FedEx Corp, the world's largest cargo airline, forecast improved revenue and margins in the current quarter and beyond, boosted by strong demand.

The bright outlook overshadowed lower earnings in the fiscal third quarter, ended February 28, and FedEx shares rose 4 percent in premarket trading.

We expect continued positive yield trends to improve revenues and margins in the fourth quarter and in fiscal 2012, said Alan Graf, chief financial officer.

The January combination of FedEx Freight and FedEx National LTL (less-than-truckload) operations likely will drive FedEx Freight's return to profitability in the fourth quarter, said the company, which is considered an economic bellwethers.

Rising oil prices that drag on the economy are a concern this year, and the near-term impact of the earthquake and tsunami in Japan is uncertain, it said.

(Editing by John Wallace)