Negotiating Committee Message 
October 1, 2015
It was great seeing many of you during the recently completed roadshows at all six of our bases around the system. Participation was high and the majority of each stop revolved around answering your questions. It’s important that you took the time to attend and participate. There is a final roadshow scheduled for Tuesday, October 6th at the Germantown Center. We look forward to seeing you there.
We have received some questions surrounding the costing of this tentative agreement. Like all ALPA carriers (and several non-ALPA carriers, too), we used the Economic and Financial Analysis Department of ALPA National (“E&FA”). E&FA used standard costing methodology with models specifically built for FedEx Express pilot demographics, operations and CBA provisions. The models generated the estimated costs of various table positions and eventually, the tentative agreement. We also used analyses provided by other national carriers during their negotiating process. The costing methods used by E&FA are the same ones we used in past negotiations and are accepted as ALPA standard. E&FA's work is widely respected by other industry participants and the National Mediation Board. We are firmly confident that these methods produce reliable and accurate information.
Every agreement has areas that simply cannot be costed beyond an educated guess. This TA is no different in that respect. However, ALPA E&FA was able to cost many areas of the TA. Below are some of the costing estimates that were provided to the MEC during negotiations1.
• Estimated Average Annual Amount Per Pilot2 (excluding Signing Bonus, International Upgrades, Flight Pay Loss, and Known Crewmember):
◦ American Airlines $25,000
◦ Delta Airlines (failed TA) $30,000
◦ FedEx Express TA $60,000
• FedEx Express TA:
◦ Total Amount to Pilot Group in Year 1 $150.2M
◦ Total Amount to Pilot Group per Month in Year 1 $12.5M
◦ Total Amount per Pilot per Month in Year 1 $2,988
Total increased cost of this TA to the Company is over $1.67 billion dollars over the 6-year duration.
Section 3 ($1.42B)
• Compensation ($1.24B)
◦ 10%, 3%, 3%, 3%, 4%, 3%
• Retro Signing Bonus ($145.2M)
◦ $134M to pilots pursuant to ALPA Lump Sum distribution policy and methodology developed by MEC Bonus Advisory Group. The difference between $145.2M and $134M is attributable to DC/DB contributions (the retro signing bonus is fully pensionable) and & employer-paid taxes (FICA and Medicare).
• International Override Increases ($6.1M)
◦ $10 per hour TAFB for Captains
◦ $8 per hour TAFB for First Officers
• Ultra-Long Range Premium ($0.00)3
◦ $24 per CH for Captains
◦ $17 per CH for First Officers
◦ Pays for entire trip guarantee if at least one flight sequence is scheduled for over 16 block hours (currently no flight sequences are scheduled in excess of 16 block hours)
• New Hire Increases ($24.5M)
◦ Training pay increase to $4000 per month
◦ FDA 1st year pay increased to $100 CH
Section 5 ($7.6M)
• Per Diem Increases
◦ Domestic
▪ .10 at DOS
▪ .05 at DOS +2 years
◦ International
▪ .10 at DOS
▪ .10 at DOS +2 years
▪ .10 at DOS +4 years
Section 8 ($29.4M)
• Higher class of service required for all flights 2+30 block or more internationally
Section 11 ($14.8M)
• Instructor Pilot and Check Airman Override increases
• Standards Check Airman Premium increases
Section 12 ($25.5M)
• Change of 36-in-168 to 32-in-120 rest provision
Section 18 ($1.4M)
• Increases in Flight Pay Loss Bank for safety programs
Section 25 ($2.9M)
• Reserve Period change penalty extended to all RP changes
◦ 1+30 CH per block change
• Soft R-Day moves
◦ 3+00 CH per move
Section 26 ($2.0M)
• Uniform allowance increases
• Known Crewmember
Section 27 (-$23.1M)
• Savings to the Company (compared against current plans) based on ALPA's assumed trend rate of 8% medical inflation for all plans (over 5 years) beginning in 2017
Section 28 ($212.5M)
• DC improvements ($91.1M)
◦ +1% at DOS
◦ +1% at DOS +4 years
• Sick Leave Buy-back ($68.4M)
• Advance Notice to Retire ($53M)
◦ Based on chart found on page 534 of the TA
FDA LOA ($2.2M)
• Increased Tuition Assistance
As you can see, these numbers represent a substantial increase in value to our pilots. The numbers were derived through a standard costing process designed to provide a clear and reliable analysis of the value contained within a TA. We encourage you to consider them as you make your decision. Thanks again for your active participation in the ratification process.
See you on Tuesday!
Scott, Bill, Tom, & Andrew
◦

1 These numbers are based on 4,190 pilots on the Master Seniority List and final TA language as of August 19, 2015.
2 Stated value of new money in the contract divided by the number of years of the contract divided by the number of pilots at DOS.
3 FedEx currently has no FAA authority for ULR flying.

The numbers above were sent to us by the Union. Let’s take a look at where the money goes. Values in decreasing order.

Total Value 1.67 Billion
-1.2400B for compensation
-0.1452B retro signing bonus
-0.1214B Combined Sick Buyback and Advance Notice to Retire
-0.0911B Defined Contribution Upgrades
-0.0294B International Higher Class of Service
-0.0255B Cost for Rest Provision Inefficiency
-0.0245B Newhire Compensation
-0.0148B Instructor And Check Airmen Upgrades
-0.0076B Per Diem
-0.0061B International Override
-0.0029B Scheduling Penalties

Who got what?
Compensation everyone got the same raises. By virtue of seat position Captains made more. Industry standard.
Retro Signing Bonus everyone received relative percentages based on seat position.
By Virtue of seat position Captains made more. Standard
Improvements to DC plan. Captains due to pay rates received more, limited by IRS cap limits.
With those 3 high cost items out of the picture, with the Captain seat receiving significantly more total dollars, what remained?
Remaining funds totaled 194 million dollars.
Funds dedicated solely for retirement incentives, sick buyback and advance notice of retirement. 121.4 million dollars. That’s 63% of all remaining dollars.

Quality of life issues, a cornerstone issue. Not addressed. Who is most affected?

Scope, No changes.

Healthcare, another cornerstone issue. $23.1 million dollar GIVEBACK. That’s not a misprint.

Retirement, most members heavily in favor of maintaining the Defined Benefit Pension. No mention during negotiations about changing retirement plans.

121.4 Million dollars specifically designated for members due to retire within the formal duration of this contract. And yet, only 4 months after the the contract was implemented, the Union, at the direction of whom, decides to invest tremendous time and considerable money into changing our current retirement plan.

Moral Obligation?

Simple question. Would the contract have passed if it had a provision creating a new retirement system?