached to the cargo net. The D&R tag will be attached to a manila tag (supplied by the Postal Service) and secured to the net with a cable tie.

Day Network

All live animal shipments must be tendered to the aviation supplier on an aircraft pallet per the market aircraft type as provided by the aviation supplier. The pallet types and aircraft assignment per air stop will be provided by the aviation supplier Tender will be by the ’All Mail Due Aviation Supplier’ column as shown in Attachment 3: Operating Plan, Day Network.

Night Network

The aviation supplier will accept live animals for loose loading for the Night Network. The aviation supplier will accept a maximum of two hundred (200) cubic feet (approximately twenty (20) pieces) of live animals for loose loading at the time specified in the ‘All Mail Due Aviation Supplier’ column in Attachment 4: Operating Plan, Night Network. For more than two hundred (200) cubic feet, the Postal Service will be required to tender no less than two (2) hours prior to the scheduled aircraft departure. More time may be required based on volume and local ramp circumstances.

Terminal Handling

The Postal Service will not place live animals inside of a closed ULD. All live animals will be shipped via pallet which will be provided by the aviation supplier. Live animal shipments will be maintained in an upright position throughout the transportation process to prevent fatality. The Postal Service will not accept or load any shipment that appears to be damaged. The Postal Service will ensure four (4) inches of air space around the perimeter of stacks of boxes. The ‘spacers / pallets’ used between the stacks of live animals will be provided by the Postal Service.

Page 99 of 101

Air Cargo Network

Contract ACN-13-FX

Attachment 11: Perishable Mail and Lives

The live animals cannot be left in direct sunlight for extended periods. Additionally, the live animals cannot be left in drafty areas or exposed to exhaust fumes. Live animals cannot be placed near dry ice shipments. If for any particular trunk flight for any origin or destination air stop on the Night Network there is more than 1,000 pounds of dry ice, any live animal shipments will be rolled to the following Day Network operation. If it is necessary to roll live animal shipments to the following Day Network operation, the aviation supplier will not incur a reduction in payment for the applicable live animal shipments. On the Day Network, live animal shipments have priority over dry ice. Live animal shipments cannot be covered with any plastic. Cargo or mail cannot be placed on top of live animals.

Page 100 of 101

Air Cargo Network

Contract ACN-13-FX

Attachment 13: Service Contract Act Wage Determinations

Attachment 13

Service Contract Act Wage Determinations

April 17, 2013

[ * ]

* Blank spaces contained confidential information which has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Page 101 of 101

EX-10.73

EXHIBIT 10.73

Compensation Arrangements with Named Executive Officers

Base Salaries

The following table sets forth the annual base salaries of FedEx’s named executive officers:

Name and Current Position	Base Salary
Frederick W. Smith Chairman, President and Chief Executive Officer	$	1,266,960
Alan B. Graf, Jr. Executive Vice President and Chief Financial Officer	$	902,784
David J. Bronczek President and Chief Executive Officer – FedEx Express	$	942,096
T. Michael Glenn Executive Vice President, Market Development and Corporate Communications	$	833,364
Robert B. Carter Executive Vice President, FedEx Information Services and Chief Information Officer	$	762,960

Mr. Smith’s base salary was effective as of July 16, 2011. The base salaries of the other named executive officers were effective as of July 1, 2011. The named executive officers did not receive base salary increases for fiscal 2013 or fiscal 2014.

Fiscal 2014 Annual Incentive Compensation Program

Chairman, President and Chief Executive Officer

Frederick W. Smith’s fiscal 2014 annual bonus will be based on the achievement of corporate objectives for operating income for fiscal 2014. The independent members of the Board of Directors, upon the recommendation of the Compensation Committee, may adjust Mr. Smith’s bonus amount upward or downward based on their annual evaluation of Mr. Smith’s performance, including the quality and effectiveness of his leadership, the execution of key strategic initiatives and the following corporate performance measures:

• FedEx’s stock price performance relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Transportation Average, the Dow Jones Industrial Average and competitors;

1

• FedEx’s stock price to earnings (P/E) ratio relative to the Standard & Poor’s 500 Composite Index, the Dow Jones Industrial Average and competitors;

• FedEx’s market capitalization;

• FedEx’s revenue and operating income growth (excluding certain unusual items) relative to competitors;

• FedEx’s free cash flow (excluding business acquisitions), return on invested capital (excluding certain unusual items), and weighted average cost of capital;

• Analyst coverage and ratings for FedEx’s stock;

• FedEx’s U.S. and international revenue market share; and

• FedEx’s reputation rankings by various publications and surveys.

None of these factors will be given any particular weight in determining whether to adjust Mr. Smith’s bonus amount.

Mr. Smith’s annual bonus target for fiscal 2014 is 130% of his annual base salary (at fiscal year-end), with a maximum payout of 300% of his target bonus.

Non-CEO Named Executive Officers

The fiscal 2014 annual bonus target payouts for the non-CEO named executive officers, as a percentage of annual base salary (at fiscal year-end), are as follows:

Name	Target Payout
Alan B. Graf, Jr.		90	%
David J. Bronczek		100	%
T. Michael Glenn		90	%
Robert B. Carter		90	%

The maximum payout for each executive is 240% of his target bonus.

The fiscal 2014 annual bonus for the non-CEO named executive officers will be based on the achievement of corporate objectives for operating income for fiscal 2014. In prior years, a portion of the annual bonus for the non-CEO named executive officers was based on the achievement of individual performance objectives. For fiscal 2014, however, the entire annual bonus for the non-CEO named executive officers will be based on company financial performance. Mr. Smith may adjust each officer’s bonus amount downward based on the officer’s achievement of individual performance objectives established at the beginning of the fiscal year. Mr. Smith will determine the achievement level of each executive’s individual objectives at the conclusion of fiscal 2014.

2

Company Financial Performance Measure

The annual bonus payout opportunity for each named executive officer ranges, on a sliding scale, from a minimum amount if the annual bonus plan’s pre-established operating income threshold is achieved up to a maximum amount if such financial performance goal is substantially exceeded. Ordinarily, our business plan objective for the financial measure – operating income for fiscal 2014 – is the target under the annual bonus plan. For fiscal 2014, however, in order to further motivate management to improve the company’s performance, the annual bonus plan’s target objective for company financial performance is higher than the business plan objective for operating income.

Long-Term Incentive Program

FedEx’s long-term incentive (“LTI”) plans for the three-fiscal-year periods 2012 through 2014, 2013 through 2015 and 2014 through 2016 provide long-term cash bonus opportunities to members of upper management, including the named executive officers, upon the conclusion of fiscal 2014, 2015 and 2016, respectively, if certain aggregate fully diluted earnings per share (“EPS”) goals established by the Board of Directors are achieved with respect to those periods. No amounts can be earned for the fiscal 2012 through 2014, 2013 through 2015 and 2014 through 2016 plans until 2014, 2015 and 2016, respectively, because achievement of the EPS goals can only be determined following the conclusion of the applicable three-fiscal-year period.

The following table sets forth the potential future payouts to each of FedEx’s named executive officers under FedEx’s LTI plans:

		Potential Future Payouts
Name	Performance Period	Threshold ($)		Target ($)		Maximum ($)
Frederick W. Smith	FY2012–FY2014		1,000,000		4,000,000		6,000,000
	FY2013–FY2015		1,000,000		4,000,000		6,000,000
	FY2014–FY2016		1,000,000		4,000,000		6,000,000
Alan B. Graf, Jr.	FY2012–FY2014		300,000		1,200,000		1,800,000
	FY2013–FY2015		300,000		1,200,000		1,800,000
	FY2014–FY2016		300,000		1,200,000		1,800,000
David J. Bronczek	FY2012–FY2014		375,000		1,500,000		2,250,000
	FY2013–FY2015		375,000		1,500,000		2,250,000
	FY2014–FY2016		375,000		1,500,000		2,250,000
T. Michael Glenn	FY2012–FY2014		300,000		1,200,000		1,800,000
	FY2013–FY2015		300,000		1,200,000		1,800,000
	FY2014–FY2016		300,000		1,200,000		1,800,000
Robert B. Carter	FY2012–FY2014		300,000		1,200,000		1,800,000
	FY2013–FY2015		300,000		1,200,000		1,800,000
	FY2014–FY2016		300,000		1,200,000		1,800,000

3

The potential individual future payouts set forth in the table above are set dollar amounts ranging from threshold (minimum) amounts, if the EPS goal achieved is less than target, up to maximum amounts, if the plan goal is substantially exceeded. There can be no assurance that the potential future payouts shown in this table will be achieved.

4

EX-21

EXHIBIT 21

SUBSIDIARIES OF FEDEX CORPORATION

The following is a list of subsidiaries of FedEx Corporation as of May 31, 2013. Pursuant to Item 601(b)(21) of Regulation S-K, we have omitted some subsidiaries that, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of May 31, 2013 under Rule 1-02(w) of Regulation S-X. FedEx Corporation owns, directly or indirectly, 100% of the voting securities of each of the listed subsidiaries.

NAME OF SUBSIDIARY	JURISDICTION OF INCORPORATION OR ORGANIZATION
Federal Express Corporation	Delaware
Federal Express Canada Ltd.	Canada
Federal Express International, Inc.	Delaware
Federal Express Pacific, Inc.	Delaware
Federal Express Europe, Inc.	Delaware
Federal Express Holdings S.A.	Delaware
FedEx International Holdings Limited (Luxembourg) S.C.S.	Grand Duchy of Luxembourg
Federal Express (China) Company Limited	People’s Republic of China
FedEx Brasil Logística e Transporte S.A.	Federative Republic of Brazil
FedEx de México S. de R.L. de C.V.	United Mexican States
FedEx UK Limited	England and Wales
FedEx Trade Networks, Inc.	Delaware
FedEx Trade Networks Trade Services, Inc.	Delaware
World Tariff, Limited	California
FedEx Trade Networks Transport & Brokerage, Inc.	New York
FedEx Ground Package System, Inc.	Delaware
FedEx Ground Package System, Ltd.	Wyoming
FedEx SmartPost, Inc.	Delaware
FedEx Freight Corporation	Delaware
FedEx Freight, Inc.	Arkansas
FedEx Custom Critical, Inc.	Ohio
FedEx Corporate Services, Inc.	Delaware
FedEx TechConnect, Inc.	Delaware
FedEx SupplyChain Systems, Inc.	Ohio
FedEx Office and Print Services, Inc.	Texas

EX-23

EXHIBIT 23

Consent of the Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-171232, 333-03443, 333-45037, 333-71065, 333-34934, 333-100572, 333-111399, 333-121418, 333-130619, 333-156333 and Form S-3 No. 333-183989) of FedEx Corporation and in the related Prospectuses of our reports dated July 15, 2013, with respect to the consolidated financial statements and schedule of FedEx Corporation, and the effectiveness of internal control over financial reporting of FedEx Corporation, included in this Annual Report (Form 10-K) for the year ended May 31, 2013.

/s/ Ernst & Young LLP

Memphis, Tennessee

July 15, 2013

EX-24

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 2013.

/s/ JAMES L. BARKSDALE

James L. Barksdale

STATE OF MISSISSIPPI

COUNTY OF MADISON

I, Sharon S. Lucius, a Notary Public in and for said County, in the aforesaid State, do hereby certify that James L. Barksdale, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ SHARON S. LUCIUS

Notary Public

My Commission Expires:

October 15, 2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of June, 2013.

/s/ JOHN A. EDWARDSON

John A. Edwardson

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Joyce J. Jones, a Notary Public in and for said County, in the aforesaid State, do hereby certify that John A. Edwardson, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JOYCE J. JONES

Notary Public

My Commission Expires:

12-10-2016

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, her true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of June, 2013.

/s/ SHIRLEY ANN JACKSON

Shirley Ann Jackson

STATE OF NEW YORK

COUNTY OF RENSSELAER

I, Theresa Hobbs, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Shirley Ann Jackson, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that she signed and delivered the said instrument as her free and voluntary act, for the uses and purposes therein set forth.

/s/ THERESA HOBBS

Notary Public

My Commission Expires:

12-27-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of June, 2013.

/s/ STEVEN R. LORANGER

Steven R. Loranger

STATE OF ARIZONA

COUNTY OF COCONINO

I, Andrew Rodriguez, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Steven R. Loranger, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ ANDREW RODRIGUEZ

Notary Public

My Commission Expires:

7-27-2015

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of May, 2013.

/s/ GARY W. LOVEMAN

Gary W. Loveman

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Joyce J. Jones, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Gary W. Loveman, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JOYCE J. JONES

Notary Public

My Commission Expires:

12-10-2016

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of June, 2013.

/s/ R. BRAD MARTIN

R. Brad Martin

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Judy C. Baird, a Notary Public in and for said County, in the aforesaid State, do hereby certify that R. Brad Martin, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JUDY C. BAIRD

Notary Public

My Commission Expires:

May 24, 2015

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of June, 2013.

/s/ JOSHUA COOPER RAMO

Joshua Cooper Ramo

STATE OF NEW YORK

COUNTY OF NEW YORK

I, Tara Henwood Butzbaugh, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Joshua Cooper Ramo, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ TARA HENWOOD BUTZBAUGH

Notary Public

My Commission Expires:

December 2014

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of June, 2013.

/s/ SUSAN C. SCHWAB

Susan C. Schwab

WASHINGTON

DISTRICT OF COLUMBIA

I, Pamela Sanford, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Susan C. Schwab, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that she signed and delivered the said instrument as her free and voluntary act, for the uses and purposes therein set forth.

/s/ PAMELA SANFORD

Notary Public

My Commission Expires:

11/14/17

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of June, 2013.

/s/ JOSHUA I. SMITH

Joshua I. Smith

STATE OF MARYLAND

COUNTY OF MONTGOMERY

I, Sandra D. Davis, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Joshua I. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ SANDRA D. DAVIS

Notary Public

My Commission Expires:

10-8-2016

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of June, 2013.

/s/ DAVID P. STEINER

David P. Steiner

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Joyce J. Jones, a Notary Public in and for said County, in the aforesaid State, do hereby certify that David P. Steiner, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JOYCE J. JONES

Notary Public

My Commission Expires:

12-10-2016

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, a Director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of June, 2013.

/s/ PAUL S. WALSH

Paul S. Walsh

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Joyce J. Jones, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Paul S. Walsh, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JOYCE J. JONES

Notary Public

My Commission Expires:

12-10-2016

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, the principal financial officer of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of May, 2013.

/s/ ALAN B. GRAF, JR.

Alan B. Graf, Jr.

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Anne R. Coleman, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Alan B. Graf, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ ANNE R. COLEMAN

Notary Public

My Commission Expires:

9-18-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, the principal executive officer and a director of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Alan B. Graf, Jr. and John L. Merino, and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer and director, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of June, 2013.

/s/ FREDERICK W. SMITH

Frederick W. Smith

STATE OF TENNESSEE

COUNTY OF SHELBY

I, Anne R. Coleman, a Notary Public in and for said County, in the aforesaid State, do hereby certify that Frederick W. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ ANNE R. COLEMAN

Notary Public

My Commission Expires:

9-18-2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned, the principal accounting officer of FedEx Corporation (the “Corporation”), a Delaware corporation, does hereby constitute and appoint Frederick W. Smith and Alan B. Graf, Jr., and each of them, with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, the Corporation’s Annual Report on Form 10-K with respect to the Corporation’s fiscal year ended May 31, 2013, and any and all amendments thereto; and hereby ratifies and confirms all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of June, 2013.

/s/ JOHN L. MERINO

John L. Merino

STATE OF TENNESSEE

COUNTY OF SHELBY

I, JoAnn Hands, a Notary Public in and for said County, in the aforesaid State, do hereby certify that John L. Merino, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the said instrument as his free and voluntary act, for the uses and purposes therein set forth.

/s/ JOANN HANDS

Notary Public

My Commission Expires:

April 10, 2016

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Frederick W. Smith, certify that:

1. I have reviewed this annual report on Form 10-K of FedEx Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 15, 2013

/s/ Frederick W. Smith

Frederick W. Smith

Chairman, President and

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan B. Graf, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of FedEx Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 15, 2013

/s/ Alan B. Graf, Jr.

Alan B. Graf, Jr.

Executive Vice President and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of FedEx Corporation (“FedEx”) on Form 10-K for the period ended May 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick W. Smith, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx.

Date: July 15, 2013

/s/ Frederick W. Smith

Frederick W. Smith

Chairman, President and

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of FedEx Corporation (“FedEx”) on Form 10-K for the period ended May 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan B. Graf, Jr., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of FedEx.

Date: July 15, 2013

/s/ Alan B. Graf, Jr.

Alan B. Graf, Jr.

Executive Vice President and

Chief Financial Officer

XML

Retirement Plans (Details 13)	12 Months Ended
	May 31, 2013
Defined Benefit Plan Assumed Health Care Cost Trend Rates [Abstract]
Defined Benefit Plan Health Care Cost Trend Rate Assumed For Next Fiscal Year	7.70%
Defined Benefit Plan Ultimate Health Care Cost Trend Rate	4.50%
Defined Benefit Plan Year That Rate Reaches Ultimate Trend Rate	2029
Defined Benefit Plan Dental Care Cost Trend Rate Assumed For Next Fiscal Year	6.90%
Defined Benefit Plan Ultimate Dental Care Cost Trend Rate	4.50%
Defined Benefit Plan Year That Dental Care Rate Reaches Ultimate Trend Rate	2029

XML

Retirement Plans (Details 3)	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Defined Benefit Plan Assets Other Information [Abstract]
Expected long-term rate of return on assets	8.00%	8.00%	8.00%
Actual rate of return on plan assets for the 15-year period	6.90%
Estimated long-term rate of return on plan assets for 2014	7.75%

XML

Retirement Plans (Details 5) (Fair Value Inputs Level 3 [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Fair Value Inputs Level 3 [Member]
Defined Benefit Plan Change In Fair Value Of Plan Assets Roll Forward
Beginning balance May 31	$ 402	$ 403
Actual return on plan assets
Assets held during current year	(29)	3
Assets sold during the year	55	38
Purchases, sales and settlements	(96)	(42)
Ending balance May 31	$ 332	$ 402

XML

Guarantees and Indemnifications (Details) (USD $) In Millions, unless otherwise specified	May 31, 2013
Guarantees [Abstract]
Guaranteed Principal Amount Of Special Facility Revenue Bonds	$ 551
Future Principal And Interest Payments For Special Facility Revenue Bonds	$ 708

XML

Condensed Consolidating Financial Statements (Details 2) (USD $) In Millions, unless otherwise specified	May 31, 2013	May 31, 2012	May 31, 2011	May 31, 2010
CURRENT ASSETS
Cash and cash equivalents	$ 4,917	$ 2,843	$ 2,328	$ 1,952
Receivables, less allowances	5,044	4,704
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	780	976
Deferred income taxes	533	533
Total current assets	11,274	9,056
PROPERTY AND EQUIPMENT, AT COST	38,109	36,164
Less accumulated depreciation and amortization	19,625	18,916
Net property and equipment	18,484	17,248
GOODWILL	2,755	2,387	2,326
Other assets	1,054	1,212
ASSETS	33,567	29,903
CURRENT LIABILITIES
Current portion of long-term debt	251	417
Accrued salaries and employee benefits	1,688	1,635
Accounts payable	1,879	1,613
Accrued expenses	1,932	1,709
Total current liabilities	5,750	5,374
LONG-TERM DEBT, LESS CURRENT PORTION	2,739	1,250
OTHER LONG-TERM LIABILITIES
Deferred income taxes	1,652	836
Other liabilities	6,028	7,716
Total other long-term liabilities	7,680	8,552
STOCKHOLDERS' INVESTMENT	17,398	14,727	15,220	13,811
LIABILITIES AND STOCKHOLDERS' INVESTMENT	33,567	29,903
Parent Company [Member]
CURRENT ASSETS
Cash and cash equivalents	3,892	1,906	1,589	1,310
Receivables, less allowances		3
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	45	261
Total current assets	3,937	2,170
PROPERTY AND EQUIPMENT, AT COST	27	29
Less accumulated depreciation and amortization	21	20
Net property and equipment	6	9
INVESTMENT IN SUBSIDIARIES	18,739	17,163
Other assets	2,187	2,845
ASSETS	24,869	22,187
CURRENT LIABILITIES
Current portion of long-term debt	250
Accrued salaries and employee benefits	82	83
Accounts payable	4	6
Accrued expenses	355	184
Total current liabilities	691	273
LONG-TERM DEBT, LESS CURRENT PORTION	2,489	1,000
INTERCOMPANY PAYABLE	1,642	1,847
OTHER LONG-TERM LIABILITIES
Other liabilities	2,649	4,340
Total other long-term liabilities	2,649	4,340
STOCKHOLDERS' INVESTMENT	17,398	14,727
LIABILITIES AND STOCKHOLDERS' INVESTMENT	24,869	22,187
Guarantor Subsidiaries [Member]
CURRENT ASSETS
Cash and cash equivalents	405	417	279	258
Receivables, less allowances	3,989	3,793
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	681	671
Deferred income taxes	518	514
Total current assets	5,593	5,395
PROPERTY AND EQUIPMENT, AT COST	35,915	34,301
Less accumulated depreciation and amortization	18,469	17,822
Net property and equipment	17,446	16,479
INTERCOMPANY RECEIVABLE	439	323
GOODWILL	1,552	1,553
INVESTMENT IN SUBSIDIARIES	3,347	2,978
Other assets	822	1,099
ASSETS	29,199	27,827
CURRENT LIABILITIES
Current portion of long-term debt	1	417
Accrued salaries and employee benefits	1,402	1,365
Accounts payable	1,392	1,276
Accrued expenses	1,366	1,406
Total current liabilities	4,161	4,464
LONG-TERM DEBT, LESS CURRENT PORTION	250	250
OTHER LONG-TERM LIABILITIES
Deferred income taxes	3,798	3,649
Other liabilities	3,133	3,193
Total other long-term liabilities	6,931	6,842
STOCKHOLDERS' INVESTMENT	17,857	16,271
LIABILITIES AND STOCKHOLDERS' INVESTMENT	29,199	27,827
Non Guarantor Subsidiaries [Member]
CURRENT ASSETS
Cash and cash equivalents	717	636	546	443
Receivables, less allowances	1,084	943
Spare parts, supplies, fuel, prepaid expenses and other, less allowances	54	44
Deferred income taxes	15	19
Total current assets	1,870	1,642
PROPERTY AND EQUIPMENT, AT COST	2,167	1,834
Less accumulated depreciation and amortization	1,135	1,074
Net property and equipment	1,032	760
INTERCOMPANY RECEIVABLE	1,203	1,524
GOODWILL	1,203	834
Other assets	191	86
ASSETS	5,499	4,846
CURRENT LIABILITIES
Accrued salaries and employee benefits	204	187
Accounts payable	609	482
Accrued expenses	211	119
Total current liabilities	1,024	788
OTHER LONG-TERM LIABILITIES
Deferred income taxes		5
Other liabilities	246	183
Total other long-term liabilities	246	188
STOCKHOLDERS' INVESTMENT	4,229	3,870
LIABILITIES AND STOCKHOLDERS' INVESTMENT	5,499	4,846
Consolidation Eliminations [Member]
CURRENT ASSETS
Cash and cash equivalents	(97)	(116)	(86)	(59)
Receivables, less allowances	(29)	(35)
Total current assets	(126)	(151)
INTERCOMPANY RECEIVABLE	(1,642)	(1,847)
INVESTMENT IN SUBSIDIARIES	(22,086)	(20,141)
Other assets	(2,146)	(2,818)
ASSETS	(26,000)	(24,957)
CURRENT LIABILITIES
Accounts payable	(126)	(151)
Total current liabilities	(126)	(151)
INTERCOMPANY PAYABLE	(1,642)	(1,847)
OTHER LONG-TERM LIABILITIES
Deferred income taxes	(2,146)	(2,818)
Total other long-term liabilities	(2,146)	(2,818)
STOCKHOLDERS' INVESTMENT	(22,086)	(20,141)
LIABILITIES AND STOCKHOLDERS' INVESTMENT	$ (26,000)	$ (24,957)

XML

Preferred Stock

12 Months Ended

May 31, 2013

Preferred Stock [Abstract]

Preferred Stock

NOTE 8: PREFERRED STOCK

Our Certificate of Incorporation authorizes the Board of Directors, at its discretion, to issue up to 4,000,000 shares of preferred stock. The stock is issuable in series, which may vary as to certain rights and preferences, and has no par value. As of May 31, 2013, none of these shares had been issued.

XML

Goodwill and Other Intangible Assets (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Goodwill and Other Intangible Assets [Abstract]
Intangible assets amortization expense	$ 27	$ 18	$ 32
Finite Lived Intangible Assets [Line Items]
Net Book Value	$ 72	$ 34

XML

Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Consolidated Statements of Income
REVENUES	$ 44,287	$ 42,680	$ 39,304
OPERATING EXPENSES:
Salaries and employee benefits	16,570	16,099	15,276
Purchased transportation	7,272	6,335	5,674
Rentals and landing fees	2,521	2,487	2,462
Depreciation and amortization	2,386	2,113	1,973
Fuel	4,746	4,956	4,151
Maintenance and repairs	1,909	1,980	1,979
Business realignment, impairment and other charges	660	134	89
Other	5,672	5,390	5,322
OPERATING EXPENSES	41,736	39,494	36,926
OPERATING INCOME	2,551	3,186	2,378
OTHER INCOME (EXPENSE):
Interest expense	(82)	(52)	(86)
Interest income	21	13	9
Other, net	(35)	(6)	(36)
OTHER INCOME (EXPENSE)	(96)	(45)	(113)
INCOME BEFORE INCOME TAXES	2,455	3,141	2,265
PROVISION FOR INCOME TAXES	894	1,109	813
NET INCOME	$ 1,561	$ 2,032	$ 1,452
EARNINGS PER COMMON SHARE
Basic	$ 4.95	$ 6.44	$ 4.61
Diluted	$ 4.91	$ 6.41	$ 4.57

XML

Description of Business and Summary of Significant Accounting Policies

12 Months Ended

May 31, 2013

Description of Business and Summary of Significant Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world's largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading North American provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight services.These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing, information technology, communications and back-office support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”).

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2013 or ended May 31 of the year referenced.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation. We are not the primary beneficiary of, nor do we have a controlling financial interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity.

REVENUE RECOGNITION. We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Transportation servicesare provided with the use of employees and independent contractors. FedEx is the principal to the transaction for most of these services and revenue from these transactions is recognized on a gross basis. Costs associated with independent contractor settlements are recognized as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income. For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date. Estimates for future billing adjustments to revenue and accounts receivable are recognized at the time of shipment for money-back service guarantees and billing corrections. Delivery costs are accrued as incurred.

Our contract logistics, global trade services and certain transportation businesses, such as FedEx SmartPost, engage in some transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Certain of our revenue-producing transactions are subject to taxes, such as sales tax, assessed by governmental authorities. We present these revenues net of tax.

CREDIT RISK. We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic factors on the composition of accounts receivable. Historically, credit losses have been within management's expectations.

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $424million in 2013, $421 million in 2012 and $375 million in 2011.

CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

SPARE PARTS, SUPPLIES AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. Additionally, allowances for obsolescence are provided for spare parts currently identified as excess or obsolete. These allowances are based on management estimates, which are subject to change. The majority of our supplies and our fuel are reported at weighted average cost.

