MEMPHIS, Tenn.—In advance of FedEx Corporation’s (FDX) release of its first quarter fiscal year (FY) 2025 earnings this week, FedEx pilots, represented by the Air Line Pilots Association, Int’l. (ALPA) pointed out today that the earnings call is sure to “miss” a critical issue underpinning FedEx’s long-term value proposition—the labor strife created in this process. ALPA FedEx Master Executive Council chair Capt. Jose Nieves issued the following statement in advance of Thursday’s earning report:
“This week’s call is sure to celebrate the financially engineered progress of business optimization initiatives, specifically DRIVE, which is a corporate financial discipline aimed at generating $4 billion in permanent cost reductions in FY 2025. We fully expect that corporate leadership will further comment on the implementation of Network 2.0, the combination of Express and Ground networks, which is expected to generate an incremental $2 billion of savings in fiscal 2027.
“While the earnings call will undoubtedly laud business optimization initiatives driving structural costs down, it will gloss over the fact that the core component of FedEx’s growth strategy focuses on international freight—specifically, freight transported through its robust air freight network that is largely flown by over 5,500 FedEx pilots.
“Just last fiscal year, FedEx pilots transported $40.8 billion of the $87.6 billion in the company’s revenue, not to mention the pilots were a critical component in delivering record profitability during the COVID pandemic era. Just as FedEx founder Fred Smith relied directly on pilots to launch the company in 1973, we remain a core contributor to growth and sustainability in the future as the company seeks to capture international air cargo volume leading to increased profit margins.
“However, instead of recognizing our tremendous contributions, we instead continue to be involved in protracted labor contract negotiations and are three years past due on an industry representative contract. FedEx simply cannot achieve growth and profitability while simultaneously short-changing the pilots on a labor contract and expecting operations to continue without the labor union marching down the legal path to self-help.
“FedEx pilots are proud of the work we do and our daily contributions to this company which is why we urge management to negotiate a deal that recognizes our continued success and represents our collaboration well into the future.”
Background Information on Negotiations:
ALPA and FedEx have been in focused negotiations for nearly two years under the supervision of the National Mediation Board, pursuant to Section 6 of the Railway Labor Act (RLA). The pilot group’s frustration with lack of progress in bargaining led to the submission of a request for proffer of arbitration and consequent release for self-help in March 2024. The National Mediation Board (NMB) rejected this request and has now called the parties to continue mediated sessions beginning September 24, 2024.
The potential impact of labor unrest on revenue generation, particularly approaching the 2024 peak shipping season, has not been openly acknowledged by the Corporation. To date, FedEx has made no effort to work collaboratively on the terms of a contract remedy beyond what is required of the NMB, leading to further uncertainty.
What is evident is that the FedEx air network is shifting focus toward international-deferred freight revenue generation while capping operational expenses in the near term. To accomplish this shift, growth forecasts and unplanned MD-11 recalls from Victorville long-term storage reveal the airline is short on wide-body long-haul freighter airplanes and will have to close that gap soon. That would require a substantial capital expenditure to do so organically, which may be met with discord without first resolving the ongoing labor dispute in a critical juncture to growth and profitability.
