Tentative contract raises pay 9% at first, 3% a year after
By Jane Roberts
Contact
August 28, 2006
www.commercialappeal.com
After more than two years of negotiating, FedEx and its pilots struck a tentative deal late Saturday, days before a final vote is expected on the contract at UPS.
While neither FedEx nor union spokesmen would answer questions, industry insiders say FedEx offered a nine percent initial raise plus three percent annual increases for the length of the four-year contract. The agreement also includes seniority increases.
"We're gratified that the collective bargaining process has produced solid contract improvements that acknowledge our pilot group's contributions to FedEx," said David Webb, chairman of the Air Line Pilot Association's FedEx master executive council. "We appreciate the company's commitment to these negotiations. We look forward to presenting the tentative agreement to our governing body and membership."
Under the deal, the highest-paid FedEx captain would earn $224 per hour, 45 cents more than the best-paid pilot at UPS would make under a contract the UPS pilots are voting on now.
The results of that vote will be announced Thursday.
The timing, analysts say, means one thing: FedEx fully expects the UPS pilots to ratify their contract. Without a similar deal, FedEx is vulnerable to higher pilot demands.
"The sooner Fred Smith gets this contract in place, the sooner he has one less big issue hanging over management," said David Field, Americas' editor of Airline Business magazine. "If FedEx is planning something new in China, for instance, it doesn't want an open contract up in the air. It takes up your time and attention and gives the union grounds for making new demands."
While few of the particulars are known about the FedEx deal, it does include a 7 percent pay contribution to the pilots' Pension B retirement fund. Under the pilots' current contract, FedEx contributes 6 percent.
"The real pressure is that peak season is coming. UPS has basically settled, and assuming they ratify their deal, shippers are left to think that FedEx might have trouble," said George Hamlin at Morten Beyer & Agnew aviation consultants in Arlington, Va. "That means they might set up contingency plans with UPS or UPS might solicit some FedEx customers."
In the UPS deal, wide-body captains are slated to get a 17.7 percent initial raise, bringing their pay to $223.55 an hour. First officers' raises will range from 18 to 25.8 percent, essentially flattening the difference in pay scales between UPS and FedEx pilots.
Each UPS pilot would also get 3 percent annual raises, starting in 2008, and a four percent raise in 2012.
After the FedEx contract language is finalized, the union's master executive council will review the deal. It is expected to seek a union vote, likely in October.
FedEx has 4,700 pilots.
The sides have been negotiating since March 2004. In early May 2005, the company offered more than $500 million in signing bonuses and raises if the pilots would end talks and accept the terms of their 1998 contract.
The deal also included annual three percent raises and choice of a three-, four- or five-year contract with bonuses based on seniority.
Union leaders scoffed at the deal. The deadline for ratification passed without a vote because MEC leaders said it did not address issues they'd spent a year trying to work out at the table.
After a second offer in October, FedEx requested the help of the National Mediation Board.
Friday, as the two sides were closing the second week of talks in Washington, the mediator requested they extend talks through the weekend. --Jane Roberts: 529-2512
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