You’re asking what the company would save each year if a new TA put all new hires on an 18% DC plan with either cash-over-cap and/or MBCBP spillover instead of the pension.

FedEx does not save money on an annual cash basis by switching new hires to an 18% DC plan. The cost is higher. Based on the pilot group composition (gathered from the dashboard at FDX.ALPA.org) —roughly 46% widebody captains, 44% widebody first officers, and 10% narrowbody captains/first officers across the 777, MD-11, 767, A300, and 757—an 18% DC plan would cost the company approximately $359 million per year. This is based on a payroll of roughly $2.0B for 5,204 pilots By comparison, the annual pilot pension “service cost,” meaning the cost of new pension benefits earned this year, is about $85 million per year. On a year-to-year basis, the 18% DC plan costs FedEx roughly $274 million more per year than continuing the pension accrual.

Where the company would actually see long-term savings—and the reason they prefer DC for future pilots—is in liability elimination. Let’s assume FedEx retires 175 to 200 pilots per year, and let’s also assume each retiree ultimately receives about $120,000 per year from the pension for roughly 19 years. That would imply each retiree represents around $2.28 million in long-term pension obligations. Under those assumptions, each year’s retirement group would create between $399 million (175 × $2.28M) and $456 million (200 × $2.28M) in new long-term liabilities. Extending that over 20 years produces approximately $8 to $9.1 billion in cumulative new pension obligations.

Think of it like this…with a pension, the corporation still has retired pilots on the books. With a DC, the corporation only has to be concerned with presently employed pilots. A pension ties the company to every retiree for decades. A DC plan ties the company only to current employees.

A DC plan does not create any long-term liabilities under these assumptions. The company pays the contribution in the year it is earned, and the obligation ends. The pension, by contrast, produces decades of future payments and exposes the company to investment, interest-rate, and longevity risk.

So the answer is: FedEx does not save money annually by moving new hires to an 18% DC plan—annual cash costs are higher. The potential savings come from stopping the pension from generating hundreds of millions of dollars in assumed long-term liabilities each year. That long-term liability avoidance, not short-term cash savings, is the economic reason the company prefers DC for future hires.

Here is the TL;DR:

Pension cost ≈ $515 million per year (true economic cost)

vs.

18% DC cost = $359 million per year (pure cash cost)

• The DC plan costs more in yearly cash than the pension service cost alone.
• But the pension is far more expensive overall because it creates hundreds of millions in new liabilities every single year.

That is why FedEx wants DC—not because of annual cash savings, but because of liability elimination.

Here is an example of salaries I used to run the DC calculations at 18% cash over cap.

Seat/Fleet Avg Salary

Payroll %

CA

B-767

$465,000

24.82%

CA

B-777

$495,000

15.15%

FO

B-777

$325,000

14.91%

FO

B-767

$295,000

13.09%

CA

A300/310

$445,000

7.76%

CA

MD-10/11

$465,000

7.45%

FO

MD-10/11

$295,000

4.03%

FO

A300/310

$295,000

3.48%

FO

B-757

$260,000

3.34%

CA

B-757

$395,000

5.96%

I’m not saying these are numbers we should negotiate for. These are purely to have some numbers to run some formulations for comparison purposes only.

Here is the crew force I used for payroll assumptions.

767 Fleet

• CA: 973
• FO: 809
• Total: 1,782

777 Fleet

• CA: 558
• FO: 836
• Total: 1,394

MD-10/11 Fleet

• CA: 292
• FO: 249
• Total: 541

A300/310 Fleet

• CA: 318
• FO: 215
• Total: 533

757 Fleet

• CA: 275
• FO: 234
• Total: 509

Total Bidding pilots: 4,759

Total MSL pilots: 5,204

Disclaimer: All the warnings about public math and I am not an expert.