FedEx pilots take harder line as contract dispute drags on

Factions coalesce around new union reps, more aggressive tactics

Eric Kulisch·Friday, March 15, 2024

 FedEx has more than 400 mainline freighters in its fleet, including 65 Airbus A300-600s (pictured), and about 5,800 pilots. (Photo: Jim Allen/FreightWaves)

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The board that sets the strategic direction for the pilots’ union at FedEx Express is projecting a united front after last week’s acrimonious debate over ending federal mediation of contract talks. The effort suggests there is more agreement than meets the eye and that aggressive steps are necessary to counter the company’s alleged intransigence. 

Despite strong membership divisions, there appears to be greater unity within the Air Line Pilots Association’s (ALPA) Master Executive Council as a new guard begins to exert control. And internal communiques obtained by FreightWaves also indicate that council members, including long-serving incumbents, share the view that FedEx (NYSE: FDX) is stringing out the labor dispute.

“Whether you are of the opinion that we should have waited longer or that we’ve waited long enough, we MUST embrace the imperative that we all work together. We are ONE TEAM on this side of the table, ready to negotiate a deal that recognizes our value to OUR corporation, and a deal that the corporation can easily afford,” the MEC said in a note to members that was signed by all 14 council representatives. “On the other side of the table is the other team, intent on dividing and conquering us. You need to decide if you’re on OUR team or THEIR team. There are no other choices, no neutral sideline or fence to stand or sit on. We stand together, or we all fail.”

ALPA last week asked the National Mediation Board to end bridgemaking efforts and allow the parties to resolve differences through arbitration – a move designed to open the door to a possible strike since neither side is likely to agree to a binding decision from an arbitrator. The letter was sent after an 8-6 vote by the MEC that some complained was engineered behind closed doors, rushed through without adequate consideration and taken without waiting for FedEx’s response to the union’s latest demands. 

The bad blood got so bad that some council representatives said they were essentially ambushed by plotters seeking to hijack the negotiations, FreightWaves reported. In a separate correspondence to crew members, a top FedEx official said the union’s shifting stances because of the internal divisions has made it difficult to come to an agreement because it doesn’t know what demands to take seriously. 

ALPA on Thursday blamed FedEx for trying to undermine union solidarity by sowing “inflammatory information and unsubstantiated allegations” in the media, notwithstanding the fact that the internal tensions were clearly spelled out in the organization’s own documents.

“Contrary to attempts to divide our governing body and pilot group, we want to reaffirm that FedEx pilot leadership stands united in its pursuit of a contract that reflects the hard work and dedication of our members. The decision to request a release from the National Mediation Board was not taken lightly, but was made in the best interest of ensuring that a resolution to our contract negotiations was completed in a timely and constructive manner,” the union said in response to the article.

It is unclear when the pilots union made its latest proposal to FedEx, but Wednesday’s membership update from the MEC and an official who was subsequently contacted implied that it happened on Feb. 27, the first day of three mediated sessions in a row. The MEC said it was angered that FedEx failed to give an answer on Feb. 29 and instead said it needed two more weeks before it could address retirement issues.

“A hallmark of the company’s behavior in negotiations has been stall, drag feet and delay. With only two days of meetings scheduled in the month of March, and only one week set aside to meet in April, we simply could not play along with the delay game any longer,” the board said. 

The parties have been negotiating for nearly three years on an updated pilot contract and have been in federal mediation since October 2022. 

The leaders said the delay solidified the view that FedEx had no intention of making improvements to the tentative agreement pilots rejected last summer. A majority of FedEx pilots were displeased with the agreement’s level of job protections, back pay, pension options and quality-of-life considerations and the fact that pay increases were below those recently achieved by passenger-airline counterparts. 

FreightWaves previously reported that FedEx did not plan to increase the value of the rejected deal in the new round of mediated talks. The MEC letter characterized management’s insignificant changes so far as “insulting.” 

Scope clause

Of particular concern, according to the correspondence, is the company is not addressing pilot concerns that more flying will be outsourced, which would reduce their earnings. ALPA wants to improve clauses in the existing contract that define what type of flying can be done by pilots that aren’t employed by the airline. 

Last year’s tentative agreement would have allowed FedEx Express to place more work during surge periods with third-party airlines without paying a higher penalty. But many pilots were concerned that language prohibiting outsourcing if FedEx reduces flight hours or furlough pilots wasn’t strong enough. Under the existing scope arrangement, FedEx pays a financial penalty to the union that gets distributed to pilots if the company goes above the agreed cap on shipment volume that can be given to charter airlines. Opponents feared FedEx might simply not replace older pilots as they retire and then claim a need to hire partner carriers to meet demand.

The latest union proposal trades smaller monetary penalties for using contractors in exchange for more job protection. The memo accused management of rejecting most of the offer and deferring discussions about reduced crew operations into the future. 

Much of the tension centers on the extent to which FedEx intends to reduce the pilot workforce as it reengineers the air network to reduce structural expenses in response to shifting e-commerce patterns, which have resulted in weaker overnight express volumes. Company executives have outlined a “Tricolor” strategy that would shift a greater percentage of the fleet towards transporting deferred freight, which would be concentrated during the daytime. They have also publicly acknowledged the need to reduce the ranks by several hundred from the current level of 5,800 pilots. 

“By definition, the Orange network is FedEx planes and FedEx pilots, just retimed to go into day sorts versus tighter night sort windows. We discussed that on our Q2 call, and have been unequivocally clear about this in all company communications around Tricolor,” said FedEx spokesperson Caitlin Adams Maier.

(Photo: Jim Allen/FreightWaves)

The MEC said it wants FedEx to put in writing that FedEx pilots will be used to fly that freight. 

“When you add their scope [suggestion] to their pitifully low pay rate offer and their shuffling of retirement benefits and throw in their insistence on including concessions” on guaranteed flight hours for training or vacation that overlaps with normal downtime “what we’ve been offered from the company is a recipe for another failed tentative agreement,” the MEC told members.

The tenor of the messages reflects recent changes within the MEC. Most of the representatives who endorsed the failed tentative agreement have been recalled and replaced. Initially, only a few representatives were recalled after the failed tentative deal and the new representatives were in the minority. Now they appear to have gained the majority. 

The MEC is looking to fill a vacancy for chairman of the negotiating committee, according to the member update.

Late Thursday, the MEC voted Chairman Billy Wilson out of office, an action he predicted last week would happen because of the power struggle and disagreement over the NMB letter’s timing.

“Our request to be released [from NMB oversight] should demonstrate to the company and investors that we will not settle for a subpar tentative agreement nor allow the process to be delayed any further,” the MEC wrote. “The trajectory plotted by the company would never yield a tentative agreement that we as a MEC could endorse, much less one that the membership could overwhelmingly ratify.”

The union has consistently criticized FedEx for citing lower profits as reason for caution on a new pilot contract, noting that the company in December announced a $1 billion accelerated share buyback program. 

During a special in-person meeting at the MEC’s Memphis, Tennessee headquarters on Wednesday, Southwest Airlines Pilots Association President Casey Murray described how a deal was reached in January that would raise pilot pay about 50% over five years. The FedEx deal shot down last summer included a 30% pay increase over 4.5 years. Murray said the agreements reached at Delta Air Lines and United Airlines set a pattern for a successful outcome with Southwest. 

The MEC plans to conduct an informational picket on Wall Street when FedEx releases quarterly results next Thursday in hopes that investors will convince management to speed up negotiations.