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software. Gains and losses on sales of property used in operations are classified within operating expenses.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset's service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

		Net Book Value at May 31,
	Range	2013		2012
Wide-body aircraft and related equipment	15 to 30 years	$	7,191	$	7,161
Narrow-body and feeder aircraft and related equipment	5 to 18 years		2,284		1,881
Package handling and ground support equipment	3 to 30 years		2,311		2,101
Vehicles	3 to 15 years		1,748		1,411
Computer and electronic equipment	2 to 10 years		993		930
Facilities and other	2 to 40 years		3,957		3,764

Substantially all property and equipment have no material residual values.  The majority of aircraft costs are depreciated on a straight-line basis over 15 to 30 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment.  This evaluation may result in changes in the estimated lives and residual values as it did in 2013 and 2012 with certain aircraft.  In May 2013, FedEx Express made the decision to accelerate the retirement of 76 aircraft and related engines to aid in our fleet modernization and improve our global network. In May 2012, we shortened the depreciable lives for 54 aircraft and related engines to accelerate the retirement of these aircraft, resulting in a depreciation expense increase of $69 million in 2013. As a result of these accelerated retirements, we expect an additional $74 million in year-over-year depreciation expense in 2014.

Depreciation expense, excluding gains and losses on sales of property and equipment used in operations, was $2.3 billion in 2013, $2.1 billion in 2012 and $1.9 billion in 2011.  Depreciation and amortization expense includes amortization of assets under capital lease.

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $45 million in 2013, $85 million in 2012 and $71 million in 2011.

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level, for our analysis of impairment.

In the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels. Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment on a quarterly basis. Factors which could cause impairment include, but are not limited to, adverse changes in our global economic outlook and the impact of our outlook on our current and projected volume levels, including lower capacity needs during our peak shipping seasons; the introduction of new fleet types or decisions to permanently retire an aircraft fleet from operations; or changes to planned service expansion activities. We currently have one aircraft temporarily idled. This aircraft has been idled for 15 months and is expected to return to revenue service.

In May 2013, we made the decision to retire from service two Airbus A310-200 aircraft and four related engines, three Airbus A310-300 aircraft and two related engines and five Boeing MD10-10 aircraft and 15 related enginesto align with the plans of FedEx Express to modernize its aircraft fleet and improve its global network. As a consequence of this decision, a noncash impairment charge of $100 million ($63 million, net of tax, or $0.20 per diluted share) was recorded in the FedEx Express segment in the fourth quarter. All of these aircraft were temporarily idled and not in revenue service.

In May 2012, we made the decision to retire from service 18 Airbus A310-200 aircraft and 26 related engines, as well as six Boeing MD10-10 aircraft and 17 related engines. As a consequence of this decision, a noncash impairment charge of $134 million ($84 million, net of tax, or $0.26 per diluted share) was recordedin the FedEx Express segment in the fourth quarter. The decision to retire these aircraft, the majority of which were temporarily idled and not in revenue service, better aligns the U.S. domestic air network capacity of FedEx Express to match current and anticipated shipment volumes.

The combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. These actions resulted in total program costs of $133 million recorded during 2011, which includes $89 millionof impairment and other charges (recorded in the “Business realignment, impairment and other charges” caption on the consolidated income statements),and $44 million of other program costs (primarily recorded in the “Depreciation and amortization” caption on the consolidated income statements).

GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity. Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we would proceed to a two-step process to test goodwill for impairment including comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter.

PENSION AND POSTRETIREMENT HEALTHCARE PLANS. Our defined benefit plans are measured using actuarial techniques that reflect management's assumptions for discount rate, expected long-term investment returns on plan assets, salary increases, expected retirement, mortality, employee turnover and future increases in healthcare costs. We determine the discount rate (which is required to be the rate at which the projected benefit obligation could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. A calculated-value method is employed for purposes of determining the asset values for our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”). Our expected rate of return is a judgmental matter which is reviewed on an annual basis and revised as appropriate.

The accounting guidance related to employers' accounting for defined benefit pension and other postretirement plans requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in other comprehensive income (“OCI”) of unrecognized gains or losses and prior service costs or credits. Additionally, the guidance requires the measurement date for plan assets and liabilities to coincide with the plan sponsor's year end.

At May 31, 2013, we recorded anincrease to equity through OCI of $861million (net of tax) based primarily on year-end adjustments related to an increase in the value of our plan assets and anincrease in the discount rate used to measure the liabilities at May 31, 2013.At May 31, 2012, we recorded a decrease to equity through OCI of $2.4billion (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liabilities at May 31, 2012.

INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

SELF-INSURANCE ACCRUALS. We are self-insured for costs associated with workers' compensation claims, vehicle accidents and general business liabilities, and benefits paid under employee healthcare and long-term disability programs. Accruals are primarily based on the actuarially estimated, undiscounted cost of claims, which includes incurred-but-not-reported claims. Current workers' compensation claims, vehicle and general liability, employee healthcare claims and long-term disability are included in accrued expenses. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense.

LEASES. We lease certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of our leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in “Other assets” in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset's useful life or the lease term.

DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized ratably over the life of the lease as a reduction of rent expense. Substantially all of these deferred gains are related to aircraft transactions.

FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive income within common stockholders' investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in the caption “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented.

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS.The pilots of FedEx Express, which represent a small number of FedEx Express's total employees, are employed under a collective bargaining agreement. The contract became amendable in March 2013, and the parties are currently in negotiations. In addition to our pilots at FedEx Express, certain FedEx non-U.S. employees are unionized.

STOCK-BASED COMPENSATION. We recognize compensation expense for stock-based awards under the provisions of the accounting guidance related to share-based payments. This guidance requires recognition of compensation expense for stock-based awards using a fair value method.We issue new shares or repurchase shares on the open market to cover employee share option exercises and restricted stock grants. Accordingly, we plan to repurchase approximately 3.7 million shares in 2014.

TREASURY SHARES. During 2013, we repurchased 2.7 million shares of FedEx common stock at an average price of $91 per share for a total of $246 million. In March 2013, our Board of Directors authorized the repurchase of up to 10 million shares of common stock. It is expected that the additional share authorization will primarily be utilized to offset the effects of equity compensation dilution over the next several years. As of May 31, 2013, 10,188,000 shares remained under existing share repurchase authorizations.

DIVIDENDS DECLARED PER COMMON SHARE. On June 3, 2013, our Board of Directors declared a quarterly dividend of $0.15 per share of common stock. The dividend was paid on July 1, 2013 to stockholders of record as of the close of business on June 17, 2013. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.

BUSINESS REALIGNMENT COSTS. During 2013, we announced profit improvement programs including reducing our selling, general and administrative cost functions through a voluntary employee separation program.

During 2013, we conducted a program to offer voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The voluntary buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance calculated based on four weeks of gross base salary for every year of FedEx service up to a maximum payment of two years of pay. This program was completed in the fourth quarter and approximately 3,600 employees have left or will be voluntarily leaving the company by the end of 2014. Eligible employees are scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Of the total population leaving the company, approximately 40% of the employees vacated positions on May 31, 2013. An additional 35% will depart throughout 2014 and approximately 25% of this population will remain until May 31, 2014. Costs of the benefits provided under the voluntary program were recognized as special termination benefits in the period that eligible employees accepted their offers.

We incurred costs of $560 million ($353 million, net of tax, or $1.11 per diluted share) during 2013 associated with our business realignment activities. These costs related primarily to severance for employees who accepted voluntary buyouts in the third and fourth quarters of 2013. Payments will be made at the time of departure. Approximately $180 million was paid under this program during 2013. The cost of the buyout program is included in the caption “Business realignment, impairment and other charges” in our consolidated statements of income. Also included in that caption are other external costs directly attributable to our business realignment activities, such as professional fees.

USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: self-insurance accruals; retirement plan obligations; long-term incentive accruals; tax liabilities; accounts receivable allowances; obsolescence of spare parts; contingent liabilities; loss contingencies, such as litigation and other claims; and impairment assessments on long-lived assets (including goodwill).

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Supplemental Cash Flow Information

12 Months Ended

May 31, 2013

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

NOTE 15: SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest expense and income taxes for the years ended May 31 was as follows (in millions):

		2013		2012		2011
Cash payments for:
	Interest (net of capitalized interest)	$	80	$	52	$	93
	Income taxes	$	687	$	403	$	493
	Income tax refunds received		(219)		(146)		(106)
	Cash tax payments, net	$	468	$	257	$	387

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Income Taxes (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Current provision (benefit)
Federal	$ 512	$ (120)	$ 79
State and local	86	80	48
Foreign	170	181	198
Current Provision, Total	768	141	325
Deferred provision (benefit)
Federal	175	947	485
State and local	(7)	21	12
Foreign	(42)		(9)
Deferred Provision, Total	126	968	488
Provision for Income Taxes, Total	$ 894	$ 1,109	$ 813

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Long Term Debt and Other Financing Arrangements (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Long Term Debt And Other Financing Arrangements [Line Items]
Long Term Debt Exclusive Of Capital Leases Fair Value	$ 3,200	$ 2,000
Repayments Of Capital Lease Obligations	116
Line Of Credit Facility Maximum Borrowing Capacity	1,000
Line Of Credit Facility Current Borrowing Capacity	1,000
Line Of Credit Facility Expiration Date	Mar. 01, 2018
Line of Credit Facility, Previous Expiration Date	Apr. 26, 2016
Line Of Credit Facility Covenant Terms Maximum Leverage Ratio	70%
Line Of Credit Facility Covenant Terms Leverage Ratio	51%
Letters Of Credit Outstanding	538
Unused Portion Of Letter Of Credit Facility	128
Letter Of Credit Maximum Facility	500
Surety Bonds Placed	539
Senior Unsecured Debt Due In 2013 9.65% [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Debt Instrument Interest Rate Stated Percentage	9.65%	9.65%
Debt Instrument, Maturity Date		Jun. 15, 2012
Repayments of Unsecured Debt	300
Senior Unsecured Debt Due 2023 2.625% [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Senior Unsecured Debt Issued	500
Debt Instrument Interest Rate Stated Percentage	2.625%
Debt Instrument, Maturity Date	Aug. 01, 2022
Debt Instrument, Issuance Date	Jul. 27, 2012
Senior Unsecured Debt Due 2023 2.70% [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Senior Unsecured Debt Issued	250
Debt Instrument Interest Rate Stated Percentage	2.70%
Debt Instrument, Maturity Date	Apr. 15, 2023
Debt Instrument, Issuance Date	Apr. 08, 2013
Senior Unsecured Debt Due 2043 3.875% [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Senior Unsecured Debt Issued	500
Debt Instrument Interest Rate Stated Percentage	3.875%
Debt Instrument, Maturity Date	Aug. 01, 2042
Debt Instrument, Issuance Date	Jul. 27, 2012
Senior Unsecured Debt Due 2043 4.10% [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Senior Unsecured Debt Issued	500
Debt Instrument Interest Rate Stated Percentage	4.10%
Debt Instrument, Maturity Date	Apr. 15, 2043
Debt Instrument, Issuance Date	Apr. 08, 2013
Total Senior Unsecured Debt Issued April 2013 [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Senior Unsecured Debt Issued	750
Total Senior Unsecured Debt Issued July 2012 [Member]
Long Term Debt And Other Financing Arrangements [Line Items]
Senior Unsecured Debt Issued	$ 1,000

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

May 31, 2013

Accumulated Other Comprehensive Income (Loss) Net Of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

NOTE 9:ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table provides changes in accumulated other comprehensive income (loss), net of tax, reported in our financial statements (in millions):

	Foreign currency translation adjustment		Retirement plans adjustments		Accumulated other comprehensive income (loss)
Balance at May 31, 2010	$	31	$	(2,471)	$	(2,440)
Other comprehensive gain (loss)		125		(235)		(110)
Balance at May 31, 2011		156		(2,706)		(2,550)
Other comprehensive gain (loss)		(95)		(2,308)		(2,403)
Balance at May 31, 2012		61		(5,014)		(4,953)
Other comprehensive gain (loss)		41		1,092		1,133
Balance at May 31, 2013	$	102	$	(3,922)	$	(3,820)

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Business Segment Information (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended													12 Months Ended
	May 31, 2013		Feb. 28, 2013		Nov. 30, 2012		Aug. 31, 2012	May 31, 2012		Feb. 29, 2012		Nov. 30, 2011	Aug. 31, 2011	May 31, 2013		May 31, 2012		May 31, 2011
Segment Reporting Information [Line Items]
Operating income (loss)	$ 502	[1]	$ 589	[1]	$ 718	[1]	$ 742	$ 856	[2]	$ 813	[2]	$ 780	$ 737	$ 2,551		$ 3,186		$ 2,378
Segment assets	33,567							29,903						33,567		29,903
FedEx Express Segment [Member]
Segment Reporting Information [Line Items]
Revenues														27,171		26,515		24,581
Depreciation and amortization														1,350		1,169		1,059
Operating income (loss)														555	[3]	1,260	[3]	1,228
Segment assets	18,935	[4]						17,981	[4]					18,935	[4]	17,981	[4]	16,463	[4]
Capital expenditures														2,067		2,689		2,467
FedEx Ground Segment [Member]
Segment Reporting Information [Line Items]
Revenues														10,578		9,573		8,485
Depreciation and amortization														434		389		337
Operating income (loss)														1,788	[5]	1,764		1,325
Segment assets	7,353	[4]						6,154	[4]					7,353	[4]	6,154	[4]	5,048	[4]
Capital expenditures														555		536		426
FedEx Freight Segment [Member]
Segment Reporting Information [Line Items]
Revenues														5,401		5,282		4,911
Depreciation and amortization														217		185		205
Operating income (loss)														208	[6]	162		(175)	[6]
Segment assets	2,953	[4]						2,807	[4]					2,953	[4]	2,807	[4]	2,664	[4]
Capital expenditures														326		340		153
FedEx Services Segment [Member]
Segment Reporting Information [Line Items]
Revenues														1,580		1,671		1,684
Depreciation and amortization														384		369		371
Segment assets	4,879	[4]						4,546	[4]					4,879	[4]	4,546	[4]	4,278	[4]
Capital expenditures														424		437		387
Other and Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues														(443)	[7]	(361)	[7]	(357)	[7]
Depreciation and amortization														1		1		1
Segment assets	(553)	[4]						(1,585)	[4]					(553)	[4]	(1,585)	[4]	(1,068)	[4]
Capital expenditures														3		5		1
Consolidated Total [Member]
Segment Reporting Information [Line Items]
Revenues														44,287		42,680		39,304
Depreciation and amortization														2,386		2,113		1,973
Operating income (loss)														2,551		3,186		2,378
Segment assets	33,567	[4]						29,903	[4]					33,567	[4]	29,903	[4]	27,385	[4]
Capital expenditures														$ 3,375		$ 4,007		$ 3,434

[1] The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.

[2] The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

[3] FedEx Express segment 2013 operating expenses include $405 million of direct and allocated business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines. FedEx Express segment 2012 operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines and a reversal of a $66 million legal reserve which was initially recorded in 2011.

[4] Segment assets include intercompany receivables.

[5] FedEx Ground segment 2013 operating expenses include $105 million of allocated business realignment costs.

[6] FedEx Freight segment 2013 operating expenses include $50 million in direct and allocated business realignment costs. FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.

[7] Includes FedEx Trade Networks and FedEx SupplyChain Systems.

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Condensed Consolidating Financial Statements (Tables)

12 Months Ended

May 31, 2013

Condensed Consolidating Financial Statements (Tables) [Abstract]

Condensed Consolidating Balance Sheets

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2013
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	3,892	$	405	$	717	$	(97)	$	4,917
	Receivables, less allowances				-		3,989		1,084		(29)		5,044
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			45		681		54		-		780
	Deferred income taxes				-		518		15		-		533
			Total current assets		3,937		5,593		1,870		(126)		11,274
PROPERTY AND EQUIPMENT, AT COST					27		35,915		2,167		-		38,109
	Less accumulated depreciation and amortization				21		18,469		1,135		-		19,625
			Net property and equipment		6		17,446		1,032		-		18,484
INTERCOMPANY RECEIVABLE					-		439		1,203		(1,642)		-
GOODWILL					-		1,552		1,203		-		2,755
INVESTMENT IN SUBSIDIARIES					18,739		3,347		-		(22,086)		-
OTHER ASSETS					2,187		822		191		(2,146)		1,054
				$	24,869	$	29,199	$	5,499	$	(26,000)	$	33,567
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	250	$	1	$	-	$	-	$	251
	Accrued salaries and employee benefits				82		1,402		204		-		1,688
	Accounts payable				4		1,392		609		(126)		1,879
	Accrued expenses				355		1,366		211		-		1,932
		Total current liabilities			691		4,161		1,024		(126)		5,750
LONG-TERM DEBT, LESS CURRENT PORTION					2,489		250		-		-		2,739
INTERCOMPANY PAYABLE					1,642		-		-		(1,642)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		3,798		-		(2,146)		1,652
	Other liabilities				2,649		3,133		246		-		6,028
		Total other long-term liabilities			2,649		6,931		246		(2,146)		7,680
STOCKHOLDERS' INVESTMENT					17,398		17,857		4,229		(22,086)		17,398
				$	24,869	$	29,199	$	5,499	$	(26,000)	$	33,567

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2012
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,906	$	417	$	636	$	(116)	$	2,843
	Receivables, less allowances				3		3,793		943		(35)		4,704
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			261		671		44		-		976
	Deferred income taxes				-		514		19		-		533
			Total current assets		2,170		5,395		1,642		(151)		9,056
PROPERTY AND EQUIPMENT, AT COST					29		34,301		1,834		-		36,164
	Less accumulated depreciation and amortization				20		17,822		1,074		-		18,916
			Net property and equipment		9		16,479		760		-		17,248
INTERCOMPANY RECEIVABLE					-		323		1,524		(1,847)		-
GOODWILL					-		1,553		834		-		2,387
INVESTMENT IN SUBSIDIARIES					17,163		2,978		-		(20,141)		-
OTHER ASSETS					2,845		1,099		86		(2,818)		1,212
				$	22,187	$	27,827	$	4,846	$	(24,957)	$	29,903
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	417	$	-	$	-	$	417
	Accrued salaries and employee benefits				83		1,365		187		-		1,635
	Accounts payable				6		1,276		482		(151)		1,613
	Accrued expenses				184		1,406		119		-		1,709
		Total current liabilities			273		4,464		788		(151)		5,374
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		250		-		-		1,250
INTERCOMPANY PAYABLE					1,847		-		-		(1,847)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		3,649		5		(2,818)		836
	Other liabilities				4,340		3,193		183		-		7,716
		Total other long-term liabilities			4,340		6,842		188		(2,818)		8,552
STOCKHOLDERS' INVESTMENT					14,727		16,271		3,870		(20,141)		14,727
				$	22,187	$	27,827	$	4,846	$	(24,957)	$	29,903

Condensed Consolidating Statements of Comprehensive Income

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended May 31, 2013
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	37,073	$	7,543	$	(329)	$	44,287
OPERATING EXPENSES:
	Salaries and employee benefits		103		14,375		2,092		-		16,570
	Purchased transportation		-		4,839		2,574		(141)		7,272
	Rentals and landing fees		5		2,198		324		(6)		2,521
	Depreciation and amortization		1		2,200		185		-		2,386
	Fuel		-		4,650		96		-		4,746
	Maintenance and repairs		1		1,791		117		-		1,909
	Business realignment, impairment and other charges		21		639		-		-		660
	Intercompany charges, net		(227)		(329)		556		-		-
	Other		96		4,565		1,193		(182)		5,672
			-		34,928		7,137		(329)		41,736
OPERATING INCOME			-		2,145		406		-		2,551
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,561		253		-		(1,814)		-
	Interest, net		(108)		42		5		-		(61)
	Intercompany charges, net		113		(131)		18		-		-
	Other, net		(5)		(20)		(10)		-		(35)
INCOME BEFORE INCOME TAXES			1,561		2,289		419		(1,814)		2,455
	Provision for income taxes		-		710		184		-		894
NET INCOME		$	1,561	$	1,579	$	235	$	(1,814)	$	1,561
COMPREHENSIVE INCOME		$	2,622	$	1,618	$	268	$	(1,814)	$	2,694
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended May 31, 2012
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	36,412	$	6,569	$	(301)	$	42,680
OPERATING EXPENSES:
	Salaries and employee benefits		114		14,153		1,832		-		16,099
	Purchased transportation		-		4,509		1,944		(118)		6,335
	Rentals and landing fees		5		2,221		267		(6)		2,487
	Depreciation and amortization		1		1,962		150		-		2,113
	Fuel		-		4,877		79		-		4,956
	Maintenance and repairs		1		1,882		97		-		1,980
	Impairment and other charges		-		134		-		-		134
	Intercompany charges, net		(218)		(323)		541		-		-
	Other		97		4,482		988		(177)		5,390
			-		33,897		5,898		(301)		39,494
OPERATING INCOME			-		2,515		671		-		3,186
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		2,032		395		-		(2,427)		-
	Interest, net		(75)		31		5		-		(39)
	Intercompany charges, net		80		(102)		22		-		-
	Other, net		(5)		(10)		9		-		(6)
INCOME BEFORE INCOME TAXES			2,032		2,829		707		(2,427)		3,141
	Provision for income taxes		-		875		234		-		1,109
NET INCOME		$	2,032	$	1,954	$	473	$	(2,427)	$	2,032
COMPREHENSIVE (LOSS) INCOME		$	(120)	$	1,796	$	380	$	(2,427)	$	(371)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	33,124	$	6,498	$	(318)	$	39,304
OPERATING EXPENSES:
	Salaries and employee benefits		109		13,206		1,961		-		15,276
	Purchased transportation		-		4,034		1,745		(105)		5,674
	Rentals and landing fees		4		2,209		253		(4)		2,462
	Depreciation and amortization		1		1,784		188		-		1,973
	Fuel		-		4,003		148		-		4,151
	Maintenance and repairs		1		1,862		116		-		1,979
	Impairment and other charges		-		28		61		-		89
	Intercompany charges, net		(222)		(317)		539		-		-
	Other		107		4,392		1,032		(209)		5,322
			-		31,201		6,043		(318)		36,926
OPERATING INCOME			-		1,923		455		-		2,378
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,452		200		-		(1,652)		-
	Interest, net		(88)		13		(2)		-		(77)
	Intercompany charges, net		104		(135)		31		-		-
	Other, net		(16)		(14)		(6)		-		(36)
INCOME BEFORE INCOME TAXES			1,452		1,987		478		(1,652)		2,265
	Provision for income taxes		-		677		136		-		813
NET INCOME		$	1,452	$	1,310	$	342	$	(1,652)	$	1,452
COMPREHENSIVE INCOME		$	1,240	$	1,329	$	425	$	(1,652)	$	1,342

Condensed Consolidating Statements of Cash Flows

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2013
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES		$	247	$	3,936	$	486	$	19	$	4,688
INVESTING ACTIVITIES
	Capital expenditures		(3)		(3,029)		(343)		-		(3,375)
	Business acquisitions, net of cash acquired		-		-		(483)		-		(483)
	Proceeds from asset dispositions and other		-		49		6		-		55
CASH USED IN INVESTING ACTIVITIES			(3)		(2,980)		(820)		-		(3,803)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		141		(58)		(83)		-		-
	Payment on loan between subsidiaries		-		(385)		385		-		-
	Intercompany dividends		-		21		(21)		-		-
	Principal payments on debt		-		(417)		-		-		(417)
	Proceeds from debt issuances		1,739		-		-		-		1,739
	Proceeds from stock issuances		280		-		-		-		280
	Excess tax benefit on the exercise of stock options		23		-		-		-		23
	Dividends paid		(177)		-		-		-		(177)
	Purchase of treasury stock		(246)		-		-		-		(246)
	Other, net		(18)		(119)		119		-		(18)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			1,742		(958)		400		-		1,184
Effect of exchange rate changes on cash			-		(10)		15		-		5
Net increase (decrease) in cash and cash equivalents			1,986		(12)		81		19		2,074
Cash and cash equivalents at beginning of period			1,906		417		636		(116)		2,843
Cash and cash equivalents at end of period		$	3,892	$	405	$	717	$	(97)	$	4,917
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2012
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(88)	$	4,383	$	570	$	(30)	$	4,835
INVESTING ACTIVITIES
	Capital expenditures		(5)		(3,792)		(210)		-		(4,007)
	Business acquisition, net of cash acquired		-		-		(116)		-		(116)
	Proceeds from asset dispositions and other		-		74		-		-		74
CASH USED IN INVESTING ACTIVITIES			(5)		(3,718)		(326)		-		(4,049)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		625		(550)		(75)		-		-
	Intercompany dividends		-		76		(76)		-		-
	Principal payments on debt		-		(29)		-		-		(29)
	Proceeds from stock issuances		128		-		-		-		128
	Excess tax benefit on the exercise of stock options		18		-		-		-		18
	Dividends paid		(164)		-		-		-		(164)
	Purchase of treasury stock		(197)						-		(197)
	Other, net		-		(19)		19		-		-
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			410		(522)		(132)		-		(244)
Effect of exchange rate changes on cash			-		(5)		(22)		-		(27)
Net increase (decrease) in cash and cash equivalents			317		138		90		(30)		515
Cash and cash equivalents at beginning of period			1,589		279		546		(86)		2,328
Cash and cash equivalents at end of period		$	1,906	$	417	$	636	$	(116)	$	2,843

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	25	$	3,978	$	65	$	(27)	$	4,041
INVESTING ACTIVITIES
	Capital expenditures		(1)		(3,263)		(170)		-		(3,434)
	Business acquisition, net of cash acquired		-		(96)		-		-		(96)
	Proceeds from asset dispositions and other		-		110		1		-		111
CASH USED IN INVESTING ACTIVITIES			(1)		(3,249)		(169)		-		(3,419)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		530		(994)		464		-		-
	Payment on loan between subsidiaries		-		235		(235)		-		-
	Intercompany dividends		-		61		(61)		-		-
	Principal payments on debt		(250)		(12)		-		-		(262)
	Proceeds from stock issuances		108		-		-		-		108
	Excess tax benefit on the exercise of stock options		23		-		-		-		23
	Dividends paid		(151)		-		-		-		(151)
	Other, net		(5)		(9)		9		-		(5)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			255		(719)		177		-		(287)
Effect of exchange rate changes on cash			-		11		30		-		41
Net increase (decrease) in cash and cash equivalents			279		21		103		(27)		376
Cash and cash equivalents at beginning of period			1,310		258		443		(59)		1,952
Cash and cash equivalents at end of period		$	1,589	$	279	$	546	$	(86)	$	2,328

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Retirement Plans (Details 7) (USD $) In Millions, unless otherwise specified	May 31, 2013	May 31, 2012
Qualified [Member]
Defined Benefit Plan Disclosure [Line Items]
Projected Benefit Obligation ("PBO")	$ 21,532	$ 21,192
Fair Value of Plan Assets	19,047	17,013
Funded Status of the Plans	(2,485)	(4,179)
Nonqualified [Member]
Defined Benefit Plan Disclosure [Line Items]
Projected Benefit Obligation ("PBO")	322	355
Funded Status of the Plans	(322)	(355)
International Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Projected Benefit Obligation ("PBO")	746	640
Fair Value of Plan Assets	386	321
Funded Status of the Plans	(360)	(319)
Components Total [Member]
Defined Benefit Plan Disclosure [Line Items]
Projected Benefit Obligation ("PBO")	22,600	22,187
Fair Value of Plan Assets	19,433	17,334
Funded Status of the Plans	$ (3,167)	$ (4,853)

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Leases (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013		May 31, 2012		May 31, 2011
Operating Leases Rent Expense [Abstract]
Minimum rentals	$ 2,061		$ 2,018		$ 2,025
Contingent rentals	192	[1]	210	[1]	193	[1]
Operating leases rent expense, total	$ 2,253		$ 2,228		$ 2,218

[1] Contingent rentals are based on equipment usage.

