So, is this latest production just another form of the infamous "red letter" from some years ago?

Remember, the company is NOT pleased with a couple of things...the result of the LOA bid and the unity and resolve displayed by a cadre of N/B instructors.

Could this be the power-play to get the Union to talk turkey on several issues?

It's my guess that it is. By threatening BLG rollbacks, bid cancellations, and potential furloughs the company is in effect putting the squeeze on the Union since by virtue of this news, we are putting the squeeze on our leadership.

Remember, we ONLY made nearly a half a BILLION profit this quarter! Asia is booming and driving all of our growth. I think they are bluffing. Who blinks first is yet to be determined.

 

Half a BILLION profit and this is how the pilot group gets treated?

Reading that FCIF reminded me of getting yelled at as a kid..."I'm going to take away this, the summer trip is CANX, going to have to take away that...blah, blah, blah!"

What bothers me is that WE are the most powerful and most important group in FDX...when will we start acting like it?

Let's see if ALPA buckles again.

 

I actually did think of the "RED LETTERS" as I read the FCIF. I had a different read on it though. I thought PC was rather complimentary of the pilot's contribution to the company. He made a point of saying he has NO PLANS TO FURLOUGH (at least at this point). I'm a bit concerned about the bad precedent of canceling bid awards but, it appears the contract permits it.

All-in-all, I saw the FCIF as simply stating facts (weak economy, over manned, 3-man to 2-man airplane transition, age 65, etc.).

Flight management is usually hesitant to put that sort of stuff in writing (I suspect for liability reasons?). I appreciated the straight forward professional tone of the FCIF.

Mark

 

FedEx is going to have to cut everything in order to stay in the green. The lawsuits from the independent drivers are really going to cut into the bottom line and will put a financial burden on the company like it has never seen.

First:

CHICAGO (Reuters) - FedEx Corp (FDX.N: Quote, Profile, Research) shares dipped more than 2 percent on Monday following news late Friday that U.S. tax authorities had found the company owed more than $319 million in taxes and penalties for 2002 related to its independent contractor model at FedEx Ground.
Estimates vary for how much FedEx may eventually asked to pay the U.S. Internal Revenue Service -- which is now reviewing FedEx's results for calendar years 2004 to 2006 -- but Credit Suisse analyst Jason Seidl wrote in a research note to clients entitled "FedEx Gets Coal in its Stocking" that the company "could potentially owe nearly $1.5 billion in taxes and expenses when all audits are completed."

This is just the taxes that the company will owe imediantly, after this initial payment they will have a tax liability of 350-450 million a year.

Second:

The drivers are challenging FedEx to change its classification of their positions -- they're treated as independent contractors -- so they can obtain overtime wages, reimbursements and benefits. Currently, FedEx requires contracted drivers to purchase or lease their trucks and pay for all operating expenses, including liability insurance, fuel and maintenance.
The lawsuits also seek reimbursement of business wages, deductions and damages as a result of FedEx's alleged "misrepresentation and unfair business practices," according to documents from lawyers representing the drivers. The suits claim FedEx takes illegal deductions from wages and fails to notify drivers of medical-leave rights.
The Massachusetts attorney general cited FedEx Ground for intentionally misclassifying 13 pickup and delivery drivers as independent contractors rather than employees and intends to fine the company $190,000 in penalties.

Five years ago the number was put at about 1.3 Billion a year to make them all employees annually. Fred is going to fight this battle very hard but has lost in every court case and the end is near. If he losses the class action lawsuit being filed in Indiana then things are going to get very difficult at FedEx. Sorry.

 

Sure so, let's cut pilot pay and mention furlough...that'll fix it.

Again, we are the most important and most powerful part of this company, when are we going to start acting like it?

 

I hate to be so negative Rat, but I would guess never.

 

So, let's see...There are about 15,000 "independent contractor" drivers. And you say, five years ago it would cost $1.3 billion a year to make these 15,000, employees?

My calculator says that would be about $87,000 each, annually, in additional costs.

That doesn't sound right.

 

I believe this includes a tax hit of over 350 million a year. FedEx would have to buy and maintain the trucks, health, retirement, and better wages. Many of the drivers make very little for the work that is done and want better wages. This is the reasoning behind the lawsuit. The number of 1.3 Billion is not my number and the article is to old on yahoo to pull up. This was the main reason that I chose to fly for UPS vs FedEx. I will post the article if I can locate it.

 

Here is all that I could find with some solid numbers.

While there are some contractors with multiple routes that make a profit, the majority of the contractors struggle to make ends meet. Every year, FedEx increases per package and per stop settlement payments but reduces the core zone settlement payment in essence making it impossible for drivers to make more money. In addition, FedEx mandates that drivers bear all expenses and buy their truck. The average operating expenses and benefits are approximately $15,000 to $30,000 annually. Drivers take home pay is significantly less than their gross earnings. Even FedEx’s recruiting materials show that the average contractor makes between $40,000-50,000 after expenses are deducted.

$30,000 for expenses
$30,000 to bring up wages to industry standards
Plus retirement
Taxes of 350 million yearly

Again these are not my numbers, so take it for what its worth.

 

Going soft on us?
Just ribbing ya'! I actually read it exactly the same way.

Our union has the opportunity to make some negotiating "hay" with this, though.