Consultant’s Insight: FedEx pilots want new contract, but will they get it?

After electing Capt. Billy Wilson as the new chair for the Air Line Pilots Association ’s FedEx Master Executive Council in October, the pilots union now expects FedEx and the pilots to return to the table to hammer out a new contract. But have the FedEx pilots lost their negotiating clout since rejecting a proposed contract in July? The National Mediation Board affirmed its offer to convene an initial bargaining session between ALPA and FedEx management in Memphis on Nov. 6-7, the union told Reuters. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] FedEx did not immediately respond to a request for comment, so it’s not known if the two sides met this week. FedEx pilots rejected a tentative contract in July that had been agreed to by the bargaining committee and included a 30% pay rise over 4½ years and a 30% increase to their legacy pensions, according to ALPA. Wilson has called for compensation in line with pilots at other airlines, where commercial pilots have won significant raises. American Airlines pilots approved a contract in August that will provide 46% in cumulative pay raises and retirement contributions over its four-year term, along with a bonus, improved scheduling, sick leave and insurance benefits. Delta Air Lines in March promised its pilots a more than 30% pay raise, “FedEx pilots have earned a career that is stable and long-lasting. Our compensation should be commensurate with our peers while including excellent quality of life with our work rules and a retirement that will provide for pilots in the future,” Wilson said in an Oct. 30 statement. “During COVID, FedEx pilots stood tall delivering for the company and the world while many of our pilots suffered in inhumane and substandard living conditions, including lockdowns and exposure to unknown chemicals. We paid a heavy price for this while the company made historic profits.” Indeed, pilots for FedEx and others in the industry were amazing during the pandemic and should be lauded for their commitment. However, the express market is different today, forcing providers, including FedEx, to reduce block hours and to park planes. Accounting for reduced market FedEx Express average daily volumes have declined more than 16.6% since FedEx’s fiscal year ending May 31, 2021. Similar volume declines are occurring at UPS and DHL as the express market normalizes since reaching record highs during the pandemic. As the express market normalizes, it’s also changing due to global economic and geopolitical risks and changes in demand. Excessive inventory levels in the United States have caused a reduced demand for replenishment from overseas, while shifts toward regionalization and nearshoring are reducing the need for as many planes. Meanwhile, technology investments are allowing shippers to forecast and plan inventory more accurately, thus reducing the need for last-minute replenishments that we tend to see during the holiday peak season and leading up to the Chinese New Year celebrations. FedEx is addressing these changes by combining its FedEx Ground and FedEx Express operations. The combined business will handle all deliveries beginning in June 2024 as part of a wider plan, dubbed DRIVE, that includes plans to permanently cut $4 billion in costs by the end of Fedex’s 2025 fiscal year. “We’re making our global network more efficient primarily through structural flight takedowns and efficiencies at our hubs and sorts as we right-size the capacity across the network,” FedEx Chief Executive Raj Subramaniam told analysts during the company’s September earnings call. Job security on the line FedEx pilots have been working without a contract since 2021 and, while the tentative agreement that was defeated in July would have provided a nice bump in pay and pension, the concern may be more about job security. This will be difficult to negotiate as FedEx needs to reduce costs to be competitive in the market. Other news outlets have reported UPS offering early retirement packages to its pilots while PSA Airlines , a regional passenger carrier owned by American Airlines, is offering bonuses totaling $250,000 for UPS and FedEx pilots to help fill a gap that has forced PSA to keep planes grounded and curtail service to some cities. FedEx told its pilots to consider the offer. UPS passed on the details to pilots who recently accepted a company buyout, according to a recent Wall Street Journal story. FedEx pilots may have missed their opportunity for favorable pay increases as the negotiations may now favor FedEx.

Consultant’s Insight: FedEx pilots want new contract, but will they get it?

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