(Reuters) - FedEx ( FDX ) shares surged in premarket trading on Friday after the parcel giant beat estimates for quarterly profit and reported a higher operating margin at Express, its largest unit.

Shares of the company rose 12.4% to $297.75 before the bell, with rival UPS up 3.5%.

FedEx ( FDX ) has taken several measures to protect margins at Express, including parking aircraft, reducing flight hours and efforts to fly fewer jets, with better capacity utilization.

The Memphis, Tennessee-based company also said on Thursday it plans to buy back $500 million worth of its shares in the current quarter, with its board approving a new $5-billion share repurchase program.

Operating margin at its Express overnight-delivery provider rose 2.5% in the February fiscal quarter, from 1.2% a year ago.

"FedEx ( FDX ) hit all the high notes this time with lower capex, a reloaded buyback program and a beat in Express off low expectations," J.P.Morgan analysts said in a note.

The firm also tightened its annual profit forecast and now expects earnings in the range of $17.25 to $18.25 per share, compared to its prior forecast of $17 to $18.50 per share.

Adjusted profit for the quarter ended Feb. 29 rose to $966 million, or $3.86 per share, topping analysts' average estimate by 41 cents per share, according to LSEG data.

"FedEx ( FDX ) delivered better margin performance at Express despite the challenging revenue/demand backdrop," Baird analysts said, calling the company's quarterly performance "one shining moment relative to lower expectations".

Investors have been urging FedEx ( FDX ) CEO Raj Subramaniam to enhance profitability in the air-based Express segment amid contract renewal negotiations with USPS and ongoing labor discussions with its pilots.

Shares of FedEx ( FDX ) trade at 12.72 times forward profit estimates, below rival UPS's 18.01 multiple.