Federal Express and the FedEx Pilots Association agreed Friday to resume talks and settled on a 60-day moratorium that eliminates the possibility of a pilot strike during the critical holiday shipping season. This comes after FedEx, a unit of the Memphis-based FDX Corp., said Thursday it had completed contingency plans to prevent any possible disruption to its service should a strike occur.
The FPA has also agreed to resume flying voluntary overtime, which it had stopped doing earlier this month.
“We are happy to confirm that this holiday season our service to our customers will continue uninterrupted,” said spokeswoman Carla Boyd.
Boyd said FedEx will honor the company commitments thus far, but “it’s business as usual now, and we will not secure any additional aircraft or trucking.” As for the $1 billion FedEx was granted, Boyd would not comment, but said that “as of right now,” there is no reason to use it.
FedEx Finds Funds to Guard Against Strike
THURSDAY, NOVEMBER 19, 1998 — Federal Express came up with a $1 billion working capital contingency fund today to thwart any possible service disruption in case of a pilots strike next month.
FedEx, received the money from various sources to use for equipment and leases. The fund supplements its existing $1 billion peak shipment season credit line.
“In the event of a work action, we are extremely confident that we will give our customers what they need,” said spokeswoman Carla Boyd. “We will be fully open for business.”
The FedEx Pilots Association could strike as early as Dec. 3.
However, FedEx may not be able to grant customers the level of service it normally offers. For example, if a strike occurs, overnight deliveries won't be available in some to-be-determined areas. Also affected are FedEx First Overnight Service, which guarantees delivery by 8 a.m. the next day, its Dangerous Goods Service and Saturday and Sunday pickup/delivery. International deliveries will be extended by one day.
FedEx said it will maintain its money-back guarantees on two- and three-day deliveries and is negotiating with some of its larger customers to shift parts of their overnight volume to the company's slower delivery services.
“As each day goes by, we are getting more contingency plans into place,” Boyd said.
FedEx made an agreement with certified air carrier Atlas Air, Golden, CO, to lease two Atlas 747-400 freighters and one Atlas 747-200 freighter. Atlas will provide FedEx with the aircraft, crew, maintenance and insurance for airport-to-airport international air freight service for a guaranteed number of operating hours per month. FedEx also plans to keep packages moving by using its more than 41,000 vehicles and is contracting trucking from additional companies. FedEx will use its ground-transportation sister companies — parcel carrier RPS Inc., Roberts Express Inc. and Viking Freight Inc., which are FDX units that were acquired last year when FedEx merged with Caliber Systems.
Morgan Keegan & Co. transportation analyst Art Hatfield said he doubted that a strike will occur but expects FedEx to be prepared.
“Two- and three-day service will be intact, and [FedEx] still has around 70 pilots they can use that constitute the 2 to 3 percent that are not union members,” he said. “There are also a lot of pilots in management who can go back in and fly for a short period of time.”
Most FedEx customers are relieved about FedEx's plans, but are watching the negotiations closely and aren't disregarding their contingency plans, yet.
“Because the speedy distribution of our products is a very important part of the way we do business and our relationship with our customers, Dell has contingency plans in place for interruptions in service,” said Neisha Frank, a spokeswoman for Dell Computer Corp., Austin, TX. However, she would not speculate about how her company or FedEx may be affected by a possible strike.
Meanwhile, the pilots association, which represents more than 3,500 pilots, and FedEx management met last week in Washington with the National Mediation Board. The board, which oversees airline labor relations, would not comment on the discussions and has asked both parties to refrain from commenting. However, it said it could advise President Clinton to intervene and halt a strike, but only if the strike would significantly disrupt the economy.
Negotiations became contentious earlier this month when the pilots asked FedEx to enter into binding arbitration with a third party. FedEx refused, saying it offered to enter arbitration when the latest round of negotiations began in July and the union refused.
