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http://www.commercialappeal.com/mca/business/article/0,1426,MCA_440_3779367,00.html
FedEx bets big in offer to pilots
$500 million labor deal would gain lift over UPS
By Jane Roberts
Contact
May 15, 2005
In the latest test of who can deliver faster, FedEx Express is pushing to fast-track its pilot negotiations, hoping to capitalize on the contract quagmire at UPS.
A win, analysts say, will not only save FedEx payroll, but will allow it to steal market share by scaring customers away from labor turbulence at Big Brown, where 99 percent of pilots Wednesday voted for a strike.
If you are Brand A and you see Brand X in negotiations, your greatest desire is to get your deal done first so the other guy is forced to bargain based on your deal," said David Field, Americas editor of Airline Business, a London-based monthly magazine. "Whoever signs first stands to have a 1 percent or 2 percent advantage."
Two weeks ago, FedEx surprised the industry by offering its 4,300 pilots more than $500 million in raises and signing bonuses if they would agree to work under their 1999 contract and cease negotiations.
"We have said all we are going to say about the offer," said David Webb, master executive council chairman of the FedEx unit of the Air Line Pilots Association.
FedEx pilots say the offer is an example of the company "throwing money at problems," and they plan to ignore the May 31 deadline FedEx set for a response.
They say the offer is the company's way of ignoring the 14 months they have spent in negotiations and keeping current work rule language intact, which could force them to fly more hours without additional pay.
A union memo issued Friday says, "Every pilot, every pilot's spouse and every pilot's dog need to understand that this attempt to bypass the negotiating committee is about derailing our attempts to improve work rules."
FedEx spokeswoman Kristin Krause says the offer gives pilots "much greater job stability than any of their industry counterparts" and "brings a quick end to negotiations," allowing them to extend their lead with "what is easily the best contract in the airline industry today."
Pilots, she said, will continue to be able to work out scheduling differences in monthly meetings with management.
The offer rippled across the industry, getting particular notice at UPS, which has been negotiating with its pilots for nearly three years.
UPS MD11 captain Lee Collins has "sensed for some time" that FedEx was trying to sign first.
"Then they can go to our customers and say, 'We've got our thing done; everything's fine at our house, but what about Big Brown?' "
The signing bonuses FedEx is offering are tied to seniority and max out at $40,000 for 15-year captains and second officers.
The offer, which lets pilots choose among a three-, four- or five-year contract, includes 3 percent annual raises. Over two years, it also would pay someone who is now a first-year second officer a $19,000 signing bonus.
By fiscal year 2007, that pilot -- lowest on the ladder at FedEx -- would be earning $84,640.
"That looks livable for a first-year guy," Collins said. "Our first year guys make less than $30,000 in salary. If the FedEx guys get this, the UPS guys are going to want at least that, if not more."
In 1997, FedEx gained 800,000 packages a day during the 12-day Teamster strike that grounded UPS, said transportation analyst Satish Jindel.
"FedEx made $177 million in extra revenue in that period," he said. "Of that volume, they retained maybe 15 percent after the strike, which is 120,000 packages a day."
If FedEx pilots take the "same approach that passenger pilots did for years, they can look forward to the situation the passenger pilots have caused their own industry.
"They have no pension, no job security and have faced huge cuts," Jindel said.
While cargo pilots cringe when compared to passenger carriers, saying they "fly against time" to make deadlines, Jindel says the comparison is fair because flying people is harder than packages.
While the union agrees the raises and bonuses are a "big" number, its financial analysis suggests they are "about 2.3 percent year-over-year raises" because the pilots have worked a year under a "dead contract."
The contract became amendable last May. Negotiations began in March 2004.
The 1999 contract, they say, "is open to a lot of interpretation," allowing the company to "change trips" and "have you in the field more," said one FedEx pilot, who spoke on condition of anonymity. "It's not written in as tight of language as we would want it."
Another issue is the amount of work FedEx outsources, pilots say.
"FedEx is so short of airplanes and crew members, it's subcontracting out the work to get the freight moved," another FedEx pilot said, also on the condition of anonymity.
"We're proud as we can be to fly all this FedEx freight," he said. "We'd like to have that business for ourselves."
The pilots do not want to discuss the issues publicly, fearing a backlash from either the union or the company.
At least one said the offer gives him optimism that a "deal could be worked out by fall."
"The majority are not angry," he said. "I'd say most are satisfied with the job and happy to be working for Federal Express. "I personally would have taken the offer, and I think a number of others would have too."
FedEx offer
Bonus and raise totals over five years:
A 15th-year captain flying a wide-body plane would get $90,422 in raises and $40,000 in signing bonus. Total: $130,422
A 15th-year second officer in a wide-body plane would get $55,023 in raises and $40,000 signing bonus. Total: $95,023
A sixth-year first officer flying wide-body plane would get $59,245 in raises and $25,000 signing bonus. Total: $84,245
A two-year first officer flying a narrow body plane would get $46,515 in raises and $19,000 bonus. Total: $65,515 Figures provided by FedEx Express
I guess they are trying to get a little more mileage out of the 3% joke they made. It's page 1 in the litter box liner of a paper here in Memphis this morning.
