The union representing some 5,800 pilots at FedEx Express has asked the National Mediation Board to be officially released from mediation for the purpose of being able to go on strike against the company to achieve a new contract.
The Air Line Pilots Association (ALPA) announced Friday that it asked the federal agency to declare an impasse in contract negotiations and move the process to binding arbitration. The request is designed to clear the way for a potential strike against the company in a heavily regulated bargaining process. Talks, which have been underway for nearly three years, have broken down over retirement, pay and quality of life.
The sides reached a tentative agreement that was endorsed by the FedEx ALPA Master Executive Council, but narrowly rejected by membership in July. It would have raised pilot pay 30% over four years. Mediated negotiations resumed in November.
“While ALPA has been generous in our movement on positions, FedEx’s incremental movement on some items and refusal to accept many of ALPA’s items indicate an unwillingness to ever reach an agreement,” Captain Christopher Comer and First Officer Jose Gomez, local FedEx union leaders, said Wednesday in a letter to fellow pilots obtained by FreightWaves.
FedEx (NYSE: FDX) said internal divisions within the pilots’ union are the main reason for the lack of a deal.
“We strongly disagree that a release from mediation is appropriate. This is a common union tactic that does not impact our outstanding service to customers around the world,” the company said in a statement.
“We have already reached one tentative agreement with our pilots that ALPA leadership supported and hailed as ‘the highest value achieved among major carriers in the last twenty years.’ Despite active support by its leadership, FedEx pilots narrowly voted it down last summer, and since that time we have seen continuous changes in union direction and leadership that have hindered progress toward a new deal. FedEx remains steadfastly committed to bargaining in good faith and reaching an agreement that is fair to all stakeholders. We believe the mediation process under the supervision of the National Mediation Board – which ALPA requested – remains the best way to achieve that goal.”
The pilots said FedEx apparently doesn’t intend to offer more money to a new contract proposal that it did last year. The comment indirectly referenced a FreightWaves article from January in which Pat DiMento, FedEx’s vice president of flight operations and training, was reported saying the company plans to offer the same amount of total money to the pilots as it did in the tentative agreement, but reallocate it differently between retirement, higher pay scales, signing bonuses or other areas.
“The intransigence of the company should not be a surprise to us, nor should it be used as an excuse for lowering our expectations. Rather, it should be the motivation for our deliberate, intentional demonstration of our unwavering will and unflinching determination to achieve the recognition that we have earned and that we deserve,” the letter said.
Pilots are also concerned about how pilots are paid when removed from trips for student training and language regarding medical mandates, such as vaccines, according to a Jan. 26 message from the FedEx negotiating committee to the pilot group.
ALPA notes that FedEx Express accounted for nearly half of the corporation’s $90 billion in revenue last year, is also in the midst of a $5 billion stock buyback and that 18 days of flying would pay for the entire increase pilots seek in a four-year contract.
But the union ask comes at a fraught time for FedEx, which is under shareholder pressure to increase profitability after a prolonged stretch of weaker parcel demand. The slowdown in demand previously spurred management to undertake an ambitious restructuring strategy designed to improve network efficiency and save $6 billion in structural costs.
At the same time, the future of FedEx’s contract with the U.S. Postal Service is an open question with the Postal Service motivated to shift more volume to cheaper ground transportation and FedEx considering whether to walk away from the business if it can’t get higher rates needed to make its daytime flying profitable.
FedEx pilots are making much less money than they did two years ago because there are fewer flight hours. Management has indicated a desire to offer early retirement packages to hundreds of pilots once a new contract is finalized, FreightWaves reported in January.
“In this business environment, as a pilot you can’t go in there asking for the world. It’s just not going to happen,” DiMento privately told a group of FedEx evaluators late last year.
Next steps
The Master Executive Council plans to organize an informational picket on Wall Street on March 21 to coincide with the release of FedEx’s quarterly earnings, according to the letter.
Collective bargaining for airlines is governed under the Railway Labor Act, which is much more restrictive than general labor law.
Under federal rules designed to prevent work interruptions in critical interstate commerce, workers are prohibited from striking and companies from locking out workers until a lengthy series of bargaining steps, including federal mediation, are completed. The federal mediator has the power to hold the parties in mediation indefinitely.
Before a strike can take place, the National Mediation Board (NMB) must first decide that additional mediation efforts would not be productive and offer the parties an opportunity to arbitrate the dispute before a special panel.
If either side declines the arbitration, both parties enter a 30-day “cooling off” period, after which the parties can engage in self-help — a strike by the union or a lockout by management.
Arbitration in the airline industry is rare because both sides must agree to it. And, the NMB historically has been very reluctant to open the door to potential strikes, which airlines often use to their advantage in negotiations.
And getting to the point of a legal strike doesn’t end there. The law allows the president to create an emergency board to investigate a labor dispute and issue a report within 30 days if the parties reject binding arbitration. That is followed by another 30-day period to consider the board’s recommendations and reach an agreement. If no agreement is reached at the end of the second cooling-off period, the parties may take action.
The pilot union at Air Transport International, a cargo subsidiary of Air Transport Services Group, in late January also asked the National Mediation Board to end contract talks and allow the process to move to arbitration. The NMB rejected the request and directed the ATI pilots to return to mediated negotiations, said Michael Sterling, chairman of the ATI Master Executive Council.
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