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Leases (Tables)

12 Months Ended

May 31, 2013

Leases (Tables) [Abstract]

Schedule of Rent Expense Under Operating Leases

Rent expense under operating leases for the years ended May 31 was as follows (in millions):
		2013		2012		2011
Minimum rentals		$	2,061	$	2,018	$	2,025
Contingent rentals(1)			192		210		193
		$	2,253	$	2,228	$	2,218
(1)	Contingent rentals are based on equipment usage.

Schedule of Future Minimum Lease Payments, Operating Leases

	Operating Leases
	Aircraft				Total
	and Related		Facilities		Operating
	Equipment		and Other		Leases
2014	$	462	$	1,474	$	1,936
2015		448		1,386		1,834
2016		453		1,183		1,636
2017		391		1,298		1,689
2018		326		904		1,230
Thereafter		824		5,826		6,650
Total	$	2,904	$	12,071	$	14,975

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Contingencies

12 Months Ended

May 31, 2013

Loss Contingency [Abstract]

Contingencies

NOTE 18: CONTINGENCIES

Wage-and-Hour.We are a defendant in a number of lawsuits containing various class-action allegations of wage-and-hour violations. The plaintiffs in these lawsuits allege, among other things, that they were forced to work “off the clock,” were not paid overtime or were not provided work breaks or other benefits. The complaints generally seek unspecified monetary damages, injunctive relief, or both. We do not believe that a material loss is reasonably possible with respect to any of these matters.

Independent Contractor — Lawsuits and State Administrative Proceedings. FedEx Ground is involved in numerous class-action lawsuits (including 31 that have been certified as class actions), individual lawsuits and state tax and other administrative proceedings that claim that the company's owner-operators should be treated as employees, rather than independent contractors.

Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court for the Northern District of Indiana. The multidistrict litigation court granted class certification in 28 cases and denied it in 14 cases. On December 13, 2010, the court entered an opinion and order addressing all outstanding motions for summary judgment on the status of the owner-operators (i.e., independent contractor vs. employee). In sum, the court has now ruled on our summary judgment motions and entered judgment in favor of FedEx Ground on all claims in 20 of the 28 multidistrict litigation cases that had been certified as class actions, finding that the owner-operators in those cases were contractors as a matter of the law of 20 states. The plaintiffs filed notices of appeal in all of these 20 cases. The Seventh Circuit heard the appeal in the Kansas case in January 2012 and, in July 2012, issued an opinion that did not make a determination with respect to the correctness of the district court's decision and, instead, certified two questions to the Kansas Supreme Court related to the classification of the plaintiffs as independent contractors under the Kansas Wage Payment Act. The other 19 cases that are before the Seventh Circuit remain stayed pending a decision of the Kansas Supreme Court.

The multidistrict litigation court remanded the other eight certified class actions back to the district courts where they were originally filed because its summary judgment ruling did not completely dispose of all of the claims in those lawsuits. Three of those cases are now on appeal with the Court of Appeals for the Ninth Circuit. The other five remain pending in their respective district courts.

While the granting of summary judgment in favor of FedEx Ground by the multidistrict litigation court in 20 of the 28 cases that had been certified as class actions remains subject to appeal, we believe that it significantly improves the likelihood that our independent contractor model will be upheld. Adverse determinations in matters related to FedEx Ground's independent contractors, however, could, among other things, entitle certain of our owner-operators and their drivers to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Ground's owner-operators in certain jurisdictions. We believe that FedEx Ground's owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the company's independent contractors. While it is reasonably possible that potential loss in some of these lawsuits or such changes to the independent contractor status of FedEx Ground's owner-operators could be material, we cannot yet determine the amount or reasonable range of potential loss. A number of factors contribute to this. The number of plaintiffs in these lawsuits continues to change, with some being dismissed and others being added and, as to new plaintiffs, discovery is still ongoing. In addition, the parties have conducted only very limited discovery into damages, which could vary considerably from plaintiff to plaintiff. Further, the range of potential loss could be impacted considerably by future rulings on the merits of certain claims and FedEx Ground's various defenses, and on evidentiary issues. In any event, we do not believe that a material loss is probable in these matters.

In addition, we are defending contractor-model cases that are not or are no longer part of the multidistrict litigation, three of which have been certified as class actions. These cases are in varying stages of litigation, and we do not expect to incur a material loss in any of these matters.

Other Matters. In August 2010, a third-party consultant who works with shipping customers to negotiate lower rates filed a lawsuit in federal district court in California against FedEx and United Parcel Service, Inc. (“UPS”) alleging violations of U.S. antitrust law. This matter was dismissed in May 2011, but the court granted the plaintiff permission to file an amended complaint, which FedEx received in June 2011. In November 2011, the court granted our motion to dismiss this complaint, but again allowed the plaintiff to file an amended complaint. The plaintiff filed a new complaint in December 2011, and the matter remains pending before the court. In February 2011, shortly after the initial lawsuit was filed, we received a demand for the production of information and documents in connection with a civil investigation by the U.S. Department of Justice (“DOJ”) into the policies and practices of FedEx and UPS for dealing with third-party consultants who work with shipping customers to negotiate lower rates. In November 2012, the DOJ served a civil investigative demand on the third-party consultant seeking all pleadings, depositions and documents produced in the lawsuit. We are cooperating with the investigation, do not believe that we have engaged in any anti-competitive activities and will vigorously defend ourselves in any action that may result from the investigation. While the litigation proceedings and the DOJ investigation move forward, and the amount of loss, if any, is dependent on a number of factors that are not yet fully developed or resolved, we do not believe that a material loss is reasonably possible.

We have received requests for information from the DOJ in the Northern District of California in connection with a criminal investigation relating to the transportation of packages for online pharmacies that may have shipped pharmaceuticals in violation of federal law. We responded to grand jury subpoenas issued in June 2008 and August 2009 and to additional requests for information pursuant to those subpoenas, and we continue to respond and cooperate with the investigation. We believe that our employees have acted in good faith at all times. We do not believe that we have engaged in any illegal activities and will vigorously defend ourselves in any action that may result from the investigation. The DOJ may pursue a criminal indictment and, if we are convicted, remedies could include fines, penalties, financial forfeiture and compliance conditions. We cannot estimate the amount or range of loss, if any, as such analysis would depend on facts and law that are not yet fully developed or resolved.

FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of their business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

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Commitments

12 Months Ended

May 31, 2013

Commitments [Abstract]

Commitments

NOTE 17: COMMITMENTS

Annual purchase commitments under various contracts as of May 31, 2013 were as follows (in millions):

		Aircraft and		Facilities
		Aircraft Related		and Other(1)		Total
2014		$	968	$	1,183	$	2,151
2015			1,054		184		1,238
2016			1,140		123		1,263
2017			959		101		1,060
2018			1,382		44		1,426
Thereafter			4,492		109		4,601
Total		$	9,995	$	1,744	$	11,739
(1)	Primarily vehicles, facilities, advertising contracts and in 2014, approximately $650 million of quarterly contributions to our U.S. Pension Plans.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to purchase goods or services. As of May 31, 2013,our obligation to purchase four Boeing 767-300 Freighter (“B767F”) aircraft and nine B777F aircraft is conditioned upon there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless we have entered into noncancelable commitments to modify such aircraft.  Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

We have several aircraft modernization programs underway which are supported by the purchase of B777F, B767F and Boeing 757 (“B757”)aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft. Our ability to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.During 2013, FedEx Express entered into an agreement to purchase 14 additional B757 aircraft, the delivery of which began in 2013 and will continue through 2014.  The agreement provides the option to purchase up to 16 additional B757 aircraft, subject to the satisfaction of certain conditions.  In addition, FedEx Express entered into agreements to purchase an additional 23 B767F aircraft, the delivery of which will occur between 2014 and 2019. The delivery of two firm B777F aircraft orders were also deferred from 2015 to 2016.

We had $414 million in deposits and progress payments as of May 31, 2013 on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the “Other assets” caption of our consolidated balance sheets. In addition to our commitment to purchase B777Fsand B767Fs, our aircraft purchase commitments include the B757 aircraft in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations. The following table is a summary of the key aircraft we are committed to purchase as of May 31, 2013, with the year of expected delivery:

	B757	B767F	B777F	Total
2014	13	4	2	19
2015	-	12	-	12
2016	-	10	2	12
2017	-	10	-	10
2018	-	10	2	12
Thereafter	-	4	14	18
Total	13	50	20	83

Effective as of June 14, 2013, we entered into a supplemental agreement to purchase 13 of the 16 B757 option aircraft noted above. Delivery of the aircraft will occur during 2014 and 2015. This aircraft transaction is not included in the table above, as it occurred subsequent to May 31, 2013.

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Condensed Consolidating Financial Statements (Details 1) (USD $) In Millions, unless otherwise specified	May 31, 2013
Guarantor Obligations [Abstract]
Debt Guarantee	$ 2,750

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Commitments (Tables)

12 Months Ended

May 31, 2013

Commitments (Tables) [Abstract]

Schedule of Purchase Commitments

		Aircraft and		Facilities
		Aircraft Related		and Other(1)		Total
2014		$	968	$	1,183	$	2,151
2015			1,054		184		1,238
2016			1,140		123		1,263
2017			959		101		1,060
2018			1,382		44		1,426
Thereafter			4,492		109		4,601
Total		$	9,995	$	1,744	$	11,739
(1)	Primarily vehicles, facilities, advertising contracts and in 2014, approximately $650 million of quarterly contributions to our U.S. Pension Plans.

Schedule of Aircraft Purchase Commitments

	B757	B767F	B777F	Total
2014	13	4	2	19
2015	-	12	-	12
2016	-	10	2	12
2017	-	10	-	10
2018	-	10	2	12
Thereafter	-	4	14	18
Total	13	50	20	83

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Business Combinations (Tables)

12 Months Ended

May 31, 2013

Acquisitions (Tables) [Abstract]

Schedule of Purchase Price Allocation

Current assets	$	145
Property and equipment		91
Goodwill		351
Intangible assets		60
Other non-current assets		70
Current liabilities		(174)
Long-term liabilities		(36)
Total purchase price	$	507

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Stock Based Compensation (Tables)

12 Months Ended

May 31, 2013

Stock Based Compensation (Tables) [Abstract]

Stock-based compensation expense

	2013		2012		2011
Stock-based compensation expense	$	109	$	105	$	98

Schedule of Stock Based Compensation Key Assumptions for Valuation

		2013			2012			2011
Weighted-average Black-Scholes value		$	29.20		$	29.92		$	28.12
Intrinsic value of options exercised		$	107		$	67		$	80
Black-Scholes Assumptions:
	Expected lives		6.1 years			6.0 years			5.9 years
	Expected volatility		35	%		34	%		34	%
	Risk-free interest rate		0.94	%		1.79	%		2.36	%
	Dividend yield		0.609	%		0.563	%		0.558	%

Schedule of Stock Option Activity

		Stock Options
		Shares		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)(1)
Outstanding at June 1, 2012		21,031,538	$	84.39
	Granted	2,547,290		88.08
	Exercised	(3,979,359)		70.41
	Forfeited	(464,035)		91.44
Outstanding at May 31, 2013		19,135,434	$	87.62	5.5 years	$	229
Exercisable		12,447,517	$	90.23	4.2 years	$	137
Expected to vest		6,288,642	$	82.77	8.1 years	$	87
Available for future grants		6,482,410
(1)	Only presented for options with market value at May 31, 2013 in excess of the exercise price of the option.

Schedule of Vested and Unvested Restricted Stock

		Restricted Stock
		Shares	Weighted-Average Grant Date Fair Value
Unvested at June 1, 2012		589,872	$	76.79
	Granted	220,391		85.45
	Vested	(253,423)		75.46
	Forfeited	(27,506)		80.13
Unvested at May 31, 2013		529,334	$	80.86

Schedule of Stock Option Vesting

	Stock Options
	Vested during the year	Fair value (in millions)
2013	2,824,757	$	81
2012	2,807,809		70
2011	2,721,602		67

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Valuation and Qualifying Accounts (Tables)

12 Months Ended

May 31, 2013

Valuation And Qualifying Accounts (Tables) [Abstract]

Schedule of Valuation and Qualifying Accounts

										SCHEDULE II
FEDEX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 2013, 2012, AND 2011
(IN MILLIONS)
				ADDITIONS
	BALANCE				CHARGED						BALANCE
	AT		CHARGED		TO						AT
	BEGINNING		TO		OTHER						END OF
DESCRIPTION	OF YEAR		EXPENSES		ACCOUNTS			DEDUCTIONS			YEAR
Accounts Receivable Reserves:
Allowance for Doubtful Accounts
2013...........................….......…....…	$	94	$	167	$	-		$	167	(a)	$	94
2012...........................….......…....…		97		160		-			163	(a)		94
2011...........................….......…....…		93		152		-			148	(a)		97
Allowance for Revenue Adjustments
2013...........................….......…....…	$	84	$	-	$	573	(b)	$	575	(c)	$	82
2012...........................….......…....…		85		-		570	(b)		571	(c)		84
2011...........................….......…....…		73		-		532	(b)		520	(c)		85
Inventory Valuation Allowance:
2013...........................….......…....…	$	184	$	24	$	-		$	3		$	205
2012...........................….......…....…		169		15		-			-			184
2011...........................….......…....…		170		13		-			14			169
(a) Uncollectible accounts written off, net of recoveries.
(b) Principally charged against revenue.
(c) Service failures, rebills and other.

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Valuation and Qualifying Accounts

12 Months Ended

May 31, 2013

Schedule of Valuation and Qualifying Accounts [Abstract]

Schedule Of Valuation And Qualifying Accounts

										SCHEDULE II
FEDEX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MAY 31, 2013, 2012, AND 2011
(IN MILLIONS)
				ADDITIONS
	BALANCE				CHARGED						BALANCE
	AT		CHARGED		TO						AT
	BEGINNING		TO		OTHER						END OF
DESCRIPTION	OF YEAR		EXPENSES		ACCOUNTS			DEDUCTIONS			YEAR
Accounts Receivable Reserves:
Allowance for Doubtful Accounts
2013...........................….......…....…	$	94	$	167	$	-		$	167	(a)	$	94
2012...........................….......…....…		97		160		-			163	(a)		94
2011...........................….......…....…		93		152		-			148	(a)		97
Allowance for Revenue Adjustments
2013...........................….......…....…	$	84	$	-	$	573	(b)	$	575	(c)	$	82
2012...........................….......…....…		85		-		570	(b)		571	(c)		84
2011...........................….......…....…		73		-		532	(b)		520	(c)		85
Inventory Valuation Allowance:
2013...........................….......…....…	$	184	$	24	$	-		$	3		$	205
2012...........................….......…....…		169		15		-			-			184
2011...........................….......…....…		170		13		-			14			169
(a) Uncollectible accounts written off, net of recoveries.
(b) Principally charged against revenue.
(c) Service failures, rebills and other.

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Stock Based Compensation (Details 3) (USD $)	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Roll Forward
Unvested at June 1	589,872
Restricted stock granted	220,391	214,435	235,998
Restricted stock vested	(253,423)
Restricted stock forfeited	(27,506)
Unvested at May 31	529,334	589,872
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Weighted Average Grant Date Fair Value [Abstract]
Unvested at June 1	$ 76.79
Restricted stock granted	$ 85.45	$ 88.95	$ 78.74
Restricted stock vested	$ 75.46
Restricted stock forfeited	$ 80.13
Unvested at May 31	$ 80.86	$ 76.79

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Income Taxes (Details 6) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns Roll Forward
Balance at beginning of year	$ 51	$ 69	$ 82
Increases for tax positions taken in the current year	1	2	2
Increases for tax positions taken in prior years	3	4	6
Decreases for tax positions taken in prior years	(3)	(35)	(10)
Settlements	(9)	(3)	(11)
Increases due to acquisitions	4	15
Decrease from lapse of statute of limitations	(2)
Changes due to currency translation	2	(1)
Balance at end of year	$ 47	$ 51	$ 69

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Stock Based Compensation (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2013
Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Intrinsic Value [Abstract]
Outstanding at May 31, 2013	$ 229	[1]
Stock options exercisable	137	[1]
Stock options expected to vest	$ 87	[1]
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Roll Forward
Outstanding at June 1, 2012	21,031,538
Stock options granted	2,547,290
Stock options exercised	(3,979,359)
Stock options forfeited	(464,035)
Outstanding at May 31, 2013	19,135,434
Stock options exercisable	12,447,517
Stock options expected to vest	6,288,642
Stock options available for future grants	6,482,410
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Remaining Contractual Term (in years) [Abstract]
Outstanding at May 31, 2013	5.5
Stock options exercisable	4.2
Stock options expected to vest	8.1
Share Based Compensation Arrangement By Share Based Payment Award Options Weighted Average Exercise Price [Abstract]
Outstanding at June 1, 2012	$ 84.39
Stock options granted	$ 88.08
Stock options exercised	$ 70.41
Stock options forfeited	$ 91.44
Outstanding at May 31, 2013	$ 87.62
Stock options exercisable	$ 90.23
Stock options expected to vest	$ 82.77

[1] Only presented for options with market value at May 31, 2013 in excess of the exercise price of the option.

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Retirement Plans (Tables)

12 Months Ended

May 31, 2013

Retirement Plan (Tables) [Abstract]

Schedule of Retirement Plan Costs

	2013		2012		2011
U.S. domestic and international pension plans	$	679	$	524	$	543
U.S. domestic and international defined contribution plans		354		338		257
U.S. domestic and international postretirement healthcare plans		78		70		60
	$	1,111	$	932	$	860

Schedule of Weighted-Average Actuarial Assumptions for Primary U.S. Retirement Plans

Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation ("APBO"), are as follows:
		Pension Plans						Postretirement Healthcare Plans
		2013		2012		2011		2013		2012		2011
Discount rate used to determine benefit obligation		4.79	%	4.44	%	5.76	%	4.91	%	4.55	%	5.67	%
Discount rate used to determine net periodic benefit cost		4.44		5.76		6.37		4.55		5.67		6.11
Rate of increase in future compensation levels
	used to determine benefit obligation	4.54		4.62		4.58		-		-		-
Rate of increase in future compensation levels
	used to determine net periodic benefit cost	4.62		4.58		4.63		-		-		-
Expected long-term rate of return on assets		8.00		8.00		8.00		-		-		-

Schedule of Plan Assets at Measurement Date

		Plan Assets at Measurement Date
		2013
						Target		Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Range %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	456	2	%	0 - 5	%	$	15	$	441
Equities						35 - 55
	U.S. large cap equity		5,264	28					37		5,227
	U.S. SMID cap equity		1,741	9					1,741
	International equities		2,271	12					1,904		367
	Private equities		332	2								$	332
Fixed income securities						45 - 65
	Corporate		4,972	26							4,972
	Government		3,888	20							3,888
	Mortgage backed and other		200	1							200
Other			(77)	-					(83)		6
		$	19,047	100	%			$	3,614	$	15,101	$	332
		2012
						Target		Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Range %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	618	4	%	0 - 3	%	$	8	$	610
Equities						45 - 55
	U.S. large cap equity		4,248	25					9		4,239
	U.S. SMID cap equity		1,368	8					1,368
	International equities		1,657	10					1,395		262
	Private equities		402	2								$	402
Fixed income securities						45 - 55
	Corporate		4,565	27							4,565
	Government		4,175	24							4,175
	Mortgage backed and other		59	-							59
Other			(79)	-					(85)		6
		$	17,013	100	%			$	2,695	$	13,916	$	402

Schedule of Change in Fair Value of Level 3 Assets

		2013		2012
Balance at beginning of year		$	402	$	403
Actual return on plan assets:
	Assets held during current year		(29)		3
	Assets sold during the year		55		38
Purchases, sales and settlements			(96)		(42)
Balance at end of the year		$	332	$	402

Schedule of Changes in the Pension and Postretirement Healthcare Plans' Benefit Obligation and Fair Value of Assets and Funded Status

			Pension Plans				Postretirement Healthcare Plans
			2013		2012		2013		2012
Accumulated Benefit Obligation ("ABO")			$	21,958	$	21,556
Changes in Projected Benefit Obligation ("PBO") and
	Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year			$	22,187	$	17,372	$	790	$	648
	Service cost			692		593		42		35
	Interest cost			968		976		36		36
	Actuarial loss (gain)			(652)		3,789		(17)		98
	Benefits paid			(589)		(502)		(54)		(51)
	Other			(6)		(41)		31		24
PBO/APBO at the end of year			$	22,600	$	22,187	$	828	$	790
Change in Plan Assets
Fair value of plan assets at the beginning of year			$	17,334	$	15,841	$	-	$	-
	Actual return on plan assets			2,081		1,235		-		-
	Company contributions			615		780		27		27
	Benefits paid			(589)		(502)		(54)		(51)
	Other			(8)		(20)		27		24
Fair value of plan assets at the end of year			$	19,433	$	17,334	$	-	$	-
Funded Status of the Plans			$	(3,167)	$	(4,853)	$	(828)	$	(790)
Amount Recognized in the Balance Sheet at May 31:
	Current pension, postretirement healthcare and other
		benefit obligations	$	(48)	$	(35)	$	(39)	$	(33)
	Noncurrent pension, postretirement healthcare and other
		benefit obligations		(3,119)		(4,818)		(789)		(757)
Net amount recognized			$	(3,167)	$	(4,853)	$	(828)	$	(790)
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	6,993	$	8,866	$	(4)	$	13
		Prior service (credit) cost and other		(781)		(897)		2		2
Total			$	6,212	$	7,969	$	(2)	$	15
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost expected to be amortized in
	next year's Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	378	$	516	$	-	$	-
		Prior service credit and other		(114)		(114)		-		-
Total			$	264	$	402	$	-	$	-

Schedule of Components of Pension Plans

Our pension plans included the following components at May 31, 2013 and 2012 (in millions):
		PBO		Fair Value of Plan Assets		Funded Status
2013
	Qualified	$	21,532	$	19,047	$	(2,485)
	Nonqualified		322		-		(322)
	International Plans		746		386		(360)
	Total	$	22,600	$	19,433	$	(3,167)
2012
	Qualified	$	21,192	$	17,013	$	(4,179)
	Nonqualified		355		-		(355)
	International Plans		640		321		(319)
	Total	$	22,187	$	17,334	$	(4,853)

Schedule of Fair Value of Plan Assets for Pension Plans with an Obligation in Excess of Plan Assets

		PBO Exceeds the Fair Value of Plan Assets
		2013		2012
Pension Benefits
	Fair value of plan assets	$	19,433	$	17,334
	PBO		(22,600)		(22,187)
	Net funded status	$	(3,167)	$	(4,853)
		ABO Exceeds the Fair Value of Plan Assets
		2013		2012
Pension Benefits
	ABO(1)	$	(21,930)	$	(21,555)
	Fair value of plan assets		19,404		17,333
	PBO		(22,570)		(22,185)
	Net funded status	$	(3,166)	$	(4,852)

(1)ABO not used in determination of funded status.

Schedule of Pension Plans Contributions

	2013		2012
Required	$	560	$	496
Voluntary		-		226
	$	560	$	722

Schedule of Net Periodic Benefit Cost

	Pension Plans						Postretirement Healthcare Plans
	2013		2012		2011		2013		2012		2011
Service cost	$	692	$	593	$	521	$	42	$	35	$	31
Interest cost		968		976		900		36		36		34
Expected return on plan assets		(1,383)		(1,240)		(1,062)		-		-		-
Recognized actuarial losses (gains) and other		402		195		184		-		(1)		(5)
Net periodic benefit cost	$	679	$	524	$	543	$	78	$	70	$	60

Schedule of Amounts Recognized in Other Comprehensive Income for All Plans

Amounts recognized in OCI for all plans were as follows (in millions):
			2013								2012
			Pension Plans				Postretirement Healthcare Plans				Pension Plans				Postretirement Healthcare Plans
			Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount
Net (gain) loss and other
	arising during period		$	(1,350)	$	(840)	$	(17)	$	(21)	$	3,777	$	2,371	$	97	$	61
Amortizations:
	Prior services credit			114		66		-		-		113		71		-		-
	Actuarial (losses) gains
		and other		(516)		(297)		-		-		(311)		(195)		1		-
Total recognized in OCI			$	(1,752)	$	(1,071)	$	(17)	$	(21)	$	3,579	$	2,247	$	98	$	61

Schedule of Expected Future Benefit Payments

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):
	Pension Plans		Postretirement Healthcare Plans
2014	$	821	$	39
2015		956		42
2016		896		44
2017		961		45
2018		1,049		47
2019-2023		6,974		274

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Income Taxes (Details 3)	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Abstract]
Statutory U.S. income tax rate	35.00%	35.00%	35.00%
State and local income taxes, net of federal benefit	2.10%	2.10%	1.70%
Other, net	(0.70%)	(1.80%)	(0.80%)
Effective tax rate	36.40%	35.30%	35.90%

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Commitments (Details 1) (USD $) In Millions, unless otherwise specified	May 31, 2013
Schedule of Purchase Commitments [Line Items]
2014	$ 2,151
2015	1,238
2016	1,263
2017	1,060
2018	1,426
Thereafter	4,601
Total	11,739
Aircraft And Related Equipment Commitments [Member]
Schedule of Purchase Commitments [Line Items]
2014	968
2015	1,054
2016	1,140
2017	959
2018	1,382
Thereafter	4,492
Total	9,995
Facilities And Other Commitments [Member]
Schedule of Purchase Commitments [Line Items]
2014	1,183	[1]
2015	184	[1]
2016	123	[1]
2017	101	[1]
2018	44	[1]
Thereafter	109	[1]
Total	$ 1,744	[1]

[1] Primarily vehicles, facilities, advertising contracts and in 2014, approximately $650 million of quarterly contributions to our U.S. Pension Plans.

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Commitments (Details 2)	May 31, 2013
Schedule of Aircraft Commitments [Line Items]
2014	19
2015	12
2016	12
2017	10
2018	12
Thereafter	18
Total	83
Boeing 777 Freighter [Member]
Schedule of Aircraft Commitments [Line Items]
2014	2
2016	2
2018	2
Thereafter	14
Total	20
Boeing 757 [Member]
Schedule of Aircraft Commitments [Line Items]
2014	13
Total	13
Boeing 767 Freighter [Member]
Schedule of Aircraft Commitments [Line Items]
2014	4
2015	12
2016	10
2017	10
2018	10
Thereafter	4
Total	50

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Related Party Transactions (Details)	12 Months Ended
	May 31, 2013
Related Party Transactions [Abstract]
Related Party Ownership Interest	10.00%

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Guarantees and Indemnifications

12 Months Ended

May 31, 2013

Guarantees and Indemnifications [Abstract]

Guarantees and Indemnifications

NOTE 16: GUARANTEES AND INDEMNIFICATIONS

In conjunction with certain transactions, primarily the lease, sale or purchase of operating assets or services in the ordinary course of business, we may provide routine guarantees or indemnifications (e.g., environmental, fuel, tax and software infringement), the terms of which range in duration, and often they are not limited and have no specified maximum obligation. As a result, the overall maximum potential amount of the obligation under such guarantees and indemnificationscannot be reasonably estimated. Historically, we have not been required to make significant payments under our guarantee or indemnification obligations and no amounts have been recognized in our financial statements for the underlying fair value of these obligations.

