Despite the dismal job market, an unexpectedly high number of FedEx (NYSE:FDX) employees made a beeline for the door when it offered "early retirement packages."

This, in turn, will result in a charge of $380 million to $420 million in fiscal year 2004, instead of between $230 million and $290 million. It means, of course, that the short-term costs of this staff-trimming effort will be higher than FedEx previously banked on.

As was pointed out here in June, "early retirement" equals layoffs, not the lounging-in-the-backyard-hammock-watching-the-days-go-by type of worry-free retirement. However, it appears that the payouts were generous enough to convince many longtime FedExers to become more "ex" than "express."

The early retirement/severance package deal is part of FedEx's drive to realign its business -- in other words, cut costs and get streamlined. With the down economy, package delivery is no longer the moving and shaking business it used to be. In fact, according to FedEx's Form 10-K, its package volumes in 2003 were stranded at 1998 levels.

In addition, the competition to deliver our precious packages is fierce, not only from Big Brown rival UPS (NYSE:UPS) and DHL Worldwide Express, but also from a U.S. Postal Service that proved to work just fine for speedy and cost-efficient delivery.

Despite the higher costs associated with this move, FedEx is still saying it will deliver earnings of $2.51 and $2.72 per share for fiscal 2004.

Although the short-term high costs of this endeavor are meant to be offset by long-term savings, will a drain of experienced talent be well replaced by a younger, greener workforce? Head over to the FedExdiscussion board and tell us whether the future is bright or bumbling for FedEx .

Alyce Lomax welcomes your feedback at