FedEx bets big in offer to pilots
$500 million labor deal would gain lift over UPS
By Jane Roberts
Contact
May 15, 2005
In the latest test of who can deliver faster, FedEx Express is pushing to fast-track its pilot negotiations, hoping to capitalize on the contract quagmire at UPS.
A win, analysts say, will not only save FedEx payroll, but will allow it to steal market share by scaring customers away from labor turbulence at Big Brown, where 99 percent of pilots Wednesday voted for a strike.
If you are Brand A and you see Brand X in negotiations, your greatest desire is to get your deal done first so the other guy is forced to bargain based on your deal," said David Field, Americas editor of Airline Business, a London-based monthly magazine. "Whoever signs first stands to have a 1 percent or 2 percent advantage."
Two weeks ago, FedEx surprised the industry by offering its 4,300 pilots more than $500 million in raises and signing bonuses if they would agree to work under their 1999 contract and cease negotiations.
"We have said all we are going to say about the offer," said David Webb, master executive council chairman of the FedEx unit of the Air Line Pilots Association.
FedEx pilots say the offer is an example of the company "throwing money at problems," and they plan to ignore the May 31 deadline FedEx set for a response.
They say the offer is the company's way of ignoring the 14 months they have spent in negotiations and keeping current work rule language intact, which could force them to fly more hours without additional pay.
A union memo issued Friday says, "Every pilot, every pilot's spouse and every pilot's dog need to understand that this attempt to bypass the negotiating committee is about derailing our attempts to improve work rules."
FedEx spokeswoman Kristin Krause says the offer gives pilots "much greater job stability than any of their industry counterparts" and "brings a quick end to negotiations," allowing them to extend their lead with "what is easily the best contract in the airline industry today."
Pilots, she said, will continue to be able to work out scheduling differences in monthly meetings with management.
The offer rippled across the industry, getting particular notice at UPS, which has been negotiating with its pilots for nearly three years.
UPS MD11 captain Lee Collins has "sensed for some time" that FedEx was trying to sign first.
"Then they can go to our customers and say, 'We've got our thing done; everything's fine at our house, but what about Big Brown?' "
The signing bonuses FedEx is offering are tied to seniority and max out at $40,000 for 15-year captains and second officers.
The offer, which lets pilots choose among a three-, four- or five-year contract, includes 3 percent annual raises. Over two years, it also would pay someone who is now a first-year second officer a $19,000 signing bonus.
By fiscal year 2007, that pilot -- lowest on the ladder at FedEx -- would be earning $84,640.
"That looks livable for a first-year guy," Collins said. "Our first year guys make less than $30,000 in salary. If the FedEx guys get this, the UPS guys are going to want at least that, if not more."
In 1997, FedEx gained 800,000 packages a day during the 12-day Teamster strike that grounded UPS, said transportation analyst Satish Jindel.
"FedEx made $177 million in extra revenue in that period," he said. "Of that volume, they retained maybe 15 percent after the strike, which is 120,000 packages a day."
If FedEx pilots take the "same approach that passenger pilots did for years, they can look forward to the situation the passenger pilots have caused their own industry.
"They have no pension, no job security and have faced huge cuts," Jindel said.
While cargo pilots cringe when compared to passenger carriers, saying they "fly against time" to make deadlines, Jindel says the comparison is fair because flying people is harder than packages.
While the union agrees the raises and bonuses are a "big" number, its financial analysis suggests they are "about 2.3 percent year-over-year raises" because the pilots have worked a year under a "dead contract."
The contract became amendable last May. Negotiations began in March 2004.
The 1999 contract, they say, "is open to a lot of interpretation," allowing the company to "change trips" and "have you in the field more," said one FedEx pilot, who spoke on condition of anonymity. "It's not written in as tight of language as we would want it."
Another issue is the amount of work FedEx outsources, pilots say.
"FedEx is so short of airplanes and crew members, it's subcontracting out the work to get the freight moved," another FedEx pilot said, also on the condition of anonymity.
"We're proud as we can be to fly all this FedEx freight," he said. "We'd like to have that business for ourselves."
The pilots do not want to discuss the issues publicly, fearing a backlash from either the union or the company.
At least one said the offer gives him optimism that a "deal could be worked out by fall."
"The majority are not angry," he said. "I'd say most are satisfied with the job and happy to be working for Federal Express. "I personally would have taken the offer, and I think a number of others would have too."
FedEx offer
Bonus and raise totals over five years:
A 15th-year captain flying a wide-body plane would get $90,422 in raises and $40,000 in signing bonus. Total: $130,422
A 15th-year second officer in a wide-body plane would get $55,023 in raises and $40,000 signing bonus. Total: $95,023
A sixth-year first officer flying wide-body plane would get $59,245 in raises and $25,000 signing bonus. Total: $84,245
A two-year first officer flying a narrow body plane would get $46,515 in raises and $19,000 bonus. Total: $65,515 Figures provided by FedEx Express
I guess they are trying to get a little more mileage out of the 3% joke they made. It's page 1 in the litter box liner of a paper here in Memphis this morning.
