Unionized pilots at FedEx Corp. are on the brink of a new labor contract after five years of acrimonious bargaining. The Air Line Pilots Association late Wednesday announced that negotiators for the pilots and the company had reached a tentative agreement on a five-year contract with the help of the federal government’s National Mediation Board.
Pilots will receive a 40% increase in their hourly pay and other benefits, along with back pay (up to $150,000 for captains and $102,500 for first officers) to account for delayed raises during negotiations, according to a copy of the agreement posted on a union website. Starting in 2028, they will receive 3% annual raises.
ALPA said the tentative agreement must still be reviewed by the FedEx pilots’ union board, known as the Master Executive Council. The board is scheduled to meet next week, according to a union source. If the MEC approves the deal, it will be presented to rank-and-file members for a ratification vote. No dates for either event were disclosed.
FedEx (NYSE: FDX) has slightly less than 5,000 pilots, down from 5,800 two years ago. About 20 pilots per month retire from the airline and the union says others have quit.
In a statement, the company described the contract as better than ones for peer pilot groups at other cargo airlines. “This tentative agreement reflects our commitment to our valued crew members and to our growth strategy for the airline and the business as a whole,” said Richard W. Smith, chief operating officer, International and chief executive officer, Airline. “It’s a win-win for our pilots, for FedEx, and for our customers around the world.”
FedEx pilots in July 2023 voted down a tentative agreement to amend their contract, which would have increased pay by up to 30% over a five-year period. The rejection of the deal exposed a major rift among union members, leading to the ouster of the MEC board by hardliners who felt union leaders were too willing to accept management proposals. Union leadership endorsed the tentative agreement as leadership endorsed as delivering industry-leading improvements on pay, retirement and work-life balance.
In early 2024, the union asked the National Mediation Board to declare an impasse and release the parties from mediation, the first step necessary to launch a strike action.
The pilots union has long argued that FedEx’s improved financial performance demonstrates it can afford a better compensation package.
FedEx last month reported strong fiscal third-quarter earnings, exceeding optimistic analyst expectations, and raised full-year guidance again. Corporate revenue increased 8% year over year to $24 billion, beating consensus estimates by $520 million, and adjusted earnings per share hit $5.25 (consensus was $4.09), up 16%, behind yield and volume strength across nearly all package services, plus cost savings from restructuring initiatives. The price of FedEx stock is up 73% over the past year.
In a news release following the earnings announcement, ALPA said pilots helped deliver that performance despite significant adjustments across the network that placed greater demands on frontline crews. FreightWaves reported in December that FedEx travel managers were overwhelmed with flight changes following the post-accident grounding of all MD-11 freighter aircraft during peak shipping season, which resulted in many pilots scrambling to make hotel and ground transportation arrangements on arrival at destination airports. FedEx also recently restructured its air network after losing a large domestic air cargo contract with the U.S. Postal Service and to improve efficiency for parcel and freight shipments.
The union has said cost-cutting under and recent stock buybacks demonstrated management’s indifference to cockpit workers. A key grievance was that FedEx created schedules that were too lean without sufficient use of reserve pilots, forcing many pilots to work overtime and experience fatigue.
“Management willingly disregarded two decades of data that balanced productivity with safety. Our pilots are now asked to do more with less rest and in less time while still operating in unnatural conditions on the backside of the clock,” said Capt. Jose Nieves, chair of the FedEx ALPA Master Executive Council in a news release last year.
Pilots last month said the pressure was showing up in measurable ways, with pilot resignations reaching historic levels.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Contact: ekulisch@freightwaves.com.
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