Special facility revenue bonds have been issued by certain municipalities primarily to finance the acquisition and construction of various airport facilities and equipment. These facilities were leased to us and are accounted for as operating leases. FedEx Express has unconditionally guaranteed $551 million in principal of these bonds (with total future principal and interest payments of approximately $708 millionas of May 31, 2013) through these leases.

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Consolidated Statements of Comprehensive Income (Loss) (Parentheticals) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Other Comprehensive Income, Tax Amounts
Foreign currency translation adjustments, tax	$ (12)	$ (26)	$ 27
Amortization of unrealized pension actuarial gains/losses and other, tax	$ (677)	$ 1,369	$ 141

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Consolidated Statements of Changes in Shareholders Equity (USD $) In Millions	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
Beginning balance at May. 31, 2010	$ 13,811	$ 31	$ 2,261	$ 13,966	$ (2,440)	$ (7)
Net income	1,452			1,452
Other comprehensive gain (loss), net of tax	(110)				(110)
Purchase of treasury stock	(5)					(5)
Cash dividends declared	(152)			(152)
Employee incentive plans and other	224	1	223
Ending balance at May. 31, 2011	15,220	32	2,484	15,266	(2,550)	(12)
Net income	2,032			2,032
Other comprehensive gain (loss), net of tax	(2,403)				(2,403)
Purchase of treasury stock	(197)					(197)
Cash dividends declared	(164)			(164)
Employee incentive plans and other	239		111			128
Ending balance at May. 31, 2012	14,727	32	2,595	17,134	(4,953)	(81)
Net income	1,561			1,561
Other comprehensive gain (loss), net of tax	1,133				1,133
Purchase of treasury stock	(246)					(246)
Cash dividends declared	(176)			(176)
Employee incentive plans and other	399		73			326
Ending balance at May. 31, 2013	$ 17,398	$ 32	$ 2,668	$ 18,519	$ (3,820)	$ (1)

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Recent Accounting Guidance

12 Months Ended

May 31, 2013

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Guidance

NOTE 2: RECENT ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements.

On June 1, 2012, we adopted the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on the presentation of comprehensive income. The new guidance requires companies to report components of comprehensive income by including comprehensive income on the face of the income statement or in a separate statement of comprehensive income. We have adopted this guidance by including a separate statement of comprehensive income (loss) for the three years ending May 31, 2013 and by including expanded accumulated other comprehensive income disclosure requirements in the notes to our consolidated financial statements. In addition on June 1, 2012, we adopted the FASB's amendments to the fair value measurements and disclosure requirements, which expanded existing disclosure requirements regarding the fair value of our long-term debt.

In February 2013, the FASB issued new guidance requiring additional information about reclassification adjustments out of comprehensive income, including changes in comprehensive income balances by component and significant items reclassified out of comprehensive income. This new standard is effective for our fiscal year ending May 31, 2014 and will have no impact on our financial condition or results of operations.

In May 2013, the FASB issued a revised exposure draft outlining proposed changes to the accounting for leases. Under the revised exposure draft, the recognition, measurement and presentation of expenses and cash flows arising from a lease would depend primarily on whether the lessee is expected to consume more than an insignificant portion of the economic benefits embedded in the underlying asset.A right-of-use asset and a liability to make lease payments will be recognized on the balance sheet for all leases (except short-term leases). The enactment of this proposal will have a significant impact on our accounting and financial reporting. The FASB has not yet proposed an effective date of this proposal.

We believe that no other new accounting guidance was adopted or issued during 2013 that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

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Income Taxes (Details 7) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Income Tax Uncertainties [Abstract]
Unrecognized Tax Benefits That Would Impact Effective Tax Rate	$ 42	$ 47
Unrecognized Tax Benefits Accrued Income Tax Penalties And Interest	29	29
Permanently Reinvested Earnings Of Foreign Subsidiaries [Abstract]
Permanently Reinvested Earnings of Foreign Subsidiaries	1,300	1,000
Permanent Reinvestment Strategy Percent Benefit To Effective Tax Rate	1.20%
Percent Income Earned in US Companies	85.00%
Cash in Offshore Jurisdictions Associated With Permanent Reinvestment Strategy	420	410
Foreign Country [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	940
State And Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	$ 500

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Consolidated Statements of Changes in Shareholders Equity (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Other comprehensive gain (loss), tax	$ 665	$ (1,395)	$ (114)
Cash dividends declared, per share	$ 0.56	$ 0.52	$ 0.48
Employee incentive plans and other, shares issued	4,172,976	2,359,659	2,229,051

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Computation of Earnings Per Share (Tables)

12 Months Ended

May 31, 2013

Computation Of Earnings Per Share (Tables) [Abstract]

Schedule of basic and diluted earnings per common share

		2013		2012		2011
Basic earnings per common share:
Net earnings allocable to common shares(1)		$	1,558	$	2,029	$	1,449
Weighted-average common shares			315		315		315
Basic earnings per common share		$	4.95	$	6.44	$	4.61
Diluted earnings per common share:
Net earnings allocable to common shares(1)		$	1,558	$	2,029	$	1,449
Weighted-average common shares			315		315		315
Dilutive effect of share-based awards			2		2		2
Weighted-average diluted shares			317		317		317
Diluted earnings per common share		$	4.91	$	6.41	$	4.57
Anti-dilutive options excluded from diluted
	earnings per common share		11.1		12.6		9.3
(1)	Net earnings available to participating securities were immaterial in all periods presented.

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Related Party Transactions

12 Months Ended

May 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 19: RELATED PARTY TRANSACTIONS

Our Chairman, President and Chief Executive Officer, Frederick W. Smith, currently holds an approximate 10% ownership interest in the National Football League Washington Redskins professional football team (“Redskins”) and is a member of its board of directors. FedEx has a multi-year naming rights agreement with the Redskins granting us certain marketing rights, including the right to name the Redskins' stadium “FedExField.”

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Description of Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

May 31, 2013

Description of Business and Summary of Significant Accounting Policies [Abstract]

Description of Business

DESCRIPTION OF BUSINESS. FedEx Corporation (“FedEx”) provides a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the respected FedEx brand. Our primary operating companies are Federal Express Corporation (“FedEx Express”), the world's largest express transportation company; FedEx Ground Package System, Inc. (“FedEx Ground”), a leading North American provider of small-package ground delivery services; and FedEx Freight, Inc. (“FedEx Freight”), a leading North American provider of less-than-truckload (“LTL”) freight services.These companies represent our major service lines and, along with FedEx Corporate Services, Inc. (“FedEx Services”), form the core of our reportable segments. Our FedEx Services segment provides sales, marketing, information technology, communications and back-office support to our transportation segments. In addition, the FedEx Services segment provides customers with retail access to FedEx Express and FedEx Ground shipping services through FedEx Office and Print Services, Inc. (“FedEx Office”) and provides customer service, technical support and billing and collection services through FedEx TechConnect, Inc. (“FedEx TechConnect”).

Fiscal Years

FISCAL YEARS. Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2013 or ended May 31 of the year referenced.

Principles of Consolidation

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of FedEx and its subsidiaries, substantially all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation. We are not the primary beneficiary of, nor do we have a controlling financial interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity.

Revenue Recognition

REVENUE RECOGNITION. We recognize revenue upon delivery of shipments for our transportation businesses and upon completion of services for our business services, logistics and trade services businesses. Transportation servicesare provided with the use of employees and independent contractors. FedEx is the principal to the transaction for most of these services and revenue from these transactions is recognized on a gross basis. Costs associated with independent contractor settlements are recognized as incurred and included in the caption “Purchased transportation” in the accompanying consolidated statements of income. For shipments in transit, revenue is recorded based on the percentage of service completed at the balance sheet date. Estimates for future billing adjustments to revenue and accounts receivable are recognized at the time of shipment for money-back service guarantees and billing corrections. Delivery costs are accrued as incurred.

Our contract logistics, global trade services and certain transportation businesses, such as FedEx SmartPost, engage in some transactions wherein they act as agents. Revenue from these transactions is recorded on a net basis. Net revenue includes billings to customers less third-party charges, including transportation or handling costs, fees, commissions, and taxes and duties.

Certain of our revenue-producing transactions are subject to taxes, such as sales tax, assessed by governmental authorities. We present these revenues net of tax.

Credit Risk

CREDIT RISK. We routinely grant credit to many of our customers for transportation and business services without collateral. The risk of credit loss in our trade receivables is substantially mitigated by our credit evaluation process, short collection terms and sales to a large number of customers, as well as the low revenue per transaction for most of our services. Allowances for potential credit losses are determined based on historical experience and the impact of current economic factors on the composition of accounts receivable. Historically, credit losses have been within management's expectations.

Advertising

ADVERTISING. Advertising and promotion costs are expensed as incurred and are classified in other operating expenses. Advertising and promotion expenses were $424million in 2013, $421 million in 2012 and $375 million in 2011.

Cash Equivalents

CASH EQUIVALENTS. Cash in excess of current operating requirements is invested in short-term, interest-bearing instruments with maturities of three months or less at the date of purchase and is stated at cost, which approximates market value.

Spare Parts, Supplies And Fuel

SPARE PARTS, SUPPLIES AND FUEL. Spare parts (principally aircraft-related) are reported at weighted-average cost. Allowances for obsolescence are provided for spare parts expected to be on hand at the date the aircraft are retired from service. These allowances are provided over the estimated useful life of the related aircraft and engines. Additionally, allowances for obsolescence are provided for spare parts currently identified as excess or obsolete. These allowances are based on management estimates, which are subject to change. The majority of our supplies and our fuel are reported at weighted average cost.

Property And Equipment

PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs are charged to expense as incurred. We capitalize certain direct internal and external costs associated with the development of internal-use software. Gains and losses on sales of property used in operations are classified within operating expenses.

For financial reporting purposes, we record depreciation and amortization of property and equipment on a straight-line basis over the asset's service life or related lease term, if shorter. For income tax purposes, depreciation is computed using accelerated methods when applicable. The depreciable lives and net book value of our property and equipment are as follows (dollars in millions):

		Net Book Value at May 31,
	Range	2013		2012
Wide-body aircraft and related equipment	15 to 30 years	$	7,191	$	7,161
Narrow-body and feeder aircraft and related equipment	5 to 18 years		2,284		1,881
Package handling and ground support equipment	3 to 30 years		2,311		2,101
Vehicles	3 to 15 years		1,748		1,411
Computer and electronic equipment	2 to 10 years		993		930
Facilities and other	2 to 40 years		3,957		3,764

Substantially all property and equipment have no material residual values.  The majority of aircraft costs are depreciated on a straight-line basis over 15 to 30 years. We periodically evaluate the estimated service lives and residual values used to depreciate our property and equipment.  This evaluation may result in changes in the estimated lives and residual values as it did in 2013 and 2012 with certain aircraft.  In May 2013, FedEx Express made the decision to accelerate the retirement of 76 aircraft and related engines to aid in our fleet modernization and improve our global network. In May 2012, we shortened the depreciable lives for 54 aircraft and related engines to accelerate the retirement of these aircraft, resulting in a depreciation expense increase of $69 million in 2013. As a result of these accelerated retirements, we expect an additional $74 million in year-over-year depreciation expense in 2014.

Depreciation expense, excluding gains and losses on sales of property and equipment used in operations, was $2.3 billion in 2013, $2.1 billion in 2012 and $1.9 billion in 2011.  Depreciation and amortization expense includes amortization of assets under capital lease.

Capitalized Interest

CAPITALIZED INTEREST. Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $45 million in 2013, $85 million in 2012 and $71 million in 2011.

Impairment of Long-Lived Assets

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

We operate integrated transportation networks, and accordingly, cash flows for most of our operating assets are assessed at a network level, not at an individual asset level, for our analysis of impairment.

In the normal management of our aircraft fleet, we routinely idle aircraft and engines temporarily due to maintenance cycles and adjustments of our network capacity to match seasonality and overall customer demand levels. Temporarily idled assets are classified as available-for-use, and we continue to record depreciation expense associated with these assets. These temporarily idled assets are assessed for impairment on a quarterly basis. Factors which could cause impairment include, but are not limited to, adverse changes in our global economic outlook and the impact of our outlook on our current and projected volume levels, including lower capacity needs during our peak shipping seasons; the introduction of new fleet types or decisions to permanently retire an aircraft fleet from operations; or changes to planned service expansion activities. We currently have one aircraft temporarily idled. This aircraft has been idled for 15 months and is expected to return to revenue service.

In May 2013, we made the decision to retire from service two Airbus A310-200 aircraft and four related engines, three Airbus A310-300 aircraft and two related engines and five Boeing MD10-10 aircraft and 15 related enginesto align with the plans of FedEx Express to modernize its aircraft fleet and improve its global network. As a consequence of this decision, a noncash impairment charge of $100 million ($63 million, net of tax, or $0.20 per diluted share) was recorded in the FedEx Express segment in the fourth quarter. All of these aircraft were temporarily idled and not in revenue service.

In May 2012, we made the decision to retire from service 18 Airbus A310-200 aircraft and 26 related engines, as well as six Boeing MD10-10 aircraft and 17 related engines. As a consequence of this decision, a noncash impairment charge of $134 million ($84 million, net of tax, or $0.26 per diluted share) was recordedin the FedEx Express segment in the fourth quarter. The decision to retire these aircraft, the majority of which were temporarily idled and not in revenue service, better aligns the U.S. domestic air network capacity of FedEx Express to match current and anticipated shipment volumes.

The combination of our FedEx Freight and FedEx National LTL operations was completed on January 30, 2011. These actions resulted in total program costs of $133 million recorded during 2011, which includes $89 millionof impairment and other charges (recorded in the “Business realignment, impairment and other charges” caption on the consolidated income statements),and $44 million of other program costs (primarily recorded in the “Depreciation and amortization” caption on the consolidated income statements).

Goodwill

GOODWILL. Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of businesses acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired entity. Goodwill is reviewed at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we would proceed to a two-step process to test goodwill for impairment including comparing the fair value of each reporting unit with its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management's assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations may include both internal and third-party valuations. Unless circumstances otherwise dictate, we perform our annual impairment testing in the fourth quarter.

Pension and Postretirement Healthcare Plans

PENSION AND POSTRETIREMENT HEALTHCARE PLANS. Our defined benefit plans are measured using actuarial techniques that reflect management's assumptions for discount rate, expected long-term investment returns on plan assets, salary increases, expected retirement, mortality, employee turnover and future increases in healthcare costs. We determine the discount rate (which is required to be the rate at which the projected benefit obligation could be effectively settled as of the measurement date) with the assistance of actuaries, who calculate the yield on a theoretical portfolio of high-grade corporate bonds (rated Aa or better) with cash flows that are designed to match our expected benefit payments in future years. A calculated-value method is employed for purposes of determining the asset values for our tax-qualified U.S. domestic pension plans (“U.S. Pension Plans”). Our expected rate of return is a judgmental matter which is reviewed on an annual basis and revised as appropriate.

The accounting guidance related to employers' accounting for defined benefit pension and other postretirement plans requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in other comprehensive income (“OCI”) of unrecognized gains or losses and prior service costs or credits. Additionally, the guidance requires the measurement date for plan assets and liabilities to coincide with the plan sponsor's year end.

At May 31, 2013, we recorded anincrease to equity through OCI of $861million (net of tax) based primarily on year-end adjustments related to an increase in the value of our plan assets and anincrease in the discount rate used to measure the liabilities at May 31, 2013.At May 31, 2012, we recorded a decrease to equity through OCI of $2.4billion (net of tax) based primarily on year-end adjustments related to increases in our projected benefit obligation due to a decrease in the discount rate used to measure the liabilities at May 31, 2012.

Income Taxes

INCOME TAXES. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The liability method is used to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to be in effect when the taxes are paid.

We recognize liabilities for uncertain income tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we must determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis or when new information becomes available to management. These reevaluations are based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, successfully settled issues under audit and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax benefit or an increase to the related provision.

We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties that are due within one year of the balance sheet date are presented as current liabilities. The remaining portion of our income tax liabilities and accrued interest and penalties are presented as noncurrent liabilities because payment of cash is not anticipated within one year of the balance sheet date. These noncurrent income tax liabilities are recorded in the caption “Other liabilities” in the accompanying consolidated balance sheets.

Self-Insurance Accruals

SELF-INSURANCE ACCRUALS. We are self-insured for costs associated with workers' compensation claims, vehicle accidents and general business liabilities, and benefits paid under employee healthcare and long-term disability programs. Accruals are primarily based on the actuarially estimated, undiscounted cost of claims, which includes incurred-but-not-reported claims. Current workers' compensation claims, vehicle and general liability, employee healthcare claims and long-term disability are included in accrued expenses. We self-insure up to certain limits that vary by operating company and type of risk. Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance and premium expense.

Leases

LEASES. We lease certain aircraft, facilities, equipment and vehicles under capital and operating leases. The commencement date of all leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the property. In addition to minimum rental payments, certain leases provide for contingent rentals based on equipment usage principally related to aircraft leases at FedEx Express and copier usage at FedEx Office. Rent expense associated with contingent rentals is recorded as incurred. Certain of our leases contain fluctuating or escalating payments and rent holiday periods. The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments over rent expense is accounted for as a deferred lease asset and recorded in “Other assets” in the accompanying consolidated balance sheets. The cumulative excess of rent expense over rent payments is accounted for as a deferred lease obligation. Leasehold improvements associated with assets utilized under capital or operating leases are amortized over the shorter of the asset's useful life or the lease term.

Deferred Gains

DEFERRED GAINS. Gains on the sale and leaseback of aircraft and other property and equipment are deferred and amortized ratably over the life of the lease as a reduction of rent expense. Substantially all of these deferred gains are related to aircraft transactions.

Foreign Currency Translation

FOREIGN CURRENCY TRANSLATION. Translation gains and losses of foreign operations that use local currencies as the functional currency are accumulated and reported, net of applicable deferred income taxes, as a component of accumulated other comprehensive income within common stockholders' investment. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local currency are included in the caption “Other, net” in the accompanying consolidated statements of income and were immaterial for each period presented.

Employees Under Collective Bargaining Arrangements

EMPLOYEES UNDER COLLECTIVE BARGAINING ARRANGEMENTS.The pilots of FedEx Express, which represent a small number of FedEx Express's total employees, are employed under a collective bargaining agreement. The contract became amendable in March 2013, and the parties are currently in negotiations. In addition to our pilots at FedEx Express, certain FedEx non-U.S. employees are unionized.

Stock-Based Compensation

STOCK-BASED COMPENSATION. We recognize compensation expense for stock-based awards under the provisions of the accounting guidance related to share-based payments. This guidance requires recognition of compensation expense for stock-based awards using a fair value method.We issue new shares or repurchase shares on the open market to cover employee share option exercises and restricted stock grants. Accordingly, we plan to repurchase approximately 3.7 million shares in 2014.

Treasury Shares

TREASURY SHARES. During 2013, we repurchased 2.7 million shares of FedEx common stock at an average price of $91 per share for a total of $246 million. In March 2013, our Board of Directors authorized the repurchase of up to 10 million shares of common stock. It is expected that the additional share authorization will primarily be utilized to offset the effects of equity compensation dilution over the next several years. As of May 31, 2013, 10,188,000 shares remained under existing share repurchase authorizations.

Dividends Declared per Common Share

DIVIDENDS DECLARED PER COMMON SHARE. On June 3, 2013, our Board of Directors declared a quarterly dividend of $0.15 per share of common stock. The dividend was paid on July 1, 2013 to stockholders of record as of the close of business on June 17, 2013. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our dividend payment amount on an annual basis at the end of each fiscal year.

Business Realignment Costs

BUSINESS REALIGNMENT COSTS. During 2013, we announced profit improvement programs including reducing our selling, general and administrative cost functions through a voluntary employee separation program.

During 2013, we conducted a program to offer voluntary cash buyouts to eligible U.S.-based employees in certain staff functions. The voluntary buyout program includes voluntary severance payments and funding to healthcare reimbursement accounts, with the voluntary severance calculated based on four weeks of gross base salary for every year of FedEx service up to a maximum payment of two years of pay. This program was completed in the fourth quarter and approximately 3,600 employees have left or will be voluntarily leaving the company by the end of 2014. Eligible employees are scheduled to vacate positions in phases to ensure a smooth transition in the impacted functions so that we maintain service levels to our customers. Of the total population leaving the company, approximately 40% of the employees vacated positions on May 31, 2013. An additional 35% will depart throughout 2014 and approximately 25% of this population will remain until May 31, 2014. Costs of the benefits provided under the voluntary program were recognized as special termination benefits in the period that eligible employees accepted their offers.

We incurred costs of $560 million ($353 million, net of tax, or $1.11 per diluted share) during 2013 associated with our business realignment activities. These costs related primarily to severance for employees who accepted voluntary buyouts in the third and fourth quarters of 2013. Payments will be made at the time of departure. Approximately $180 million was paid under this program during 2013. The cost of the buyout program is included in the caption “Business realignment, impairment and other charges” in our consolidated statements of income. Also included in that caption are other external costs directly attributable to our business realignment activities, such as professional fees.

Use Of Estimates

USE OF ESTIMATES. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent liabilities. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: self-insurance accruals; retirement plan obligations; long-term incentive accruals; tax liabilities; accounts receivable allowances; obsolescence of spare parts; contingent liabilities; loss contingencies, such as litigation and other claims; and impairment assessments on long-lived assets (including goodwill).

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Income Taxes (Details 5) (USD $) In Millions, unless otherwise specified	May 31, 2013	May 31, 2012
Deferred Tax Assets Liabilities Net [Abstract]
Current deferred tax asset	$ 533	$ 533
Noncurrent deferred tax liability	(1,652)	(836)
Net deferred tax liabilities	$ (1,119)	$ (303)

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Condensed Consolidating Financial Statements (Details 4) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Condensed Financial Statements Captions [Line Items]
Cash provided by (used in) operating activities	$ 4,688	$ 4,835	$ 4,041
Investing Activities:
Capital expenditures	(3,375)	(4,007)	(3,434)
Business acquisitions, net of cash acquired	(483)	(116)	(96)
Proceeds from asset dispositions and other	55	74	111
Cash used in investing activities	(3,803)	(4,049)	(3,419)
Financing Activities:
Principal payments on debt	(417)	(29)	(262)
Proceeds from debt issuance	1,739
Proceeds from stock issuances	280	128	108
Excess tax benefit on the exercise of stock options	23	18	23
Dividends paid	(177)	(164)	(151)
Purchase of treasury stock	(246)	(197)
Other, net	(18)		(5)
Cash provided by (used in) financing activities	1,184	(244)	(287)
Effect of exchange rate changes on cash	5	(27)	41
Net increase (decrease) in cash and cash equivalents	2,074	515	376
Cash and cash equivalents at beginning of period	2,843	2,328	1,952
Cash and cash equivalents at end of period	4,917	2,843	2,328
Parent Company [Member]
Condensed Financial Statements Captions [Line Items]
Cash provided by (used in) operating activities	247	(88)	25
Investing Activities:
Capital expenditures	(3)	(5)	(1)
Cash used in investing activities	(3)	(5)	(1)
Financing Activities:
Net transfers from (to) Parent	141	625	530
Principal payments on debt			(250)
Proceeds from debt issuance	1,739
Proceeds from stock issuances	280	128	108
Excess tax benefit on the exercise of stock options	23	18	23
Dividends paid	(177)	(164)	(151)
Purchase of treasury stock	(246)	(197)
Other, net	(18)		(5)
Cash provided by (used in) financing activities	1,742	410	255
Net increase (decrease) in cash and cash equivalents	1,986	317	279
Cash and cash equivalents at beginning of period	1,906	1,589	1,310
Cash and cash equivalents at end of period	3,892	1,906	1,589
Guarantor Subsidiaries [Member]
Condensed Financial Statements Captions [Line Items]
Cash provided by (used in) operating activities	3,936	4,383	3,978
Investing Activities:
Capital expenditures	(3,029)	(3,792)	(3,263)
Business acquisitions, net of cash acquired			(96)
Proceeds from asset dispositions and other	49	74	110
Cash used in investing activities	(2,980)	(3,718)	(3,249)
Financing Activities:
Net transfers from (to) Parent	(58)	(550)	(994)
Payment on loan between subsidiaries	(385)		235
Intercompany dividends	21	76	61
Principal payments on debt	(417)	(29)	(12)
Other, net	(119)	(19)	(9)
Cash provided by (used in) financing activities	(958)	(522)	(719)
Effect of exchange rate changes on cash	(10)	(5)	11
Net increase (decrease) in cash and cash equivalents	(12)	138	21
Cash and cash equivalents at beginning of period	417	279	258
Cash and cash equivalents at end of period	405	417	279
Non Guarantor Subsidiaries [Member]
Condensed Financial Statements Captions [Line Items]
Cash provided by (used in) operating activities	486	570	65
Investing Activities:
Capital expenditures	(343)	(210)	(170)
Business acquisitions, net of cash acquired	(483)	(116)
Proceeds from asset dispositions and other	6		1
Cash used in investing activities	(820)	(326)	(169)
Financing Activities:
Net transfers from (to) Parent	(83)	(75)	464
Payment on loan between subsidiaries	385		(235)
Intercompany dividends	(21)	(76)	(61)
Other, net	119	19	9
Cash provided by (used in) financing activities	400	(132)	177
Effect of exchange rate changes on cash	15	(22)	30
Net increase (decrease) in cash and cash equivalents	81	90	103
Cash and cash equivalents at beginning of period	636	546	443
Cash and cash equivalents at end of period	717	636	546
Consolidation Eliminations [Member]
Condensed Financial Statements Captions [Line Items]
Cash provided by (used in) operating activities	19	(30)	(27)
Financing Activities:
Net increase (decrease) in cash and cash equivalents	19	(30)	(27)
Cash and cash equivalents at beginning of period	(116)	(86)	(59)
Cash and cash equivalents at end of period	$ (97)	$ (116)	$ (86)

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Long Term Debt and Other Financing Arrangements (Tables)

12 Months Ended

May 31, 2013

Long Term Debt (Tables) [Abstract]

Components of Long-term Debt (Net of Discounts)

				May 31,
				2013		2012
Senior unsecured debt:
	Interest Rate %		Maturity
	9.65		2013	$	-	$	300
	7.38		2014		250		250
	8.00		2019		750		750
	2.625		2023		499		-
	2.70		2023		249		-
	3.875		2043		493		-
	4.10		2043		499		-
	7.60		2098		239		239
	Total senior unsecured debt				2,979		1,539
Capital lease obligations					11		128
					2,990		1,667
		Less current portion			251		417
				$	2,739	$	1,250

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Income Taxes (Details 4) (USD $) In Millions, unless otherwise specified	May 31, 2013	May 31, 2012
Components Of Deferred Tax Assets [Abstract]
Property, equipment, leases and intangibles	$ 157	$ 248
Employee benefits	1,771	2,300
Self-insurance accruals	533	495
Other	251	338
Net operating loss/credit carryforwards	298	179
Valuation allowances	(204)	(145)
Deferred Tax Assets, Net	2,806	3,415
Components Of Deferred Tax Liabilities [Abstract]
Property, equipment, leases and intangibles	3,676	3,436
Employee benefits	11	11
Other	238	271
Deferred Tax Liabilities	$ 3,925	$ 3,718

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Commitments (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	Jun. 14, 2013 Subsequent Event [Member]
Other Commitment Disclosures [Abstract]
Deposit and Progress Payments	$ 414
Required U.S. pension plans contributions in 2014	$ 650
Other Aircraft Disclosures [Line Items]
Boeing 777F Conditional Aircraft Commitments	9
Boeing 767F Conditional Aircraft Commitments	4
Boeing 757 Aircraft Purchases	14	13
Boeing 767F Aircraft Purchases	23
Boeing 757F Aircraft Options Purchased	16
Boeing 777F deferrals	2

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Long-term Debt and Other Financing Arrangements (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Debt Instrument [Line Items]
Capital lease obligations	$ 11	$ 128
Total Debt And Capital Lease Obligations	2,990	1,667
Less current portion	251	417
LONG-TERM DEBT, LESS CURRENT PORTION	2,739	1,250
Senior Unsecured Debt Due In 2013 9.65% [Member]
Debt Instrument [Line Items]
Long Term Debt		300
Debt Instrument Interest Rate Stated Percentage	9.65%	9.65%
Debt Instrument, Maturity Date		Jun. 15, 2012
Senior Unsecured Debt Due In 2014 7.38% [Member]
Debt Instrument [Line Items]
Long Term Debt	250	250
Debt Instrument Interest Rate Stated Percentage	7.38%	7.38%
Debt Instrument, Maturity Date	Jan. 15, 2014	Jan. 15, 2014
Senior Unsecured Debt Due 2019 8.00% [Member]
Debt Instrument [Line Items]
Long Term Debt	750	750
Debt Instrument Interest Rate Stated Percentage	8.00%	8.00%
Debt Instrument, Maturity Date	Jan. 15, 2019	Jan. 15, 2019
Senior Unsecured Debt Due 2023 2.625% [Member]
Debt Instrument [Line Items]
Long Term Debt	499
Debt Instrument Interest Rate Stated Percentage	2.625%
Debt Instrument, Maturity Date	Aug. 01, 2022
Senior Unsecured Debt Due 2023 2.70% [Member]
Debt Instrument [Line Items]
Long Term Debt	249
Debt Instrument Interest Rate Stated Percentage	2.70%
Debt Instrument, Maturity Date	Apr. 15, 2023
Senior Unsecured Debt Due 2043 3.875% [Member]
Debt Instrument [Line Items]
Long Term Debt	493
Debt Instrument Interest Rate Stated Percentage	3.875%
Debt Instrument, Maturity Date	Aug. 01, 2042
Senior Unsecured Debt Due 2043 4.10% [Member]
Debt Instrument [Line Items]
Long Term Debt	499
Debt Instrument Interest Rate Stated Percentage	4.10%
Debt Instrument, Maturity Date	Apr. 15, 2043
Senior Unsecured Debt Due 2098 7.60% [Member]
Debt Instrument [Line Items]
Long Term Debt	239	239
Debt Instrument Interest Rate Stated Percentage	7.60%	7.60%
Debt Instrument, Maturity Date	Jul. 01, 2097	Jul. 01, 2097
Total Senior Unsecured Debt [Member]
Debt Instrument [Line Items]
Long Term Debt	$ 2,979	$ 1,539

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Description of Business and Summary of Significant Accounting Policies (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended			12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	May 31, 2013	May 31, 2012	May 31, 2011
Advertising [Abstract]
Advertising and promotion expenses				$ 424	$ 421	$ 375
Business Realignment Costs [Abstract]
Business Realignment Costs	496	47	13	560
Business Realignment Costs, Net Of Tax				353
Business Realignment Costs, Diluted EPS Impact	$ 1.11			$ 1.11
Business Realignment Costs Paid				180
Number of Employees Accepted Voluntary Buyout				3,600
Percent Employees Departed May 31, 2013				40.00%
Percent Employees To Depart Throughout 2014				35.00%
Percent Employees To Depart on May 31, 2014				25.00%
Capitalized Interest [Abstract]
Interest Costs Capitalized				45	85	71
Dividends Declared [Abstract]
Dividends Payable, Date Declared				Jun. 03, 2013
Dividends Payable Amount Per Share	$ 0.15			$ 0.15
Dividends Payable, Date To Be Paid				Jul. 01, 2013
Dividends Payable, Date Of Record				Jun. 17, 2013
Impairment of Long Lived Assets [Abstract]
Asset impairments Diluted EPS impact				$ 0.20	$ 0.26
Asset impairments, net of tax				63	84
Number of Impaired Airbus A310-200 Aircraft	2			2	18
Number of Impaired Boeing MD10-10 Aircraft	5			5	6
Number of Impaired Airbus A310-200 Aircraft Engines	4			4	26
Number of Impaired Boeing MD10-10 Aircraft Engines	15			15	17
Number of Impaired Airbus A310-300 Aircraft	3			3
Number of Impaired Airbus A310-300 Aircraft Engines	2			2
Number of Idle Aircraft	1			1
Aircraft Idle Term	15 months			15 months
Asset impairments				100	134
Impairment and other charges						89
Other program costs						44
Total program costs						133
Pension And Postretirement Healthcare Plans Equity Impact [Abstract]
Benefit plans adjustments at year-end measurement date, net of tax				(861)	2,400
Property And Equipment [Line Items]
Net property and equipment	18,484			18,484	17,248
Depreciation expense, excluding gains and losses on sales of property and equipment				2,300	2,100	1,900
Depreciable Life Range For Majority Of Aircraft Costs				15 to 30 years
Number of Aircraft With Shortened Depreciable Lives	76			76	54
2013 Incremental Depreciation Expense				69
2014 Projected Incremental Depreciation Expense				74
Stock Based Compensation [Abstract]
Number Of Shares To Be Repurchased in 2014	3,700,000			3,700,000
Treasury Shares [Abstract]
Treasury Stock Acquired, Average Cost Per Share				$ 91
Number of Shares Repurchased	2,700,000			2,700,000
Purchase of treasury stock				246	197
Stock Repurchase Program, Number Of Shares Authorized To Be Repurchased	10,000,000			10,000,000
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased	10,188,000			10,188,000
Wide Body Aircraft And Related Equipment [Member]
Property And Equipment [Line Items]
Depreciable lives range				15 to 30 years
Net property and equipment	7,191			7,191	7,161
Narrow Body And Feeder Aircraft And Related Equipment [Member]
Property And Equipment [Line Items]
Depreciable lives range				5 to 18 years
Net property and equipment	2,284			2,284	1,881
Package Handling And Ground Support Equipment [Member]
Property And Equipment [Line Items]
Depreciable lives range				3 to 30 years
Net property and equipment	2,311			2,311	2,101
Vehicles [Member]
Property And Equipment [Line Items]
Depreciable lives range				3 to 15 years
Net property and equipment	1,748			1,748	1,411
Computer And Electronic Equipment [Member]
Property And Equipment [Line Items]
Depreciable lives range				2 to 10 years
Net property and equipment	993			993	930
Facilities And Other Property [Member]
Property And Equipment [Line Items]
Depreciable lives range				2 to 40 years
Net property and equipment	$ 3,957			$ 3,957	$ 3,764

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Supplemental Cash Flow Information (Tables)

12 Months Ended

May 31, 2013

Supplemental Cash Flow (Tables) [Abstract]

Supplemental Cash Flow Table

		2013		2012		2011
Cash payments for:
	Interest (net of capitalized interest)	$	80	$	52	$	93
	Income taxes	$	687	$	403	$	493
	Income tax refunds received		(219)		(146)		(106)
	Cash tax payments, net	$	468	$	257	$	387

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Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	May 31, 2013	May 31, 2012
CURRENT ASSETS
Allowances for receivables	$ 176	$ 178
Allowances for spare parts, supplies and fuel	$ 205	$ 184
COMMON STOCKHOLDERS' INVESTMENT
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	800	800
Common stock, shares issued	318	317

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Selected Current Liabilities

12 Months Ended

May 31, 2013

Selected Current Liabilities Details [Abstract]

Selected Current Liabilities

NOTE 5: SELECTED CURRENT LIABILITIES

The components of selected current liability captions were as follows (in millions):

			May 31,
			2013		2012
Accrued Salaries and Employee Benefits
	Salaries		$	489	$	280
	Employee benefits, including
		variable compensation		615		803
	Compensated absences			584		552
			$	1,688	$	1,635
Accrued Expenses
	Self-insurance accruals		$	796	$	678
	Taxes other than income taxes			368		386
	Other			768		645
			$	1,932	$	1,709

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Consolidated Statements of Comprehensive Income (Loss)
NET INCOME	$ 1,561	$ 2,032	$ 1,452
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax benefit of $12 and $26 in 2013 and 2012 and tax expense of $27 in 2011	41	(95)	125
Amortization of unrealized pension actuarial gains/losses and other, net of tax expense of $677 in 2013 and tax benefit of $1,369 and $141 in 2012 and 2011	1,092	(2,308)	(235)
Other comprehensive income (loss)	1,133	(2,403)	(110)
Comprehensive income (loss)	$ 2,694	$ (371)	$ 1,342

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Leases (Details 4) (USD $) In Millions, unless otherwise specified	May 31, 2013
Schedule of Future Minimum Operating Lease Payments [Line Items]
2014	$ 1,936
2015	1,834
2016	1,636
2017	1,689
2018	1,230
Thereafter	6,650
Total	14,975
Aircraft and Related Equipment [Member]
Schedule of Future Minimum Operating Lease Payments [Line Items]
2014	462
2015	448
2016	453
2017	391
2018	326
Thereafter	824
Total	2,904
Facilities and Other [Member]
Schedule of Future Minimum Operating Lease Payments [Line Items]
2014	1,474
2015	1,386
2016	1,183
2017	1,298
2018	904
Thereafter	5,826
Total	$ 12,071

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	May 31, 2013	May 31, 2012
CURRENT ASSETS
Cash and cash equivalents	$ 4,917	$ 2,843
Receivables, less allowances of $176 and $178	5,044	4,704
Spare parts, supplies and fuel, less allowances of $205 and $184	457	440
Deferred income taxes	533	533
Prepaid expenses and other	323	536
Total current assets	11,274	9,056
PROPERTY AND EQUIPMENT, AT COST
Aircraft and related equipment	14,716	14,360
Package handling and ground support equipment	6,452	5,912
Computer and electronic equipment	4,958	4,646
Vehicles	4,080	3,654
Facilities and other	7,903	7,592
Gross property and equipment	38,109	36,164
Less accumulated depreciation and amortization	19,625	18,916
Net property and equipment	18,484	17,248
OTHER LONG-TERM ASSETS
Goodwill	2,755	2,387
Other assets	1,054	1,212
Total other long-term assets	3,809	3,599
ASSETS	33,567	29,903
CURRENT LIABILITIES
Current portion of long-term debt	251	417
Accrued salaries and employee benefits	1,688	1,635
Accounts payable	1,879	1,613
Accrued expenses	1,932	1,709
Total current liabilities	5,750	5,374
LONG-TERM DEBT, LESS CURRENT PORTION	2,739	1,250
OTHER LONG-TERM LIABILITIES
Deferred income taxes	1,652	836
Pension, postretirement healthcare and other benefit obligations	3,916	5,582
Self-insurance accruals	987	963
Deferred lease obligations	778	784
Deferred gains, principally related to aircraft transactions	227	251
Other liabilities	120	136
Total other long-term liabilities	7,680	8,552
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' INVESTMENT
Common stock, $0.10 par value; 800 million shares authorized; 318 million shares issued as of May 31, 2013 and 317 million shares issued as of May 31, 2012	32	32
Additional paid-in capital	2,668	2,595
Retained earnings	18,519	17,134
Accumulated other comprehensive loss	(3,820)	(4,953)
Treasury stock, at cost	(1)	(81)
Total common stockholders' investment	17,398	14,727
LIABILITIES AND STOCKHOLDERS' INVESTMENT	$ 33,567	$ 29,903

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Business Combinations (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012 Mexico acquisition [Member]	May 31, 2011 India acquisition [Member]	May 31, 2013 Poland acquisition [Member]	May 31, 2013 Brazil acquisition [Member]	May 31, 2013 France acquisition [Member]
Business Acquisition Cost Of Acquired Entity [Abstract]
Current assets	$ 145
Property and equipment	91
Goodwill	351
Intangible assets	60
Other non-current assets	70
Current liabilities	(174)
Long-term liabilities	(36)
Acquisition price	$ 507	$ 128	$ 96	$ 54	$ 398	$ 55
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	9 years
Acquired Finite-lived Intangible Assets Amortization Period, Majority of Expense Recognized	5 years

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Retirement Plans (Details 6) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Accumulated Benefit Obligation ("ABO")	$ 21,958	$ 21,556
Changes in Projected Benefit Obligation ("PBO") and Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year	22,187	17,372
Service cost	692	593	521
Interest cost	968	976	900
Actuarial (gain) loss	(652)	3,789
Benefits paid	(589)	(502)
Other	(6)	(41)
PBO/APBO at the end of year	22,600	22,187	17,372
Change in Plan Assets
Beginning balance May 31	17,334	15,841
Actual return on plan assets	2,081	1,235
Company contributions	615	780
Benefits paid	(589)	(502)
Other	(8)	(20)
Ending balance May 31	19,433	17,334	15,841
Funded Status of the Plans	(3,167)	(4,853)
Amount Recognized in the Balance Sheet at May 31
Current pension, postretirement healthcare and other benefit obligations	(48)	(35)
Noncurrent pension, postretirement healthcare and other benefit obligations	(3,119)	(4,818)
Net amount recognized	(3,167)	(4,853)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost
Net actuarial loss (gain)	6,993	8,866
Prior service (credit) cost and other	(781)	(897)
Total	6,212	7,969
Defined Benefit Plan Amounts That Will Be Amortized From Accumulated Other Comprehensive Income Loss In Next Fiscal Year Abstract
Net actuarial loss (gain)	378	516
Prior service credit and other	(114)	(114)
Total	264	402
Postretirement Healthcare Plans [Member]
Changes in Projected Benefit Obligation ("PBO") and Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year	790	648
Service cost	42	35	31
Interest cost	36	36	34
Actuarial (gain) loss	(17)	98
Benefits paid	(54)	(51)
Other	31	24
PBO/APBO at the end of year	828	790	648
Change in Plan Assets
Company contributions	27	27
Benefits paid	(54)	(51)
Other	27	24
Funded Status of the Plans	(828)	(790)
Amount Recognized in the Balance Sheet at May 31
Current pension, postretirement healthcare and other benefit obligations	(39)	(33)
Noncurrent pension, postretirement healthcare and other benefit obligations	(789)	(757)
Net amount recognized	(828)	(790)
Amounts Recognized in AOCI and not yet reflected in Net Periodic Benefit Cost
Net actuarial loss (gain)	(4)	13
Prior service (credit) cost and other	2	2
Total	$ (2)	$ 15

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Retirement Plans (Details 2)	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Defined Benefit Plan Assumptions Used In Calculations [Abstract]
Expected long-term rate of return on assets	8.00%	8.00%	8.00%
Pension Plans [Member]
Defined Benefit Plan Assumptions Used In Calculations [Abstract]
Discount rate used to determine benefit obligation	4.79%	4.44%	5.76%
Discount rate used to determine net periodic benefit cost	4.44%	5.76%	6.37%
Rate of increase in future compensation levels used to determine benefit obligation	4.54%	4.62%	4.58%
Rate of increase in future compensation levels used to determine net periodic benefit cost	4.62%	4.58%	4.63%
Expected long-term rate of return on assets	8.00%	8.00%	8.00%
Postretirement Healthcare Plans [Member]
Defined Benefit Plan Assumptions Used In Calculations [Abstract]
Discount rate used to determine benefit obligation	4.91%	4.55%	5.67%
Discount rate used to determine net periodic benefit cost	4.55%	5.67%	6.11%

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Summary of Quarterly Operating Results (Unaudited)

12 Months Ended

May 31, 2013

Summary of Quarterly Operating Results [Abstract]

Summary of Quarterly Operating Results (Unaudited)

NOTE 20: SUMMARY OF QUARTERLY OPERATING RESULTS (UNAUDITED)

		First		Second		Third		Fourth
(in millions, except per share amounts)		Quarter		Quarter		Quarter		Quarter
2013(1)
Revenues		$	10,792	$	11,107	$	10,953	$	11,435
Operating income			742		718		589		502
Net income			459		438		361		303
Basic earnings per common share(2)			1.46		1.39		1.14		0.96
Diluted earnings per common share(2)			1.45		1.39		1.13		0.95
2012(3)
Revenues		$	10,521	$	10,587	$	10,564	$	11,008
Operating income			737		780		813		856
Net income			464		497		521		550
Basic earnings per common share(2)			1.46		1.57		1.66		1.74
Diluted earnings per common share(2)			1.46		1.57		1.65		1.73
(1)	The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.
(2)	The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.
(3)	The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

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Business Segment Information

12 Months Ended

May 31, 2013

Business Segment Information [Abstract]

Business Segment Information

NOTE 14: BUSINESS SEGMENT INFORMATION

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation)
	FedEx Trade Networks (air and ocean freight forwarding and customs
		brokerage)
	FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing, information technology,
		communications and back-office functions)
	FedEx TechConnect (customer service, technical support, billings
		and collections)
	FedEx Office (document and business services and package
		acceptance)

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the FedEx Express segment in their natural expense line items. The FedEx Services segment includes: FedEx Services, which provides sales, marketing, information technology, communications and back-office support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses.

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments in MD&Areflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

Other Intersegment Transactions

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

The following table provides a reconciliation of reportable segment revenues, depreciation and amortization, operating income (loss) and segment assets to consolidated financial statement totals for the years ended or as of May 31 (in millions):

		FedEx Express Segment(1)		FedEx Ground Segment(2)		FedEx Freight Segment(3)		FedEx Services Segment		Other and Eliminations		Consolidated Total
Revenues
2013		$	27,171	$	10,578	$	5,401	$	1,580	$	(443)	$	44,287
2012			26,515		9,573		5,282		1,671		(361)		42,680
2011			24,581		8,485		4,911		1,684		(357)		39,304
Depreciation and amortization
2013		$	1,350	$	434	$	217	$	384	$	1	$	2,386
2012			1,169		389		185		369		1		2,113
2011			1,059		337		205		371		1		1,973
Operating income (loss)
2013		$	555	$	1,788	$	208	$	-	$	-	$	2,551
2012			1,260		1,764		162		-		-		3,186
2011			1,228		1,325		(175)		-		-		2,378
Segment assets(4)
2013		$	18,935	$	7,353	$	2,953	$	4,879	$	(553)	$	33,567
2012			17,981		6,154		2,807		4,546		(1,585)		29,903
2011			16,463		5,048		2,664		4,278		(1,068)		27,385
(1)	FedEx Express segment 2013 operating expenses include $405 million of direct and allocated business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines. FedEx Express segment 2012 operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines and a reversal of a $66 million legal reserve which was initially recorded in 2011.
(2)	FedEx Ground segment 2013 operating expenses include $105 million of allocated business realignment costs.
(3)	FedEx Freight segment 2013 operating expenses include $50 million in direct and allocated business realignment costs. FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.
(4)	Segment assets include intercompany receivables.

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):
	FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Other		Consolidated Total
2013	$	2,067	$	555	$	326	$	424	$	3	$	3,375
2012		2,689		536		340		437		5		4,007
2011		2,467		426		153		387		1		3,434

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):
REVENUE BY SERVICE TYPE
				2013		2012		2011
FedEx Express segment:
	Package:
		U.S. overnight box		$	6,513	$	6,546	$	6,128
		U.S. overnight envelope			1,705		1,747		1,736
		U.S. deferred			3,020		3,001		2,805
			Total U.S. domestic package revenue		11,238		11,294		10,669
		International priority			6,586		6,849		6,760
		International economy			2,046		1,859		1,468
			Total international export package revenue		8,632		8,708		8,228
		International domestic(1)			1,398		853		653
			Total package revenue		21,268		20,855		19,550
	Freight:
		U.S.			2,562		2,498		2,188
		International priority			1,678		1,827		1,722
		International airfreight			276		307		283
			Total freight revenue		4,516		4,632		4,193
	Other				1,387		1,028		838
			Total FedEx Express segment		27,171		26,515		24,581
FedEx Ground segment:
	FedEx Ground				9,652		8,791		7,855
	FedEx SmartPost				926		782		630
		Total FedEx Ground segment			10,578		9,573		8,485
FedEx Freight segment					5,401		5,282		4,911
FedEx Services segment					1,580		1,671		1,684
Other and eliminations(2)					(443)		(361)		(357)
				$	44,287	$	42,680	$	39,304
GEOGRAPHICAL INFORMATION(3)
Revenues:
	U.S.			$	31,550	$	29,837	$	27,461
	International:
		FedEx Express segment			12,357		12,370		11,437
		FedEx Ground segment			234		216		177
		FedEx Freight segment			112		101		84
		FedEx Services segment			34		156		145
			Total international revenue		12,737		12,843		11,843
				$	44,287	$	42,680	$	39,304
Noncurrent assets:
	U.S.			$	19,637	$	18,874	$	17,235
	International				2,656		1,973		1,865
				$	22,293	$	20,847	$	19,100
(1)		International domestic revenues include our international intra-country domestic express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).
(2)		Includes FedEx Trade Networks and FedEx SupplyChain Systems.
(3)		International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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Business Segment Information (Tables)

12 Months Ended

May 31, 2013

Business Segment Information (Tables) [Abstract]

Schedule of Segment Information

		FedEx Express Segment(1)		FedEx Ground Segment(2)		FedEx Freight Segment(3)		FedEx Services Segment		Other and Eliminations		Consolidated Total
Revenues
2013		$	27,171	$	10,578	$	5,401	$	1,580	$	(443)	$	44,287
2012			26,515		9,573		5,282		1,671		(361)		42,680
2011			24,581		8,485		4,911		1,684		(357)		39,304
Depreciation and amortization
2013		$	1,350	$	434	$	217	$	384	$	1	$	2,386
2012			1,169		389		185		369		1		2,113
2011			1,059		337		205		371		1		1,973
Operating income (loss)
2013		$	555	$	1,788	$	208	$	-	$	-	$	2,551
2012			1,260		1,764		162		-		-		3,186
2011			1,228		1,325		(175)		-		-		2,378
Segment assets(4)
2013		$	18,935	$	7,353	$	2,953	$	4,879	$	(553)	$	33,567
2012			17,981		6,154		2,807		4,546		(1,585)		29,903
2011			16,463		5,048		2,664		4,278		(1,068)		27,385
(1)	FedEx Express segment 2013 operating expenses include $405 million of direct and allocated business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines. FedEx Express segment 2012 operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines and a reversal of a $66 million legal reserve which was initially recorded in 2011.
(2)	FedEx Ground segment 2013 operating expenses include $105 million of allocated business realignment costs.
(3)	FedEx Freight segment 2013 operating expenses include $50 million in direct and allocated business realignment costs. FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.
(4)	Segment assets include intercompany receivables.

Schedule of Segment Capital Expenditures

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):
	FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Other		Consolidated Total
2013	$	2,067	$	555	$	326	$	424	$	3	$	3,375
2012		2,689		536		340		437		5		4,007
2011		2,467		426		153		387		1		3,434

Schedule of Revenue by Service Type and Geographical Information

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):
REVENUE BY SERVICE TYPE
				2013		2012		2011
FedEx Express segment:
	Package:
		U.S. overnight box		$	6,513	$	6,546	$	6,128
		U.S. overnight envelope			1,705		1,747		1,736
		U.S. deferred			3,020		3,001		2,805
			Total U.S. domestic package revenue		11,238		11,294		10,669
		International priority			6,586		6,849		6,760
		International economy			2,046		1,859		1,468
			Total international export package revenue		8,632		8,708		8,228
		International domestic(1)			1,398		853		653
			Total package revenue		21,268		20,855		19,550
	Freight:
		U.S.			2,562		2,498		2,188
		International priority			1,678		1,827		1,722
		International airfreight			276		307		283
			Total freight revenue		4,516		4,632		4,193
	Other				1,387		1,028		838
			Total FedEx Express segment		27,171		26,515		24,581
FedEx Ground segment:
	FedEx Ground				9,652		8,791		7,855
	FedEx SmartPost				926		782		630
		Total FedEx Ground segment			10,578		9,573		8,485
FedEx Freight segment					5,401		5,282		4,911
FedEx Services segment					1,580		1,671		1,684
Other and eliminations(2)					(443)		(361)		(357)
				$	44,287	$	42,680	$	39,304
GEOGRAPHICAL INFORMATION(3)
Revenues:
	U.S.			$	31,550	$	29,837	$	27,461
	International:
		FedEx Express segment			12,357		12,370		11,437
		FedEx Ground segment			234		216		177
		FedEx Freight segment			112		101		84
		FedEx Services segment			34		156		145
			Total international revenue		12,737		12,843		11,843
				$	44,287	$	42,680	$	39,304
Noncurrent assets:
	U.S.			$	19,637	$	18,874	$	17,235
	International				2,656		1,973		1,865
				$	22,293	$	20,847	$	19,100
(1)		International domestic revenues include our international intra-country domestic express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).
(2)		Includes FedEx Trade Networks and FedEx SupplyChain Systems.
(3)		International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

XML

Retirement Plans (Details 4) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Cash And Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	$ 456	$ 618
Actual %	2.00%	4.00%
Target %	0 - 5%	0 - 3%
Quoted Prices In Active Markets Level 1	15	8
Other Observable Inputs Level 2	441	610
U.S. Large Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	5,264	4,248
Actual %	28.00%	25.00%
Quoted Prices In Active Markets Level 1	37	9
Other Observable Inputs Level 2	5,227	4,239
U.S. SMID Cap Equity
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	1,741	1,368
Actual %	9.00%	8.00%
Quoted Prices In Active Markets Level 1	1,741	1,368
International Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	2,271	1,657
Actual %	12.00%	10.00%
Quoted Prices In Active Markets Level 1	1,904	1,395
Other Observable Inputs Level 2	367	262
Private Equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	332	402
Actual %	2.00%	2.00%
Unobservable Inputs Level 3	332	402
Total Equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target %	35 - 55%	45 - 55%
Corporate Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	4,972	4,565
Actual %	26.00%	27.00%
Other Observable Inputs Level 2	4,972	4,565
Government Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	3,888	4,175
Actual %	20.00%	24.00%
Other Observable Inputs Level 2	3,888	4,175
Mortgage Backed And Other Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	200	59
Actual %	1.00%
Other Observable Inputs Level 2	200	59
Total Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target %	45 - 65%	45 - 55%
Other Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	(77)	(79)
Quoted Prices In Active Markets Level 1	(83)	(85)
Other Observable Inputs Level 2	6	6
Total Asset Class [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	19,047	17,013
Actual %	100.00%	100.00%
Quoted Prices In Active Markets Level 1	3,614	2,695
Other Observable Inputs Level 2	15,101	13,916
Unobservable Inputs Level 3	$ 332	$ 402

XML

Selected Current Liabilities (Details) (USD $) In Millions, unless otherwise specified	May 31, 2013	May 31, 2012
Selected Current Liabilities Details [Abstract]
Salaries	$ 489	$ 280
Employee benefits, including variable compensation	615	803
Compensated absences	584	552
Accrued salaries and employee benefits	1,688	1,635
Self-insurance accruals	796	678
Taxes other than income taxes	368	386
Other	768	645
Accrued expenses	$ 1,932	$ 1,709

XML

Stock Based Compensation (Details 4) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Ratio Of Outstanding And Available To Grant Shares To Total Outstanding Common And Equity Compensation Shares And Equity Compensation Shares Available For Grant [Abstract]
Ratio Of Outstanding And Available To Grant Shares To Total Outstanding Common And Equity Compensation Shares And Equity Compensation Shares Available For Grant	8.00%
Share Based Compensation Arrangement By Share Based Award Options Vesting During Years [Abstract]
Vested during the year	2,824,757	2,807,809	2,721,602
Fair Value	$ 81	$ 70	$ 67
Unrecognized Compensation Cost Related To Unvested Share Based Compensation Arrangements [Abstract]
Total unrecognized compensation cost, net of estimated forfeitures	$ 133
Stock option remaining weighted average vesting period	2 years

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

May 31, 2013

Accumulated Other Comprehensive Income (Loss) (Tables) [Abstract]

Schedule Of Accumulated Other Comprehensive Income (Loss)

	Foreign currency translation adjustment		Retirement plans adjustments		Accumulated other comprehensive income (loss)
Balance at May 31, 2010	$	31	$	(2,471)	$	(2,440)
Other comprehensive gain (loss)		125		(235)		(110)
Balance at May 31, 2011		156		(2,706)		(2,550)
Other comprehensive gain (loss)		(95)		(2,308)		(2,403)
Balance at May 31, 2012		61		(5,014)		(4,953)
Other comprehensive gain (loss)		41		1,092		1,133
Balance at May 31, 2013	$	102	$	(3,922)	$	(3,820)

XML

Goodwill and Other Intagible Assets (Tables)

12 Months Ended

May 31, 2013

Goodwill and Other Intangible Assets (Tables) [Abstract]

Schedule Of Goodwill

			FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Total
Goodwill at May 31, 2011			$	1,272	$	90	$	735	$	1,539	$	3,636
Accumulated impairment charges				-		-		(133)		(1,177)		(1,310)
Balance as of May 31, 2011				1,272		90		602		362		2,326
Goodwill acquired(1)				104		-		-		-		104
Purchase adjustments and other(2)				(32)		-		-		(11)		(43)
Balance as of May 31, 2012				1,344		90		602		351		2,387
Goodwill acquired(3)				351		-		-		-		351
Purchase adjustments and other(2)				20		-		-		(3)		17
Balance as of May 31, 2013			$	1,715	$	90	$	602	$	348	$	2,755
Accumulated goodwill impairment
	charges as of May 31, 2013		$	-	$	-	$	(133)	$	(1,177)	$	(1,310)
(1)		Goodwill acquired in 2012 relates to the acquisition of the Mexican domestic express package delivery company, Multipack. See Note 3 for related disclosures.
(2)		Primarily currency translation adjustments.
(3)		Goodwill acquired in 2013 relates to the acquisitions of transportation companies in Poland, France and Brazil. See Note 3 for related disclosures.

XML

Selected Current Liabilities (Tables)

12 Months Ended

May 31, 2013

Selected Current Liabilities (Tables) [Abstract]

Selected Current Liabilities

			May 31,
			2013		2012
Accrued Salaries and Employee Benefits
	Salaries		$	489	$	280
	Employee benefits, including
		variable compensation		615		803
	Compensated absences			584		552
			$	1,688	$	1,635
Accrued Expenses
	Self-insurance accruals		$	796	$	678
	Taxes other than income taxes			368		386
	Other			768		645
			$	1,932	$	1,709

XML

Goodwill and Other Intangible Assets

12 Months Ended

May 31, 2013

Goodwill and Other Intangible Assets [Abstract]

Goodwill And Other Intangible Assets

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL. The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions):

			FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Total
Goodwill at May 31, 2011			$	1,272	$	90	$	735	$	1,539	$	3,636
Accumulated impairment charges				-		-		(133)		(1,177)		(1,310)
Balance as of May 31, 2011				1,272		90		602		362		2,326
Goodwill acquired(1)				104		-		-		-		104
Purchase adjustments and other(2)				(32)		-		-		(11)		(43)
Balance as of May 31, 2012				1,344		90		602		351		2,387
Goodwill acquired(3)				351		-		-		-		351
Purchase adjustments and other(2)				20		-		-		(3)		17
Balance as of May 31, 2013			$	1,715	$	90	$	602	$	348	$	2,755
Accumulated goodwill impairment
	charges as of May 31, 2013		$	-	$	-	$	(133)	$	(1,177)	$	(1,310)
(1)		Goodwill acquired in 2012 relates to the acquisition of the Mexican domestic express package delivery company, Multipack. See Note 3 for related disclosures.
(2)		Primarily currency translation adjustments.
(3)		Goodwill acquired in 2013 relates to the acquisitions of transportation companies in Poland, France and Brazil. See Note 3 for related disclosures.

Our reporting units with significant recorded goodwill include our FedEx Express, FedEx Freight and FedEx Office (reported in the FedEx Services segment) reporting units. We evaluated these reporting units during the fourth quarter of 2013. The estimated fair value of each of these reporting units exceeded their carrying values in 2013 and 2012, and we do not believe that any of these reporting units were at risk as of May 31, 2013.

OTHER INTANGIBLE ASSETS.The net book value of our other intangible assets was $72 million at May 31, 2013 and $34 million at May 31, 2012. Amortization expense for intangible assets was $27 million in 2013, $18 million in 2012 and $32 million in 2011. Estimated amortization expense is expected to be immaterial in 2014 and beyond.

XML

Stock Based Compensation (Details 1) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Share Based Compensation Allocation And Classification In Financial Statements [Abstract]
Stock-based compensation expense	$ 109	$ 105	$ 98
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract]
Stock-based compensation valuation method	Black-Scholes
Weighted-average Black-Scholes value	$ 29.20	$ 29.92	$ 28.12
Intrinsic value of options exercised	$ 107	$ 67	$ 80
Expected lives	6.1 years	6.0 years	5.9 years
Expected volatility	35.00%	34.00%	34.00%
Risk-free interest rate	0.94%	1.79%	2.36%
Dividend Yield	0.609%	0.563%	0.558%
Share Based Compensation Arrangement Stock Options [Abstract]
Stock option vesting period range	1 to 4 years
Percentage of options vesting ratably over four years	83.00%
Restricted stock expiration period	ratably over 4 years
Maximum term of stock options	10 years

XML

Business Segment Information (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013		May 31, 2012		May 31, 2011
FedEx Express Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
U.S. overnight box	$ 6,513		$ 6,546		$ 6,128
U.S. overnight envelope	1,705		1,747		1,736
U.S. deferred	3,020		3,001		2,805
Total U.S. domestic package revenue	11,238		11,294		10,669
International priority	6,586		6,849		6,760
International economy	2,046		1,859		1,468
Total international export package revenue	8,632		8,708		8,228
International domestic	1,398	[1]	853	[1]	653	[1]
Total package revenue	21,268		20,855		19,550
U.S. freight	2,562		2,498		2,188
International priority freight	1,678		1,827		1,722
International airfreight	276		307		283
Total freight revenue	4,516		4,632		4,193
Other	1,387		1,028		838
Total revenue	27,171		26,515		24,581
FedEx Ground Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
FedEx Ground	9,652		8,791		7,855
FedEx SmartPost	926		782		630
Total revenue	10,578		9,573		8,485
FedEx Freight Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Total revenue	5,401		5,282		4,911
FedEx Services Segment [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Total revenue	1,580		1,671		1,684
Other and Eliminations [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Total revenue	(443)	[2]	(361)	[2]	(357)	[2]
Consolidated Total [Member]
Entity Wide Information Revenue From External Customer [Line Items]
Total revenue	$ 44,287		$ 42,680		$ 39,304

[1] International domestic revenues include our international intra-country domestic express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).

[2] Includes FedEx Trade Networks and FedEx SupplyChain Systems.

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Condensed Consolidating Financial Statements

12 Months Ended

May 31, 2013

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements

NOTE 21: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

We are required to present condensed consolidating financial information in order for the subsidiary guarantors (other than FedEx Express) of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are wholly owned by FedEx, guarantee $2.75 billion of our debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result, the "Guarantor Subsidiaries" and "Non-guarantor Subsidiaries" columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

Condensed consolidating financial statements for our guarantor subsidiaries and non-guarantor subsidiaries are presented in the following tables (in millions):

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2013
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	3,892	$	405	$	717	$	(97)	$	4,917
	Receivables, less allowances				-		3,989		1,084		(29)		5,044
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			45		681		54		-		780
	Deferred income taxes				-		518		15		-		533
			Total current assets		3,937		5,593		1,870		(126)		11,274
PROPERTY AND EQUIPMENT, AT COST					27		35,915		2,167		-		38,109
	Less accumulated depreciation and amortization				21		18,469		1,135		-		19,625
			Net property and equipment		6		17,446		1,032		-		18,484
INTERCOMPANY RECEIVABLE					-		439		1,203		(1,642)		-
GOODWILL					-		1,552		1,203		-		2,755
INVESTMENT IN SUBSIDIARIES					18,739		3,347		-		(22,086)		-
OTHER ASSETS					2,187		822		191		(2,146)		1,054
				$	24,869	$	29,199	$	5,499	$	(26,000)	$	33,567
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	250	$	1	$	-	$	-	$	251
	Accrued salaries and employee benefits				82		1,402		204		-		1,688
	Accounts payable				4		1,392		609		(126)		1,879
	Accrued expenses				355		1,366		211		-		1,932
		Total current liabilities			691		4,161		1,024		(126)		5,750
LONG-TERM DEBT, LESS CURRENT PORTION					2,489		250		-		-		2,739
INTERCOMPANY PAYABLE					1,642		-		-		(1,642)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		3,798		-		(2,146)		1,652
	Other liabilities				2,649		3,133		246		-		6,028
		Total other long-term liabilities			2,649		6,931		246		(2,146)		7,680
STOCKHOLDERS' INVESTMENT					17,398		17,857		4,229		(22,086)		17,398
				$	24,869	$	29,199	$	5,499	$	(26,000)	$	33,567

CONDENSED CONSOLIDATING BALANCE SHEETS
May 31, 2012
						Guarantor		Non-guarantor
				Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,906	$	417	$	636	$	(116)	$	2,843
	Receivables, less allowances				3		3,793		943		(35)		4,704
	Spare parts, supplies, fuel, prepaid expenses
		and other, less allowances			261		671		44		-		976
	Deferred income taxes				-		514		19		-		533
			Total current assets		2,170		5,395		1,642		(151)		9,056
PROPERTY AND EQUIPMENT, AT COST					29		34,301		1,834		-		36,164
	Less accumulated depreciation and amortization				20		17,822		1,074		-		18,916
			Net property and equipment		9		16,479		760		-		17,248
INTERCOMPANY RECEIVABLE					-		323		1,524		(1,847)		-
GOODWILL					-		1,553		834		-		2,387
INVESTMENT IN SUBSIDIARIES					17,163		2,978		-		(20,141)		-
OTHER ASSETS					2,845		1,099		86		(2,818)		1,212
				$	22,187	$	27,827	$	4,846	$	(24,957)	$	29,903
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
	Current portion of long-term debt			$	-	$	417	$	-	$	-	$	417
	Accrued salaries and employee benefits				83		1,365		187		-		1,635
	Accounts payable				6		1,276		482		(151)		1,613
	Accrued expenses				184		1,406		119		-		1,709
		Total current liabilities			273		4,464		788		(151)		5,374
LONG-TERM DEBT, LESS CURRENT PORTION					1,000		250		-		-		1,250
INTERCOMPANY PAYABLE					1,847		-		-		(1,847)		-
OTHER LONG-TERM LIABILITIES
	Deferred income taxes				-		3,649		5		(2,818)		836
	Other liabilities				4,340		3,193		183		-		7,716
		Total other long-term liabilities			4,340		6,842		188		(2,818)		8,552
STOCKHOLDERS' INVESTMENT					14,727		16,271		3,870		(20,141)		14,727
				$	22,187	$	27,827	$	4,846	$	(24,957)	$	29,903

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended May 31, 2013
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	37,073	$	7,543	$	(329)	$	44,287
OPERATING EXPENSES:
	Salaries and employee benefits		103		14,375		2,092		-		16,570
	Purchased transportation		-		4,839		2,574		(141)		7,272
	Rentals and landing fees		5		2,198		324		(6)		2,521
	Depreciation and amortization		1		2,200		185		-		2,386
	Fuel		-		4,650		96		-		4,746
	Maintenance and repairs		1		1,791		117		-		1,909
	Business realignment, impairment and other charges		21		639		-		-		660
	Intercompany charges, net		(227)		(329)		556		-		-
	Other		96		4,565		1,193		(182)		5,672
			-		34,928		7,137		(329)		41,736
OPERATING INCOME			-		2,145		406		-		2,551
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,561		253		-		(1,814)		-
	Interest, net		(108)		42		5		-		(61)
	Intercompany charges, net		113		(131)		18		-		-
	Other, net		(5)		(20)		(10)		-		(35)
INCOME BEFORE INCOME TAXES			1,561		2,289		419		(1,814)		2,455
	Provision for income taxes		-		710		184		-		894
NET INCOME		$	1,561	$	1,579	$	235	$	(1,814)	$	1,561
COMPREHENSIVE INCOME		$	2,622	$	1,618	$	268	$	(1,814)	$	2,694
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended May 31, 2012
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	36,412	$	6,569	$	(301)	$	42,680
OPERATING EXPENSES:
	Salaries and employee benefits		114		14,153		1,832		-		16,099
	Purchased transportation		-		4,509		1,944		(118)		6,335
	Rentals and landing fees		5		2,221		267		(6)		2,487
	Depreciation and amortization		1		1,962		150		-		2,113
	Fuel		-		4,877		79		-		4,956
	Maintenance and repairs		1		1,882		97		-		1,980
	Impairment and other charges		-		134		-		-		134
	Intercompany charges, net		(218)		(323)		541		-		-
	Other		97		4,482		988		(177)		5,390
			-		33,897		5,898		(301)		39,494
OPERATING INCOME			-		2,515		671		-		3,186
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		2,032		395		-		(2,427)		-
	Interest, net		(75)		31		5		-		(39)
	Intercompany charges, net		80		(102)		22		-		-
	Other, net		(5)		(10)		9		-		(6)
INCOME BEFORE INCOME TAXES			2,032		2,829		707		(2,427)		3,141
	Provision for income taxes		-		875		234		-		1,109
NET INCOME		$	2,032	$	1,954	$	473	$	(2,427)	$	2,032
COMPREHENSIVE (LOSS) INCOME		$	(120)	$	1,796	$	380	$	(2,427)	$	(371)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
REVENUES		$	-	$	33,124	$	6,498	$	(318)	$	39,304
OPERATING EXPENSES:
	Salaries and employee benefits		109		13,206		1,961		-		15,276
	Purchased transportation		-		4,034		1,745		(105)		5,674
	Rentals and landing fees		4		2,209		253		(4)		2,462
	Depreciation and amortization		1		1,784		188		-		1,973
	Fuel		-		4,003		148		-		4,151
	Maintenance and repairs		1		1,862		116		-		1,979
	Impairment and other charges		-		28		61		-		89
	Intercompany charges, net		(222)		(317)		539		-		-
	Other		107		4,392		1,032		(209)		5,322
			-		31,201		6,043		(318)		36,926
OPERATING INCOME			-		1,923		455		-		2,378
OTHER INCOME (EXPENSE):
	Equity in earnings of subsidiaries		1,452		200		-		(1,652)		-
	Interest, net		(88)		13		(2)		-		(77)
	Intercompany charges, net		104		(135)		31		-		-
	Other, net		(16)		(14)		(6)		-		(36)
INCOME BEFORE INCOME TAXES			1,452		1,987		478		(1,652)		2,265
	Provision for income taxes		-		677		136		-		813
NET INCOME		$	1,452	$	1,310	$	342	$	(1,652)	$	1,452
COMPREHENSIVE INCOME		$	1,240	$	1,329	$	425	$	(1,652)	$	1,342

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2013
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY OPERATING ACTIVITIES		$	247	$	3,936	$	486	$	19	$	4,688
INVESTING ACTIVITIES
	Capital expenditures		(3)		(3,029)		(343)		-		(3,375)
	Business acquisitions, net of cash acquired		-		-		(483)		-		(483)
	Proceeds from asset dispositions and other		-		49		6		-		55
CASH USED IN INVESTING ACTIVITIES			(3)		(2,980)		(820)		-		(3,803)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		141		(58)		(83)		-		-
	Payment on loan between subsidiaries		-		(385)		385		-		-
	Intercompany dividends		-		21		(21)		-		-
	Principal payments on debt		-		(417)		-		-		(417)
	Proceeds from debt issuances		1,739		-		-		-		1,739
	Proceeds from stock issuances		280		-		-		-		280
	Excess tax benefit on the exercise of stock options		23		-		-		-		23
	Dividends paid		(177)		-		-		-		(177)
	Purchase of treasury stock		(246)		-		-		-		(246)
	Other, net		(18)		(119)		119		-		(18)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			1,742		(958)		400		-		1,184
Effect of exchange rate changes on cash			-		(10)		15		-		5
Net increase (decrease) in cash and cash equivalents			1,986		(12)		81		19		2,074
Cash and cash equivalents at beginning of period			1,906		417		636		(116)		2,843
Cash and cash equivalents at end of period		$	3,892	$	405	$	717	$	(97)	$	4,917
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2012
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	(88)	$	4,383	$	570	$	(30)	$	4,835
INVESTING ACTIVITIES
	Capital expenditures		(5)		(3,792)		(210)		-		(4,007)
	Business acquisition, net of cash acquired		-		-		(116)		-		(116)
	Proceeds from asset dispositions and other		-		74		-		-		74
CASH USED IN INVESTING ACTIVITIES			(5)		(3,718)		(326)		-		(4,049)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		625		(550)		(75)		-		-
	Intercompany dividends		-		76		(76)		-		-
	Principal payments on debt		-		(29)		-		-		(29)
	Proceeds from stock issuances		128		-		-		-		128
	Excess tax benefit on the exercise of stock options		18		-		-		-		18
	Dividends paid		(164)		-		-		-		(164)
	Purchase of treasury stock		(197)						-		(197)
	Other, net		-		(19)		19		-		-
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			410		(522)		(132)		-		(244)
Effect of exchange rate changes on cash			-		(5)		(22)		-		(27)
Net increase (decrease) in cash and cash equivalents			317		138		90		(30)		515
Cash and cash equivalents at beginning of period			1,589		279		546		(86)		2,328
Cash and cash equivalents at end of period		$	1,906	$	417	$	636	$	(116)	$	2,843

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended May 31, 2011
				Guarantor		Non-guarantor
		Parent		Subsidiaries		Subsidiaries		Eliminations		Consolidated
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		$	25	$	3,978	$	65	$	(27)	$	4,041
INVESTING ACTIVITIES
	Capital expenditures		(1)		(3,263)		(170)		-		(3,434)
	Business acquisition, net of cash acquired		-		(96)		-		-		(96)
	Proceeds from asset dispositions and other		-		110		1		-		111
CASH USED IN INVESTING ACTIVITIES			(1)		(3,249)		(169)		-		(3,419)
FINANCING ACTIVITIES
	Net transfers from (to) Parent		530		(994)		464		-		-
	Payment on loan between subsidiaries		-		235		(235)		-		-
	Intercompany dividends		-		61		(61)		-		-
	Principal payments on debt		(250)		(12)		-		-		(262)
	Proceeds from stock issuances		108		-		-		-		108
	Excess tax benefit on the exercise of stock options		23		-		-		-		23
	Dividends paid		(151)		-		-		-		(151)
	Other, net		(5)		(9)		9		-		(5)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			255		(719)		177		-		(287)
Effect of exchange rate changes on cash			-		11		30		-		41
Net increase (decrease) in cash and cash equivalents			279		21		103		(27)		376
Cash and cash equivalents at beginning of period			1,310		258		443		(59)		1,952
Cash and cash equivalents at end of period		$	1,589	$	279	$	546	$	(86)	$	2,328

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Income Taxes (Tables)

12 Months Ended

May 31, 2013

Income Taxes (Tables) [Abstract]

Schedule of Components of the Provision for Income Taxes

			2013		2012		2011
Current provision (benefit)
	Domestic:
		Federal	$	512	$	(120)	$	79
		State and local		86		80		48
	Foreign			170		181		198
				768		141		325
Deferred provision (benefit)
	Domestic:
		Federal		175		947		485
		State and local		(7)		21		12
	Foreign			(42)		-		(9)
				126		968		488
			$	894	$	1,109	$	813

Schedule of Reconciliation of the Statutory Federal Income Tax Rate to the Effective Income Tax Rate

			2013		2012		2011
Statutory U.S. income tax rate			35.0	%	35.0	%	35.0	%
Increase (decrease) resulting from:
	State and local income taxes,
		net of federal benefit	2.1		2.1		1.7
	Other, net		(0.7)		(1.8)		(0.8)
Effective tax rate			36.4	%	35.3	%	35.9	%

Schedule of Significant Components of Deferred Tax Assets and Liabilities

		2013				2012
		Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
Property, equipment,
	leases and intangibles	$	157	$	3,676	$	248	$	3,436
Employee benefits			1,771		11		2,300		11
Self-insurance accruals			533		-		495		-
Other			251		238		338		271
Net operating loss/credit
	carryforwards		298		-		179		-
Valuation allowances			(204)		-		(145)		-
		$	2,806	$	3,925	$	3,415	$	3,718

Schedule of Net Deferred Tax Liabilities

	2013		2012
Current deferred tax asset	$	533	$	533
Noncurrent deferred tax liability		(1,652)		(836)
	$	(1,119)	$	(303)

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

		2013		2012		2011
Balance at beginning of year		$	51	$	69	$	82
	Increases for tax positions taken in the current year		1		2		2
	Increases for tax positions taken in prior years		3		4		6
	Decreases for tax positions taken in prior years		(3)		(35)		(10)
	Settlements		(9)		(3)		(11)
	Increases due to acquisitions		4		15		-
	Decrease from lapse of statute of limitations		(2)		-		-
	Changes due to currency translation		2		(1)		-
Balance at end of year		$	47	$	51	$	69

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Valuation and Qualifying Accounts (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013		May 31, 2012		May 31, 2011
Allowance For Doubtful Accounts [Member]
Movement In Valuation Allowances And Reserves Roll Forward
Valuation Allowances And Reserves Beginning Balance	$ 94		$ 97		$ 93
Charged To Expenses	167		160		152
Deductions	167	[1]	163	[1]	148	[1]
Valuation Allowances And Reserves Ending Balance	94		94		97
Allowance For Revenue Adjustments [Member]
Movement In Valuation Allowances And Reserves Roll Forward
Valuation Allowances And Reserves Beginning Balance	84		85		73
Charged To Other Accounts	573	[2]	570	[2]	532	[2]
Deductions	575	[3]	571	[3]	520	[3]
Valuation Allowances And Reserves Ending Balance	82		84		85
Inventory Valuation Allowance [Member]
Movement In Valuation Allowances And Reserves Roll Forward
Valuation Allowances And Reserves Beginning Balance	184		169		170
Charged To Expenses	24		15		13
Deductions	3				14
Valuation Allowances And Reserves Ending Balance	$ 205		$ 184		$ 169

[1] (a) Uncollectible accounts written off, net of recoveries.

[2] (b) Principally charged against revenue.

[3] (c) Service failures, rebills and other.

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Leases

12 Months Ended

May 31, 2013

Leases [Abstract]

Leases

NOTE 7: LEASES

We utilize certain aircraft, land, facilities, retail locations and equipment under capital and operating leases that expire at various dates through 2046. Weleased 10% of our total aircraft fleet under operating leases as of May 31, 2013 and10% of our total aircraft fleet under capital and operating leases as of May 31,2012. A portion of our supplemental aircraft are leased by us under agreements that provide for cancellation upon 30 days' notice. Our leased facilities include national, regional and metropolitan sorting facilities, retail facilities and administrative buildings.

Rent expense under operating leases for the years ended May 31 was as follows (in millions):
		2013		2012		2011
Minimum rentals		$	2,061	$	2,018	$	2,025
Contingent rentals(1)			192		210		193
		$	2,253	$	2,228	$	2,218
(1)	Contingent rentals are based on equipment usage.

A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of one year at May 31, 2013 is as follows (in millions):

	Operating Leases
	Aircraft				Total
	and Related		Facilities		Operating
	Equipment		and Other		Leases
2014	$	462	$	1,474	$	1,936
2015		448		1,386		1,834
2016		453		1,183		1,636
2017		391		1,298		1,689
2018		326		904		1,230
Thereafter		824		5,826		6,650
Total	$	2,904	$	12,071	$	14,975

Property and equipment recorded under capital leases and future minimum lease payments under capital leases were immaterial at May 31, 2013. Theweighted-average remaining lease term of all operating leases outstanding at May 31, 2013 was approximately six years. While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

FedEx Express makes payments under certain leveraged operating leases that are sufficient to pay principal and interest on certain pass-through certificates. The pass-through certificates are not direct obligations of, or guaranteed by, FedEx or FedEx Express.

We are the lessee in a series of operating leases covering a portion of our leased aircraft. The lessors are trusts established specifically to purchase, finance and lease aircraft to us. These leasing entities meet the criteria for variable interest entities. We are not the primary beneficiary of the leasing entities, as the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates us to absorb decreases in value or entitles us to participate in increases in the value of the aircraft. As such, we are not required to consolidate the entity as the primary beneficiary. Our maximum exposure under these leases is included in the summary of future minimum lease payments shown above.

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Supplemental Cash Flow Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Supplemental Cash Flow Information [Abstract]
Interest (net of capitalized interest)	$ 80	$ 52	$ 93
Income taxes	687	403	493
Income tax refunds received	(219)	(146)	(106)
Cash tax payments, net	$ 468	$ 257	$ 387

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Retirement Plans (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Pension and Other Postretirement Benefit Expense [Abstract]
U.S. domestic and international pension plans	$ 679	$ 524	$ 543
U.S. domestic and international defined contribution plans	354	338	257
U.S. domestic and international postretirement healthcare plans	78	70	60
Retirement plans costs	1,111	932	860
Pension And Postretirement Healthcare Plans Equity Impact [Abstract]
Benefit plans adjustments at year-end measurement date, net of tax	$ (861)	$ 2,400

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Business Combinations

12 Months Ended

May 31, 2013

Business Combinations [Abstract]

Business Combinations

NOTE 3: BUSINESS COMBINATIONS

During 2013, we expandedthe international service offerings of FedEx Express by completing the following business acquisitions:

• Rapidão CometaLogística e Transporte S.A., a Brazilian transportation and logistics company, for $398 million in cash from operations on July 4, 2012
• TATEX, a French express transportation company, for $55 million in cash from operations on July 3, 2012
• Opek Sp.z o.o., a Polish domestic express package delivery company, for $54 million in cash from operations on June 13, 2012

These acquisitions give us more robust transportation networks within these countries and added capabilities in these important international markets.

The financial results of these acquired businessesare included in the FedEx Express segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations and therefore, pro forma financial information has not been presented.

The estimated fair values of the assets and liabilities related to these acquisitions have been recorded in the FedEx Express segment and are included in the accompanying consolidated balance sheet based on an allocation of the purchase prices (summarized in the table below in millions).

Current assets	$	145
Property and equipment		91
Goodwill		351
Intangible assets		60
Other non-current assets		70
Current liabilities		(174)
Long-term liabilities		(36)
Total purchase price	$	507

The goodwill of $351 million is primarily attributable to expected benefits from synergies of the combinations with the existing FedEx Express business and other acquired entities. The portion of the purchase price allocated to goodwill is not deductible for U.S. income tax purposes. The intangible assets acquired consist primarily of customer-related intangible assets, which will be amortized on an accelerated basis over their average estimated useful lives of nine years, with the majority of the amortization recognized during the first five years.

On June 20, 2013, we signed agreements to acquire the businesses operated by our current service provider Supaswift (Pty) Ltd. in five countries in Southern Africa. The acquisition will be funded with cash from operations and is expected to be completed in the second half of 2014, subject to customary closing conditions. The financial results of the acquired businesses will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2014 results.

In2012, we completed our acquisition of ServiciosNacionalesMupa, S.A. de C.V. (MultiPack), a Mexican domestic express package delivery company, for $128 million in cash from operations on July 25, 2011. In 2011, FedEx Express completed the acquisition of the Indian logistics, distribution and express businesses of AFL Pvt. Ltd. and its affiliate Unifreight India Pvt. Ltd. for $96 million in cash from operations on February 22, 2011. The financial results of these acquired businesses are included in the FedEx Express segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations or financial condition and therefore, pro forma financial information has not been presented. Substantially all of the purchase price was allocated to goodwill, which was entirely attributed to our FedEx Express reporting unit.

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Operating Activities:
Net income	$ 1,561	$ 2,032	$ 1,452
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	2,386	2,113	1,973
Provision for uncollectible accounts	167	160	152
Deferred income taxes and other noncash items	521	1,126	669
Business realignment, impairment and other charges	479	134	29
Stock-based compensation	109	105	98
Changes in assets and liabilities:
Receivables	(451)	(254)	(400)
Other current assets	257	(231)	(114)
Pension assets and liabilities, net	(335)	(453)	(169)
Accounts payable and other liabilities	10	144	370
Other, net	(16)	(41)	(19)
Cash provided by operating activities	4,688	4,835	4,041
Investing Activities:
Capital expenditures	(3,375)	(4,007)	(3,434)
Business acquisitions, net of cash acquired	(483)	(116)	(96)
Proceeds from asset dispositions and other	55	74	111
Cash used in investing activities	(3,803)	(4,049)	(3,419)
Financing Activities:
Principal payments on debt	(417)	(29)	(262)
Proceeds from debt issuance	1,739
Proceeds from stock issuances	280	128	108
Excess tax benefit on the exercise of stock options	23	18	23
Dividends paid	(177)	(164)	(151)
Purchase of treasury stock	(246)	(197)
Other, net	(18)		(5)
Cash provided by (used in) financing activities	1,184	(244)	(287)
Effect of exchange rate changes on cash	5	(27)	41
Net increase (decrease) in cash and cash equivalents	2,074	515	376
Cash and cash equivalents at beginning of period	2,843	2,328	1,952
Cash and cash equivalents at end of period	$ 4,917	$ 2,843	$ 2,328

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Business Segment Information (Details 4) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013		May 31, 2012		May 31, 2011
Revenues From External Customers And Long Lived Assets [Line Items]
U.S. revenue	$ 31,550		$ 29,837		$ 27,461
U.S. Noncurrent assets	19,637	[1]	18,874	[1]	17,235	[1]
International Noncurrent assets	2,656	[1]	1,973	[1]	1,865	[1]
Total Noncurrent Assets	22,293	[1]	20,847	[1]	19,100	[1]
FedEx Express Segment [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
International revenue	12,357	[1]	12,370	[1]	11,437	[1]
Total revenue	27,171		26,515		24,581
FedEx Ground Segment [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
International revenue	234	[1]	216	[1]	177	[1]
Total revenue	10,578		9,573		8,485
FedEx Freight Segment [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
International revenue	112	[1]	101	[1]	84	[1]
Total revenue	5,401		5,282		4,911
FedEx Services Segment [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
International revenue	34	[1]	156	[1]	145	[1]
Total revenue	1,580		1,671		1,684
International Total [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
International revenue	12,737	[1]	12,843	[1]	11,843	[1]
Consolidated Total [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total revenue	$ 44,287		$ 42,680		$ 39,304

[1] International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.

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Goodwill and Other Intangible Assets (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013		May 31, 2012		May 31, 2011
Net Goodwill Detail [Abstract]
Gross Goodwill at May 31					$ 3,636
Accumulated impairment charges	(1,310)				(1,310)
GOODWILL	2,755		2,387
Goodwill Roll Forward
Beginning Goodwill at May 31	2,387		2,326
Goodwill acquired	351	[1]	104	[2]
Purchase adjustments and other	17	[3]	(43)	[3]
Ending Goodwill at May 31	2,755		2,387
FedEx Express Segment [Member]
Net Goodwill Detail [Abstract]
Gross Goodwill at May 31					1,272
GOODWILL	1,715		1,344
Goodwill Roll Forward
Beginning Goodwill at May 31	1,344		1,272
Goodwill acquired	351	[1]	104	[2]
Purchase adjustments and other	20	[3]	(32)	[3]
Ending Goodwill at May 31	1,715		1,344
FedEx Ground Segment [Member]
Net Goodwill Detail [Abstract]
Gross Goodwill at May 31					90
GOODWILL	90		90		90
Goodwill Roll Forward
Beginning Goodwill at May 31					90
Ending Goodwill at May 31	90		90		90
FedEx Freight Segment [Member]
Net Goodwill Detail [Abstract]
Gross Goodwill at May 31					735
Accumulated impairment charges	(133)				(133)
GOODWILL	602		602		602
Goodwill Roll Forward
Beginning Goodwill at May 31					602
Ending Goodwill at May 31	602		602		602
FedEx Services Segment [Member]
Net Goodwill Detail [Abstract]
Gross Goodwill at May 31					1,539
Accumulated impairment charges	(1,177)				(1,177)
GOODWILL	348		351
Goodwill Roll Forward
Beginning Goodwill at May 31	351		362
Purchase adjustments and other	(3)	[3]	(11)	[3]
Ending Goodwill at May 31	$ 348		$ 351

[1] Goodwill acquired in 2013 relates to the acquisitions of transportation companies in Poland, France and Brazil. See Note 3 for related disclosures.

[2] Goodwill acquired in 2012 relates to the acquisition of the Mexican domestic express package delivery company, Multipack. See Note 3 for related disclosures.

[3] Primarily currency translation adjustments.

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Summary of Quarterly Operating Results (Unaudited) (Tables)

12 Months Ended

May 31, 2013

Quarterly Operating Results (Tables) [Abstract]

Summary of Quarterly Operating Results (Unaudited)

		First		Second		Third		Fourth
(in millions, except per share amounts)		Quarter		Quarter		Quarter		Quarter
2013(1)
Revenues		$	10,792	$	11,107	$	10,953	$	11,435
Operating income			742		718		589		502
Net income			459		438		361		303
Basic earnings per common share(2)			1.46		1.39		1.14		0.96
Diluted earnings per common share(2)			1.45		1.39		1.13		0.95
2012(3)
Revenues		$	10,521	$	10,587	$	10,564	$	11,008
Operating income			737		780		813		856
Net income			464		497		521		550
Basic earnings per common share(2)			1.46		1.57		1.66		1.74
Diluted earnings per common share(2)			1.46		1.57		1.65		1.73
(1)	The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.
(2)	The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.
(3)	The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

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Retirement Plans (Details 9) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Pension Plans Contributions [Abstract]
Required U.S. pension plans contributions	$ 560	$ 496
Voluntary U.S. pension plans contributions		226
Company contributions	560	722
Required U.S. pension plans contributions in 2014	$ 650

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Description of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

May 31, 2013

Property And Equipment (Tables) [Abstract]

Schedule of Depreciable Lives and Net Book Value of Property and Equipment

		Net Book Value at May 31,
	Range	2013		2012
Wide-body aircraft and related equipment	15 to 30 years	$	7,191	$	7,161
Narrow-body and feeder aircraft and related equipment	5 to 18 years		2,284		1,881
Package handling and ground support equipment	3 to 30 years		2,311		2,101
Vehicles	3 to 15 years		1,748		1,411
Computer and electronic equipment	2 to 10 years		993		930
Facilities and other	2 to 40 years		3,957		3,764

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Condensed Consolidating Financial Statements (Details 3) (USD $) In Millions, unless otherwise specified	3 Months Ended													12 Months Ended
	May 31, 2013		Feb. 28, 2013		Nov. 30, 2012		Aug. 31, 2012	May 31, 2012		Feb. 29, 2012		Nov. 30, 2011	Aug. 31, 2011	May 31, 2013	May 31, 2012	May 31, 2011
Condensed Financial Statements Captions [Line Items]
REVENUES	$ 11,435		$ 10,953		$ 11,107		$ 10,792	$ 11,008		$ 10,564		$ 10,587	$ 10,521	$ 44,287	$ 42,680	$ 39,304
OPERATING EXPENSES:
Salaries and employee benefits														16,570	16,099	15,276
Purchased transportation														7,272	6,335	5,674
Rentals and landing fees														2,521	2,487	2,462
Depreciation and amortization														2,386	2,113	1,973
Fuel														4,746	4,956	4,151
Maintenance and repairs														1,909	1,980	1,979
Business realignment, impairment and other charges														660	134	89
Other														5,672	5,390	5,322
OPERATING EXPENSES														41,736	39,494	36,926
OPERATING INCOME	502	[1]	589	[1]	718	[1]	742	856	[2]	813	[2]	780	737	2,551	3,186	2,378
OTHER INCOME (EXPENSE):
Interest, net														(61)	(39)	(77)
Other, net														(35)	(6)	(36)
INCOME BEFORE INCOME TAXES														2,455	3,141	2,265
PROVISION FOR INCOME TAXES														894	1,109	813
NET INCOME	303	[1]	361	[1]	438	[1]	459	550	[2]	521	[2]	497	464	1,561	2,032	1,452
COMPREHENSIVE INCOME (LOSS)														2,694	(371)	1,342
Parent Company [Member]
OPERATING EXPENSES:
Salaries and employee benefits														103	114	109
Rentals and landing fees														5	5	4
Depreciation and amortization														1	1	1
Maintenance and repairs														1	1	1
Business realignment, impairment and other charges														21
Intercompany charges, net														(227)	(218)	(222)
Other														96	97	107
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries														1,561	2,032	1,452
Interest, net														(108)	(75)	(88)
Intercompany charges, net														113	80	104
Other, net														(5)	(5)	(16)
INCOME BEFORE INCOME TAXES														1,561	2,032	1,452
NET INCOME														1,561	2,032	1,452
COMPREHENSIVE INCOME (LOSS)														2,622	(120)	1,240
Guarantor Subsidiaries [Member]
Condensed Financial Statements Captions [Line Items]
REVENUES														37,073	36,412	33,124
OPERATING EXPENSES:
Salaries and employee benefits														14,375	14,153	13,206
Purchased transportation														4,839	4,509	4,034
Rentals and landing fees														2,198	2,221	2,209
Depreciation and amortization														2,200	1,962	1,784
Fuel														4,650	4,877	4,003
Maintenance and repairs														1,791	1,882	1,862
Business realignment, impairment and other charges														639	134	28
Intercompany charges, net														(329)	(323)	(317)
Other														4,565	4,482	4,392
OPERATING EXPENSES														34,928	33,897	31,201
OPERATING INCOME														2,145	2,515	1,923
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries														253	395	200
Interest, net														42	31	13
Intercompany charges, net														(131)	(102)	(135)
Other, net														(20)	(10)	(14)
INCOME BEFORE INCOME TAXES														2,289	2,829	1,987
PROVISION FOR INCOME TAXES														710	875	677
NET INCOME														1,579	1,954	1,310
COMPREHENSIVE INCOME (LOSS)														1,618	1,796	1,329
Non Guarantor Subsidiaries [Member]
Condensed Financial Statements Captions [Line Items]
REVENUES														7,543	6,569	6,498
OPERATING EXPENSES:
Salaries and employee benefits														2,092	1,832	1,961
Purchased transportation														2,574	1,944	1,745
Rentals and landing fees														324	267	253
Depreciation and amortization														185	150	188
Fuel														96	79	148
Maintenance and repairs														117	97	116
Business realignment, impairment and other charges																61
Intercompany charges, net														556	541	539
Other														1,193	988	1,032
OPERATING EXPENSES														7,137	5,898	6,043
OPERATING INCOME														406	671	455
OTHER INCOME (EXPENSE):
Interest, net														5	5	(2)
Intercompany charges, net														18	22	31
Other, net														(10)	9	(6)
INCOME BEFORE INCOME TAXES														419	707	478
PROVISION FOR INCOME TAXES														184	234	136
NET INCOME														235	473	342
COMPREHENSIVE INCOME (LOSS)														268	380	425
Consolidation Eliminations [Member]
Condensed Financial Statements Captions [Line Items]
REVENUES														(329)	(301)	(318)
OPERATING EXPENSES:
Purchased transportation														(141)	(118)	(105)
Rentals and landing fees														(6)	(6)	(4)
Other														(182)	(177)	(209)
OPERATING EXPENSES														(329)	(301)	(318)
OTHER INCOME (EXPENSE):
Equity in earnings of subsidiaries														(1,814)	(2,427)	(1,652)
INCOME BEFORE INCOME TAXES														(1,814)	(2,427)	(1,652)
NET INCOME														(1,814)	(2,427)	(1,652)
COMPREHENSIVE INCOME (LOSS)														$ (1,814)	$ (2,427)	$ (1,652)

[1] The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.

[2] The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

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Summary of Quarterly Operating Results (Unaudited) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	May 31, 2013		Feb. 28, 2013		Nov. 30, 2012		Aug. 31, 2012		May 31, 2012		Feb. 29, 2012		Nov. 30, 2011		Aug. 31, 2011		May 31, 2013	May 31, 2012	May 31, 2011
Selected Quarterly Financial Information [Abstract]
Revenues	$ 11,435		$ 10,953		$ 11,107		$ 10,792		$ 11,008		$ 10,564		$ 10,587		$ 10,521		$ 44,287	$ 42,680	$ 39,304
Operating income (loss)	502	[1]	589	[1]	718	[1]	742		856	[2]	813	[2]	780		737		2,551	3,186	2,378
Net income	303	[1]	361	[1]	438	[1]	459		550	[2]	521	[2]	497		464		1,561	2,032	1,452
Basic earnings per common share	$ 0.96	[1],[3]	$ 1.14	[1],[3]	$ 1.39	[1],[3]	$ 1.46	[3]	$ 1.74	[2],[3]	$ 1.66	[2],[3]	$ 1.57	[3]	$ 1.46	[3]	$ 4.95	$ 6.44	$ 4.61
Diluted earnings per common share	$ 0.95	[1],[3]	$ 1.13	[1],[3]	$ 1.39	[1],[3]	$ 1.45	[3]	$ 1.73	[2],[3]	$ 1.65	[2],[3]	$ 1.57	[3]	$ 1.46	[3]	$ 4.91	$ 6.41	$ 4.57
Selected Quarterly Financial Information Special Items [Abstract]
Business Realignment Costs	496		47		13												560
Asset Impairment Charges	100								134
Number Of Impaired Aircraft	10								24								10	24
Loss Contingency Reserve Reversal											$ 66

[1] The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.

[2] The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

[3] The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

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Retirement Plans (Details 8) (USD $) In Millions, unless otherwise specified	May 31, 2013		May 31, 2012
Defined Benefit Plan Pension Plans With Accumulated Benefit Obligations In Excess Of Plan Assets [Abstract]
ABO	$ (21,930)	[1]	$ (21,555)	[1]
Fair value of plan assets	19,404		17,333
PBO	(22,570)		(22,185)
Net funded status	(3,166)		(4,852)
Defined Benefit Plan Plans With Benefit Obligations In Excess Of Plan Assets [Abstract]
Fair value of plan assets	19,433		17,334
PBO	(22,600)		(22,187)
Net funded status	$ (3,167)		$ (4,853)

[1] ABO not used in determination of funded status.

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Business Segment Information (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended					12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	May 31, 2012	Feb. 29, 2012	May 31, 2013	May 31, 2011	May 31, 2013 FedEx Express Segment [Member]	May 31, 2012 FedEx Express Segment [Member]	May 31, 2013 FedEx Ground Segment [Member]	May 31, 2013 FedEx Freight Segment [Member]	May 31, 2011 FedEx Freight Segment [Member]
Business Segment Information Table Detail [Line Items]
Business Realignment Costs	$ 496	$ 47	$ 13			$ 560		$ 405		$ 105	$ 50
Loss Contingency Reserve Reversal					66				66
Asset Impairment Charges	100			134				100	134
Number Of Impaired Aircraft	10			24		10		10	24
FedEx Freight restructuring charges							$ 133					$ 133

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Computation of Earnings Per Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	May 31, 2013		Feb. 28, 2013		Nov. 30, 2012		Aug. 31, 2012		May 31, 2012		Feb. 29, 2012		Nov. 30, 2011		Aug. 31, 2011		May 31, 2013		May 31, 2012		May 31, 2011
Basic earnings per common share:
Net earnings allocable to common shares																	$ 1,558	[1]	$ 2,029	[1]	$ 1,449	[1]
Weighted-average common shares																	315		315		315
Basic earnings per common share	$ 0.96	[2],[3]	$ 1.14	[2],[3]	$ 1.39	[2],[3]	$ 1.46	[2]	$ 1.74	[2],[4]	$ 1.66	[2],[4]	$ 1.57	[2]	$ 1.46	[2]	$ 4.95		$ 6.44		$ 4.61
Diluted earnings per common share:
Net earnings allocable to common shares																	$ 1,558	[1]	$ 2,029	[1]	$ 1,449	[1]
Weighted-average common shares																	315		315		315
Dilutive effect of share-based awards																	2		2		2
Weighted-average diluted shares																	317		317		317
Diluted earnings per common share	$ 0.95	[2],[3]	$ 1.13	[2],[3]	$ 1.39	[2],[3]	$ 1.45	[2]	$ 1.73	[2],[4]	$ 1.65	[2],[4]	$ 1.57	[2]	$ 1.46	[2]	$ 4.91		$ 6.41		$ 4.57
Anti-dilutive options excluded from diluted earnings per common share																	11.1		12.6		9.3

[1] Net earnings available to participating securities were immaterial in all periods presented.

[2] The sum of the quarterly earnings per share may not equal annual amounts due to differences in the weighted-average number of shares outstanding during the respective period.

[3] The fourth quarter of 2013 includes $496 million of business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines at FedEx Express. The third quarter of 2013 includes $47 million of business realignment costs. The second quarter of 2013 includes $13 million of business realignment costs.

[4] The fourth quarter of 2012 includes an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines at FedEx Express. The third quarter of 2012 includes the reversal of a $66 million legal reserve.

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Leases (Details 5)	May 31, 2013	May 31, 2012
Other Lease Information (Details) [Abstract]
Percentage Total Aircraft Fleet Leased	10.00%	10.00%
Operating Leases Weighted-Average Remaining Lease Term	6 years

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Retirement Plans (Details 10) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Pension Plans [Member]
Net Periodic Benefit Cost
Service cost	$ 692	$ 593	$ 521
Interest cost	968	976	900
Expected return on plan assets	(1,383)	(1,240)	(1,062)
Recognized actuarial losses (gains) and other	402	195	184
Total net periodic benefit cost	679	524	543
Postretirement Healthcare Plans [Member]
Net Periodic Benefit Cost
Service cost	42	35	31
Interest cost	36	36	34
Recognized actuarial losses (gains) and other		(1)	(5)
Total net periodic benefit cost	$ 78	$ 70	$ 60

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Stock Based Compensation

12 Months Ended

May 31, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 10: STOCK-BASED COMPENSATION

Our total stock-based compensation expense for the years ended May 31 was as follows (in millions):

	2013		2012		2011
Stock-based compensation expense	$	109	$	105	$	98

We have two types of equity-based compensation: stock options and restricted stock.

STOCK OPTIONS. Under the provisions of our incentive stock plans, key employees and non-employee directors may be granted options to purchase shares of our common stock at a price not less than its fair market value on the date of grant. Vesting requirements are determined at the discretion of the Compensation Committee of our Board of Directors. Option-vesting periods range from one to four years, with 83% of our options vesting ratably over four years. Compensation expense associated with these awards is recognized on a straight-line basis over the requisite service period of the award.

RESTRICTED STOCK. Under the terms of our incentive stock plans, restricted shares of our common stock are awarded to key employees. All restrictions on the shares expire ratably over a four-year period. Shares are valued at the market price on the date of award. The terms of our restricted stock provide for continued vesting subsequent to the employee's retirement. Compensation expense associated with these awards is recognized on a straight-line basis over the shorter of the remaining service or vesting period.

VALUATION AND ASSUMPTIONS. We use the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock awards is based on the stock price of the award on the grant date. We record stock-based compensation expense in the “Salaries and employee benefits” caption in the accompanying consolidated statements of income.

The key assumptions for the Black-Scholes valuation method include the expected life of the option, stock price volatility, a risk-free interest rate, and dividend yield. Following is a table of the weighted-average Black-Scholes value of our stock option grants, the intrinsic value of options exercised (in millions), and the key weighted-average assumptions used in the valuation calculations for the options granted during the years ended May 31, and then a discussion of our methodology for developing each of the assumptions used in the valuation model:

		2013			2012			2011
Weighted-average Black-Scholes value		$	29.20		$	29.92		$	28.12
Intrinsic value of options exercised		$	107		$	67		$	80
Black-Scholes Assumptions:
	Expected lives		6.1 years			6.0 years			5.9 years
	Expected volatility		35	%		34	%		34	%
	Risk-free interest rate		0.94	%		1.79	%		2.36	%
	Dividend yield		0.609	%		0.563	%		0.558	%

The expected life represents an estimate of the period of time options are expected to remain outstanding, and we examine actual stock option exercises to determine the expected life of the options. Options granted have a maximum term of 10 years. Expected volatilities are based on the actual changes in the market value of our stock and are calculated using daily market value changes from the date of grant over a past period equal to the expected life of the options. The risk-free interest rate is the U.S. Treasury Strip rate posted at the date of grant having a term equal to the expected life of the option. The expected dividend yield is the annual rate of dividends per share over the exercise price of the option.

The following table summarizes information about stock option activity for the year ended May 31, 2013:

		Stock Options
		Shares		Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)(1)
Outstanding at June 1, 2012		21,031,538	$	84.39
	Granted	2,547,290		88.08
	Exercised	(3,979,359)		70.41
	Forfeited	(464,035)		91.44
Outstanding at May 31, 2013		19,135,434	$	87.62	5.5 years	$	229
Exercisable		12,447,517	$	90.23	4.2 years	$	137
Expected to vest		6,288,642	$	82.77	8.1 years	$	87
Available for future grants		6,482,410
(1)	Only presented for options with market value at May 31, 2013 in excess of the exercise price of the option.

The options granted during the year ended May 31, 2013 are primarily related to our principal annual stock option grant in June 2012.

The following table summarizes information about vested and unvested restricted stock for the year ended May 31, 2013:

		Restricted Stock
		Shares	Weighted-Average Grant Date Fair Value
Unvested at June 1, 2012		589,872	$	76.79
	Granted	220,391		85.45
	Vested	(253,423)		75.46
	Forfeited	(27,506)		80.13
Unvested at May 31, 2013		529,334	$	80.86

During the year ended May 31, 2012, there were 214,435 shares of restricted stock granted with a weighted-average fair value of $88.95. During the year ended May 31, 2011, there were 235,998shares of restricted stock granted with a weighted-average fair value of $78.74.

The following table summarizes information about stock option vesting during the years ended May 31:

	Stock Options
	Vested during the year	Fair value (in millions)
2013	2,824,757	$	81
2012	2,807,809		70
2011	2,721,602		67

As of May 31, 2013, there was $133 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. This compensation expense is expected to be recognized on a straight-line basis over the remaining weighted-average vesting period of approximately two years.

Total shares outstanding or available for grant related to equity compensation at May 31, 2013represented 8% of the total outstanding common and equity compensation shares and equity compensation shares available for grant.

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Long-Term Debt and Other Financing Arrangements

12 Months Ended

May 31, 2013

Long-Term Debt and Other Financing Arrangements [Abstract]

Long-term Debt and Other Financing Arrangements

NOTE 6: LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

The components of long-term debt (net of discounts),along with maturity dates for the years subsequent to May 31, 2013,are as follows (in millions):

				May 31,
				2013		2012
Senior unsecured debt:
	Interest Rate %		Maturity
	9.65		2013	$	-	$	300
	7.38		2014		250		250
	8.00		2019		750		750
	2.625		2023		499		-
	2.70		2023		249		-
	3.875		2043		493		-
	4.10		2043		499		-
	7.60		2098		239		239
	Total senior unsecured debt				2,979		1,539
Capital lease obligations					11		128
					2,990		1,667
		Less current portion			251		417
				$	2,739	$	1,250

Interest on our fixed-rate notes is paid semi-annually. Long-term debt, exclusive of capital leases, had estimated fair values of $3.2 billion at May 31, 2013 and $2.0 billionat May 31, 2012. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of our long-term debt is classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

We have a shelf registration statement filed with the Securities and Exchange Commission that allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

In April 2013, we issued $750 million of senior unsecured debt under our current shelf registration statement, comprised of $250 million of 2.70% fixed-rate notes due in April 2023 and $500 million of 4.10% fixed-rate notes due in April 2043. We utilized the net proceeds for working capital and general corporate purposes. In July 2012, we issued $1 billion of senior unsecured debt under a then current shelf registration statement, comprised of $500 million of 2.625% fixed-rate notes due in August 2022 and $500 million of 3.875% fixed-rate notes due in August 2042. We utilized the net proceeds for working capital and general corporate purposes.

During 2013, we made principal payments of $116 million related to capital lease obligations and repaid our $300 million 9.65% unsecured notes that matured in June 2012 using cash from operations.

A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. On March 1, 2013, we entered into an amendment to our credit agreement to, among other things, extend its maturity date from April 26, 2016 to March 1, 2018. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters' rentals and landing fees) to capital (adjusted debt plus total common stockholders' investment) that does not exceed 70%. Our leverage ratio of adjusted debt to capital was 51% at May 31, 2013. We believe the leverage ratio covenant is our only significant restrictive covenant in our revolving credit agreement. Our revolving credit agreement contains other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the leverage ratio covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. As of May 31, 2013, no commercial paper was outstanding, and the entire $1 billion under the revolving credit facility was available for future borrowings.

We issue other financial instruments in the normal course of business to support our operations, includingstandby letters of credit and surety bonds. We had a total of $538 million in letters of credit outstanding at May 31, 2013, with $128 millionunused under our primary $500 million letter of credit facility, and $539 million in outstanding surety bonds placed by third-party insurance providers. These instruments are required under certain U.S. self-insurance programs and are also used in the normal course of international operations. The underlying liabilities insured by these instruments are reflected in our balance sheets, where applicable. Therefore, no additional liability is reflected for the letters of credit and surety bonds themselves.

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Income Taxes (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Pre Tax Earnings Of Foreign Operations [Abstract]
(Loss) Earnings From Foreign Operations	$ (55)	$ 358	$ 472

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Retirement Plans

12 Months Ended

May 31, 2013

Retirement Plans [Abstract]

Retirement Plans

NOTE 13: RETIREMENT PLANS

We sponsor programs that provide retirement benefits to most of our employees. These programs include defined benefit pension plans, defined contribution plans and postretirement healthcare plans. The accounting for pension and postretirement healthcare plans includes numerous assumptions, such as: discount rates; expected long-term investment returns on plan assets; future salary increases; employee turnover; mortality; and retirement ages. These assumptions most significantly impact our U.S. Pension Plans.

The accounting guidance related to postretirement benefits requires recognition in the balance sheet of the funded status of defined benefit pension and other postretirement benefit plans, and the recognition in accumulated other comprehensive income (“AOCI”) of unrecognized gains or losses and prior service costs or credits. The funded status is measured as the difference between the fair value of the plan's assets and the projected benefit obligation (“PBO”) of the plan. We recorded anincrease to equity of $861million (net of tax)at May 31, 2013, and a decrease to equity of $2.4 billion (net of tax) at May 31, 2012, attributable to our plans.

A summary of our retirement plans costs over the past three years is as follows (in millions):

	2013		2012		2011
U.S. domestic and international pension plans	$	679	$	524	$	543
U.S. domestic and international defined contribution plans		354		338		257
U.S. domestic and international postretirement healthcare plans		78		70		60
	$	1,111	$	932	$	860

Total retirement plans costs in 2013 were higher than 2012 due to the negative impact of a significantly lower discount rate at our May 31, 2012 measurement date. Total retirement plans cost increased in 2012 primarily due to higher expenses for our 401(k) plans due to the fullrestoration of company matching contributions on January 1, 2011.

PENSION PLANS. Our largest pension plan covers certain U.S. employees age 21 and over, with at least one year of service. Pension benefits for most employees are accrued under a cash balance formula we call the Portable Pension Account. Under the Portable Pension Account, the retirement benefit is expressed as a dollar amount in a notional account that grows with annual credits based on pay, age and years of credited service, and interest on the notional account balance. The Portable Pension Account benefit is payable as a lump sum or an annuity at retirement at the election of the employee. The plan interest credit rate varies from year to year based on a U.S. Treasury index and corporate bond rates. Prior to 2009, certain employees earned benefits using a traditional pension formula (based on average earnings and years of service). Benefits under this formula were capped on May 31, 2008 for most employees. We also sponsor or participate in nonqualified benefit plans covering certain of our U.S. employee groups and other pension plans covering certain of our international employees. The international defined benefit pension plans provide benefits primarily based on final earnings and years of service and are funded in compliance with local laws and practices.

POSTRETIREMENT HEALTHCARE PLANS. Certain of our subsidiaries offer medical, dental and vision coverage to eligible U.S. retirees and their eligible dependents. U.S. employees covered by the principal plan become eligible for these benefits at age 55 and older, if they have permanent, continuous service of at least 10 years after attainment of age 45 if hired prior to January 1, 1988, or at least 20 years after attainment of age 35 if hired on or after January 1, 1988. Postretirement healthcare benefits are capped at 150% of the 1993 per capita projected employer cost, which has been reached and, therefore, these benefits are not subject to additional future inflation.

PENSION PLAN ASSUMPTIONS. Our pension cost is materially affected by the discount rate used to measure pension obligations, the level of plan assets available to fund those obligations and the expected long-term rate of return on plan assets.

We use a measurement date of May 31 for our pension and postretirement healthcare plans. Management reviews the assumptions used to measure pension costs on an annual basis. Economic and market conditions at the measurement date impact these assumptions from year to year.Actuarial gains or losses are generated for changes in assumptions and to the extent that actual results differ from those assumed. These actuarial gains and losses are amortized over the remaining average service lives of our active employees if they exceed a corridor amount in the aggregate. Additional information about our pension plans can be found in the Critical Accounting Estimates section of Management's Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) in this Annual Report on Form 10-K (“Annual Report”).

Weighted-average actuarial assumptions for our primary U.S. retirement plans, which represent substantially all of our PBO and accumulated postretirement benefit obligation ("APBO"), are as follows:
		Pension Plans						Postretirement Healthcare Plans
		2013		2012		2011		2013		2012		2011
Discount rate used to determine benefit obligation		4.79	%	4.44	%	5.76	%	4.91	%	4.55	%	5.67	%
Discount rate used to determine net periodic benefit cost		4.44		5.76		6.37		4.55		5.67		6.11
Rate of increase in future compensation levels
	used to determine benefit obligation	4.54		4.62		4.58		-		-		-
Rate of increase in future compensation levels
	used to determine net periodic benefit cost	4.62		4.58		4.63		-		-		-
Expected long-term rate of return on assets		8.00		8.00		8.00		-		-		-

The estimated average rate of return on plan assets is the expected future long-term rate of earnings on plan assets and is a forward-looking assumption that materially affects our pension cost. Establishing the expected future rate of investment return on our pension assets is a judgmental matter. We review the expected long-term rate of return on an annual basis and revise it as appropriate. Management considers the following factors in determining this assumption:

• the duration of our pension plan liabilities, which drives the investment strategy we can employ with our pension plan assets;
• the types of investment classes in which we invest our pension plan assets and the expected compound geometric return we can reasonably expect those investment classes to earn over time; and
• the investment returns we can reasonably expect our investment management program to achieve in excess of the returns we could expect if investments were made strictly in indexed funds.

Our expected long-term rate of return on plan assets was 8% for 2013, 2012 and 2011.Our actual return in each of the past three years exceeded that amount for our principal U.S. domestic pension plan. For the 15-year period ended May 31, 2013, our actual returns were 6.9%.For 2014, we plan to lower our expected return on plan assets assumption for long-term returns on plan assets to 7.75% as we continue to refine our asset and liability management strategy. In lowering this assumption we considered our historical returns, our investment strategy for our plan assets, including the impacts of the long duration of our plan liability and the relatively low annual draw on plan assets on that investment strategy.

Pension expense is also affected by the accounting policy used to determine the value of plan assets at the measurement date. We use a calculated-value method to determine the value of plan assets, which helps mitigate short-term volatility in market performance (both increases and decreases) by amortizing certain actuarial gains or losses over a period no longer than four years. Another method used in practice applies the market value of plan assets at the measurement date. For purposes of valuing plan assets for determining 2014 pension expense, the calculated value method resulted in the same value as the market value, as it did in 2013. For determining 2012 pension expense, we used the calculated value method which resulted in a portion of the asset gain in 2011 being deferred to future years because our actual returns on plan assets significantly exceeded our assumptions.

The investment strategy for pension plan assets is to utilize a diversified mix of global public and private equity portfolios, together with fixed-income portfolios, to earn a long-term investment return that meets our pension plan obligations. Our pension plan assets are invested primarily in publicly tradeable securities, and our pension plans hold only a minimal investment in FedEx common stock that is entirely at the discretion of third-party pension fund investment managers. Our largest holding classesareU.S. Large Cap Equities, which is indexed to the S&P 500 Index, Corporate Fixed Income Securities and Government Fixed Income Securities. Accordingly, we do not have any significant concentrations of risk. Active management strategies are utilized within the plan in an effort to realize investment returns in excess of market indices. As part of our strategy to manage pension costs and funded status volatility, we have transitioned to a liability-driven investment strategy to better align plan assets with liabilities. Our investment strategy also includes the limited use of derivative financial instruments on a discretionary basis to improve investment returns and manage exposure to market risk. In all cases, our investment managers are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage a portfolio.

Following is a description of the valuation methodologies used for investments measured at fair value:

• Cash and cash equivalents. These Level 1 investments include cash, cash equivalents and foreign currency valued using exchange rates. TheLevel 2 investments include commingled funds valued using the net asset value.
• Domestic and international equities. These Level 1 investments are valued at the closing price or last trade reported on the major market on which the individual securities are traded. The Level 2 investments are commingled funds valued using the net asset value.
• Private equity. The valuation of these Level 3 investments requires significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. Investments are valued based upon recommendations of our investment managers incorporating factors such as contributions and distributions, market transactions, market comparables and performance multiples.
• Fixed income. We determine the fair value of these Level 2 corporate bonds, U.S. and non-U.S. government securities and other fixed income securities by using bid evaluation pricing models or quoted prices of securities with similar characteristics.

The fair values of investments by level and asset category and the weighted-average asset allocations for our domestic pension plans at the measurement date are presented in the following table (in millions):

		Plan Assets at Measurement Date
		2013
						Target		Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Range %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	456	2	%	0 - 5	%	$	15	$	441
Equities						35 - 55
	U.S. large cap equity		5,264	28					37		5,227
	U.S. SMID cap equity		1,741	9					1,741
	International equities		2,271	12					1,904		367
	Private equities		332	2								$	332
Fixed income securities						45 - 65
	Corporate		4,972	26							4,972
	Government		3,888	20							3,888
	Mortgage backed and other		200	1							200
Other			(77)	-					(83)		6
		$	19,047	100	%			$	3,614	$	15,101	$	332
		2012
						Target		Quoted Prices in Active Markets		Other Observable Inputs		Unobservable Inputs
Asset Class		Fair Value		Actual %		Range %		Level 1		Level 2		Level 3
Cash and cash equivalents		$	618	4	%	0 - 3	%	$	8	$	610
Equities						45 - 55
	U.S. large cap equity		4,248	25					9		4,239
	U.S. SMID cap equity		1,368	8					1,368
	International equities		1,657	10					1,395		262
	Private equities		402	2								$	402
Fixed income securities						45 - 55
	Corporate		4,565	27							4,565
	Government		4,175	24							4,175
	Mortgage backed and other		59	-							59
Other			(79)	-					(85)		6
		$	17,013	100	%			$	2,695	$	13,916	$	402

The change in fair value of Level 3 assets that use significant unobservable inputs is shown in the table below (in millions):

		2013		2012
Balance at beginning of year		$	402	$	403
Actual return on plan assets:
	Assets held during current year		(29)		3
	Assets sold during the year		55		38
Purchases, sales and settlements			(96)		(42)
Balance at end of the year		$	332	$	402

The following table provides a reconciliation of the changes in the pension and postretirement healthcare plans' benefit obligations and fair value of assets over the two-year period ended May 31, 2013 and a statement of the funded status as of May 31, 2013 and 2012 (in millions):

			Pension Plans				Postretirement Healthcare Plans
			2013		2012		2013		2012
Accumulated Benefit Obligation ("ABO")			$	21,958	$	21,556
Changes in Projected Benefit Obligation ("PBO") and
	Accumulated Postretirement Benefit Obligation ("APBO")
PBO/APBO at the beginning of year			$	22,187	$	17,372	$	790	$	648
	Service cost			692		593		42		35
	Interest cost			968		976		36		36
	Actuarial loss (gain)			(652)		3,789		(17)		98
	Benefits paid			(589)		(502)		(54)		(51)
	Other			(6)		(41)		31		24
PBO/APBO at the end of year			$	22,600	$	22,187	$	828	$	790
Change in Plan Assets
Fair value of plan assets at the beginning of year			$	17,334	$	15,841	$	-	$	-
	Actual return on plan assets			2,081		1,235		-		-
	Company contributions			615		780		27		27
	Benefits paid			(589)		(502)		(54)		(51)
	Other			(8)		(20)		27		24
Fair value of plan assets at the end of year			$	19,433	$	17,334	$	-	$	-
Funded Status of the Plans			$	(3,167)	$	(4,853)	$	(828)	$	(790)
Amount Recognized in the Balance Sheet at May 31:
	Current pension, postretirement healthcare and other
		benefit obligations	$	(48)	$	(35)	$	(39)	$	(33)
	Noncurrent pension, postretirement healthcare and other
		benefit obligations		(3,119)		(4,818)		(789)		(757)
Net amount recognized			$	(3,167)	$	(4,853)	$	(828)	$	(790)
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	6,993	$	8,866	$	(4)	$	13
		Prior service (credit) cost and other		(781)		(897)		2		2
Total			$	6,212	$	7,969	$	(2)	$	15
Amounts Recognized in AOCI and not yet reflected in
	Net Periodic Benefit Cost expected to be amortized in
	next year's Net Periodic Benefit Cost:
		Net actuarial loss (gain)	$	378	$	516	$	-	$	-
		Prior service credit and other		(114)		(114)		-		-
Total			$	264	$	402	$	-	$	-

Our pension plans included the following components at May 31, 2013 and 2012 (in millions):
		PBO		Fair Value of Plan Assets		Funded Status
2013
	Qualified	$	21,532	$	19,047	$	(2,485)
	Nonqualified		322		-		(322)
	International Plans		746		386		(360)
	Total	$	22,600	$	19,433	$	(3,167)
2012
	Qualified	$	21,192	$	17,013	$	(4,179)
	Nonqualified		355		-		(355)
	International Plans		640		321		(319)
	Total	$	22,187	$	17,334	$	(4,853)

The table above provides the PBO, fair value of plan assets and funded status of our pension plans on an aggregated basis. The following table presents our plans on a disaggregated basis to show those plans (as a group) whose assets did not exceed their liabilities. These plans are comprised of our unfunded nonqualified plans, certain international plans and our U.S. Pension Plans.At May 31, 2013 and 2012, the fair value of plan assets for pension plans with a PBO or ABO in excess of plan assets were as follows (in millions):

		PBO Exceeds the Fair Value of Plan Assets
		2013		2012
Pension Benefits
	Fair value of plan assets	$	19,433	$	17,334
	PBO		(22,600)		(22,187)
	Net funded status	$	(3,167)	$	(4,853)
		ABO Exceeds the Fair Value of Plan Assets
		2013		2012
Pension Benefits
	ABO(1)	$	(21,930)	$	(21,555)
	Fair value of plan assets		19,404		17,333
	PBO		(22,570)		(22,185)
	Net funded status	$	(3,166)	$	(4,852)

(1)ABO not used in determination of funded status.

Contributions to our U.S. Pension Plans for the years ended May 31 were as follows (in millions):

	2013		2012
Required	$	560	$	496
Voluntary		-		226
	$	560	$	722

For 2014, we anticipate making required contributions to our U.S. Pension Plans totaling approximately $650 million.

Net periodic benefit cost for the three years ended May 31 were as follows (in millions):

	Pension Plans						Postretirement Healthcare Plans
	2013		2012		2011		2013		2012		2011
Service cost	$	692	$	593	$	521	$	42	$	35	$	31
Interest cost		968		976		900		36		36		34
Expected return on plan assets		(1,383)		(1,240)		(1,062)		-		-		-
Recognized actuarial losses (gains) and other		402		195		184		-		(1)		(5)
Net periodic benefit cost	$	679	$	524	$	543	$	78	$	70	$	60

Pension costs in 2013 were higher than 2012 due to the negative impact of a significantly lower discount rate at our May 31, 2012 measurement date.

Amounts recognized in OCI for all plans were as follows (in millions):
			2013								2012
			Pension Plans				Postretirement Healthcare Plans				Pension Plans				Postretirement Healthcare Plans
			Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount		Gross Amount		Net of Tax Amount
Net (gain) loss and other
	arising during period		$	(1,350)	$	(840)	$	(17)	$	(21)	$	3,777	$	2,371	$	97	$	61
Amortizations:
	Prior services credit			114		66		-		-		113		71		-		-
	Actuarial (losses) gains
		and other		(516)		(297)		-		-		(311)		(195)		1		-
Total recognized in OCI			$	(1,752)	$	(1,071)	$	(17)	$	(21)	$	3,579	$	2,247	$	98	$	61

Benefit payments, which reflect expected future service, are expected to be paid as follows for the years ending May 31 (millions):
	Pension Plans		Postretirement Healthcare Plans
2014	$	821	$	39
2015		956		42
2016		896		44
2017		961		45
2018		1,049		47
2019-2023		6,974		274

These estimates are based on assumptions about future events. Actual benefit payments may vary significantly from these estimates.

Future medical benefit claims costs are estimated to increase at an annual rate of 7.7% during 2014, decreasing to an annual growth rate of 4.5% in 2029 and thereafter. Future dental benefit costs are estimated to increase at an annual rate of 6.9% during 2014, decreasing to an annual growth rate of 4.5%in 2029 and thereafter. A 1% change in these annual trend rates would not have a significant impact on the APBO at May 31, 2013 or 2013 benefit expense because the level of these benefits is capped.

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Computation of Earnings Per Share

12 Months Ended

May 31, 2013

Earnings Per Share [Abstract]

Computation of Earnings Per Share

NOTE 11: COMPUTATION OF EARNINGS PER SHARE

The calculation of basic and diluted earnings per common share for the years ended May 31 was as follows (in millions, except per share amounts):

		2013		2012		2011
Basic earnings per common share:
Net earnings allocable to common shares(1)		$	1,558	$	2,029	$	1,449
Weighted-average common shares			315		315		315
Basic earnings per common share		$	4.95	$	6.44	$	4.61
Diluted earnings per common share:
Net earnings allocable to common shares(1)		$	1,558	$	2,029	$	1,449
Weighted-average common shares			315		315		315
Dilutive effect of share-based awards			2		2		2
Weighted-average diluted shares			317		317		317
Diluted earnings per common share		$	4.91	$	6.41	$	4.57
Anti-dilutive options excluded from diluted
	earnings per common share		11.1		12.6		9.3
(1)	Net earnings available to participating securities were immaterial in all periods presented.

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Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	Jul. 12, 2013	Nov. 30, 2012
Document and Entity Information [Abstract]
Document Type	10-K
Document Period End Date	May 31, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Entity Registrant Name	FedEx Corporation
Entity Central Index Key	0001048911
Current Fiscal Year End Date	--05-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 26.3
Entity Common Stock, Shares Outstanding		316,584,465

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Retirement Plans (Details 11) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income [Abstract]
Total recognized in OCI, Net of Tax Amount	$ (1,092)	$ 2,308	$ 235
Pension Plans [Member]
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income [Abstract]
Net (gain) loss and other arising during period, Gross Amount	(1,350)	3,777
Amortization of prior services credit, Gross Amount	114	113
Amortization of actuarial (losses) gains and other, Gross Amount	(516)	(311)
Total recognized in OCI, Gross Amount	(1,752)	3,579
Net (gain) loss and other arising during period, Net of Tax Amount	(840)	2,371
Amortization of prior services credit, Net of Tax Amount	66	71
Amortization of actuarial (losses) gains and other, Net of Tax Amount	(297)	(195)
Total recognized in OCI, Net of Tax Amount	(1,071)	2,247
Postretirement Healthcare Plans [Member]
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income [Abstract]
Net (gain) loss and other arising during period, Gross Amount	(17)	97
Amortization of actuarial (losses) gains and other, Gross Amount		1
Total recognized in OCI, Gross Amount	(17)	98
Net (gain) loss and other arising during period, Net of Tax Amount	(21)	61
Total recognized in OCI, Net of Tax Amount	$ (21)	$ 61

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Income Taxes

12 Months Ended

May 31, 2013

Income Taxes [Abstract]

Income Taxes

NOTE 12: INCOME TAXES

The components of the provision for income taxes for the years ended May 31 were as follows (in millions):

			2013		2012		2011
Current provision (benefit)
	Domestic:
		Federal	$	512	$	(120)	$	79
		State and local		86		80		48
	Foreign			170		181		198
				768		141		325
Deferred provision (benefit)
	Domestic:
		Federal		175		947		485
		State and local		(7)		21		12
	Foreign			(42)		-		(9)
				126		968		488
			$	894	$	1,109	$	813

Our current federal income tax expenses in 2013, 2012 and 2011 were significantly reducedby accelerated depreciation deductions we claimed under provisions of the American Taxpayer Relief Act of 2013 and the Tax Relief and the Small Business Jobs Acts of 2010. Those Acts, designed to stimulate new business investment in the U.S., accelerated our depreciation deductions for new qualifying investments, such as our Boeing 777 Freighter (“B777F”) aircraft. These were timing benefits only, in that depreciation accelerated into an earlier year is foregone in later years. Our 2013 current provision for federal income taxes was, therefore, higher than in 2012 and 2011.

Pre-tax (loss) earnings of foreign operations for 2013, 2012 and 2011 were $(55)million, $358 million and $472 million, respectively.These amounts represent only a portion of total results associated with international shipments and accordingly, do not represent our international or domestic results of operations.

A reconciliation of the statutory federal income tax rate to the effective income tax rate for the years ended May 31 was as follows:

			2013		2012		2011
Statutory U.S. income tax rate			35.0	%	35.0	%	35.0	%
Increase (decrease) resulting from:
	State and local income taxes,
		net of federal benefit	2.1		2.1		1.7
	Other, net		(0.7)		(1.8)		(0.8)
Effective tax rate			36.4	%	35.3	%	35.9	%

Our 2012 rate was favorably impacted by the conclusion of the IRS audit of our 2007-2009 consolidated income tax returns.

The significant components of deferred tax assets and liabilities as of May 31 were as follows (in millions):

		2013				2012
		Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
Property, equipment,
	leases and intangibles	$	157	$	3,676	$	248	$	3,436
Employee benefits			1,771		11		2,300		11
Self-insurance accruals			533		-		495		-
Other			251		238		338		271
Net operating loss/credit
	carryforwards		298		-		179		-
Valuation allowances			(204)		-		(145)		-
		$	2,806	$	3,925	$	3,415	$	3,718

The net deferred tax liabilities as of May 31 have been classified in the balance sheets as follows (in millions):

	2013		2012
Current deferred tax asset	$	533	$	533
Noncurrent deferred tax liability		(1,652)		(836)
	$	(1,119)	$	(303)

We have $940 million of net operating loss carryovers in various foreign jurisdictions and $500 million of state operating loss carryovers.  The valuation allowances primarily represent amounts reserved for operating loss and tax credit carryforwards, which expire over varying periods starting in 2014.  As a result of this and other factors, we believe that a substantial portion of these deferred tax assets may not be realized.

Permanently reinvested earnings of our foreign subsidiaries amounted to $1.3billion at the end of2013 and $1billion at the end of2012.  We have not recognized deferred taxes for U.S. federal income tax purposes on those earnings. In 2013, our permanent reinvestment strategy with respect to unremittedearnings of our foreign subsidiaries provided a 1.2% benefit to our effective tax rate.  Were the earnings to be distributed, in the form of dividends or otherwise, these earnings could be subject to U.S. federal income tax and non-U.S. withholding taxes.  Unrecognized foreign tax credits potentially could be available to reduce a portion of any U.S. tax liability.  Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to uncertainties related to the timing and source of any potential distribution of such funds, along with other important factors such as the amount of associated foreign tax credits. Cash in offshore jurisdictions associated with our permanent reinvestment strategy totaled $420millionat the end of 2013 and $410 million at the end of 2012.

In 2013, more than 85% of our total enterprise-wide income was earned in U.S. companies of FedEx that are taxable in the United States. As a U.S. airline, our FedEx Express unit is required by Federal Aviation Administration and other rules to conduct its air operations, domestic and international, through a U.S. company. However, we serve more than 220 countries and territories around the world, and are required to establish legal entities in many of them. Most of our entities in those countries are operating entities, engaged in picking up and delivering packages and performing other transportation services. In the meantime, we are continually expanding our global network to meet our customers' needs, which requires increasing investment outside the U.S. We typically use cash generated overseas to fund these investments and have a foreign holding company which manages our investments in several foreign operating companies, including new acquisitions made in 2013 in Poland, France and Brazil.

We are subject to taxation in the U.S. and various U.S. state, local and foreign jurisdictions. We are currently under examination by the IRS for the 2010 and 2011 tax years.  It is reasonably possible that certain income tax return proceedings will be completed during the next 12 months and could result in a change in our balance of unrecognized tax benefits. The expected impact of any changes would not be material to our consolidated financial statements.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

		2013		2012		2011
Balance at beginning of year		$	51	$	69	$	82
	Increases for tax positions taken in the current year		1		2		2
	Increases for tax positions taken in prior years		3		4		6
	Decreases for tax positions taken in prior years		(3)		(35)		(10)
	Settlements		(9)		(3)		(11)
	Increases due to acquisitions		4		15		-
	Decrease from lapse of statute of limitations		(2)		-		-
	Changes due to currency translation		2		(1)		-
Balance at end of year		$	47	$	51	$	69

Our liabilities recorded for uncertain tax positions include $42 million at May 31, 2013 and $47 million at May 31, 2012associated with positions that if favorably resolved would provide a benefit to our effective tax rate. We classify interest related to income tax liabilities as interest expense, and if applicable, penalties are recognized as a component of income tax expense. The balance of accrued interest and penalties was $29 million onboth May 31, 2013 and May 31, 2012. Total interest and penalties included in our consolidated statements of income are immaterial.

It is difficult to predict the ultimate outcome or the timing of resolution for tax positions. Changes may result from the conclusion of ongoing audits, appeals or litigation in state, local, federal and foreign tax jurisdictions, or from the resolution of various proceedings between the U.S. and foreign tax authorities. Our liability for uncertain tax positions includes no matters that are individually or collectively material to us. It is reasonably possible that the amount of the benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months, but an estimate of the range of the reasonably possible changes cannot be made. However, we do not expect that the resolution of any of our uncertain tax positions will be material.

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (4,953)	$ (2,550)	$ (2,440)
Other comprehensive gain (loss)	1,133	(2,403)	(110)
Ending balance	(3,820)	(4,953)	(2,550)
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	61	156	31
Other comprehensive gain (loss)	41	(95)	125
Ending balance	102	61	156
Retirement Plans Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(5,014)	(2,706)	(2,471)
Other comprehensive gain (loss)	1,092	(2,308)	(235)
Ending balance	$ (3,922)	$ (5,014)	$ (2,706)

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Preferred Stock (Details) (USD $)	May 31, 2013
Preferred Stock Number Of Shares Par Value And Other Disclosures [Abstract]
Preferred Stock Shares Authorized	4,000,000
Preferred Stock Par Value	$ 0
Preferred Stock Shares Issued	0

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Retirement Plans (Details 12) (USD $) In Millions, unless otherwise specified	May 31, 2013
Pension Plans [Member]
Defined Benefit Plan Estimated Future Benefit Payments Abstract
2014	$ 821
2015	956
2016	896
2017	961
2018	1,049
2019-2023	6,974
Postretirement Healthcare Plans [Member]
Defined Benefit Plan Estimated Future Benefit Payments Abstract
2014	39
2015	42
2016	44
2017	45
2018	47
2019-2023	$ 274