steamgauge

Rumors abound in the schoolhouse and on the line suggesting 200 to 1000 current pilots are redundant to our needs. We are told this is the result of fuel price increases and the global economic slump. In support of this conclusion we might be pointed to the company website for investor relations:

“For the three months ended August 31, 2008, FedEx Corporation's revenues increased 8% to $10.0 billion. The company reported net income of $241 million, or $1.23 per diluted share, down 22 percent from a year ago. Operating results declined, as strong cost management actions were more than offset by global economic weakness, higher fuel prices and the related negative effects of higher fuel surcharges. One fewer operating day at each of the transportation segments also negatively affected results.” (Investor Relations brief, FedEx Corporation - Investor Relations - Key Facts). Further support for this position can be found in the FY09 business update on our website showing roughly the same domestic volume we had in FY08 as we had in FY98. The domestic decline is partially offset by the almost 6% increase in international ADV. Yet, there is more to the story…

The 200 to 1000 pilots affected by these forecasts of imminent furlough need to understand a little history. Prior to the 2006 BC, JG*, & MW* contract, the company manning model offered little chance of furlough because the company did not hire a pilot until the current pilot utilization exceeded 130% of an average year of flying. At that point, the company believed it more cost effective to hire a new pilot than continue paying overage. Hence, the company would have to fly 30% below current levels to arrive at ALL current pilots flying just their average BLG! Yet, according to company guidance to investors our revenues are up 8% and we are still making a sizeable profit. So, why are we suddenly now overstaffed if overall ADV is down about 4% domestically and up 6% internationally? The answer may be found in the 2006 contractual changes (see § 25.F.1.c.):

F. Bid Period Phase-In

1. A phase-in conflict occurs when:

c. a pilot is awarded/assigned a recurrent training session in
conflict with a trip or block of R-days, as provided in Section
25.C.11.d.ii. or C.11.f.

Previously, recurrent training conflicts were handled by substitution. The undisclosed effect of this change is to force us to train on our days off adding to the number of days worked in a month. To add insult to injury, these extra workdays are paid at less than straight time (TOD = 4+30). This added language in the current contract also has significant pay penalties for those who are not senior enough to bid out of conflict. I’ll explain that in another letter. Here is why, in my opinion, we are now overstaffed:

4679 pilots x 5 days/yr average training = 23395 days formerly assigned VTO

added to

4679 pilots x 5 estimated days now TOD = 23395 days of RSV/line holders no longer lost to training

added to

4679 pilots x 3 estimated days lost to substitution (10 days recurrent training conflict per year with the average of 40% recovery by company in substitution less actual days in conflict ((10-5=5x60%=3)) = 14,037 days no longer lost to substitution and manned by reserves

Equals an estimated 60827 pilot workdays no longer needed!

If you figure about 14 pilot workdays a month x 12 months = 168 workdays/year per pilot. Then, 60827/168 = 362 pilots no longer needed.

Additionally, the company looks toward 80% reserve utilization as a standard. With the number of pilots forced to train on their days off or find makeup to regain the hours lost due to conflict, our reserve utilization has fallen to near 10%. Consequently, there are elements in management suggesting our reserve pilot levels are unsustainably high as well (in the neighborhood of an additional 500+ pilots too many). It should be noted an average pilot works fewer required days because of sick leave and vacation than the 168 days in this analysis. I understand the assumptions behind these numbers may be disputed with AQP changes to required training, seat differences, and non-MEM training versus MEM training footprints and other quibbles. But, what cannot be disputed is the devastating impact this concession in the 2006 contract has on the careers and seniority of us all.

In short, this means some 362 additional “virtual” pilots were added to the system by this one change to our first contract---more pilots, if you add the “Reserve manning standard” into the analysis. It is important to understand a 22% drop in profitability is not the same as a 22% drop in hours flown or pilots required. More likely, our customers are switching to lower cost modes of shipment such as second day and the like. Needless to say, we are not greater than 30% below business plan (at least not yet). Without the addition of §25.F.1.c. to our current contract, we would not be under any threat of a furlough.

Obviously, if current economic trends continue unabated this analysis would no longer apply and a discussion of the furlough clause would be in order. In any event, I hope this provides you a background for understanding the statements uttered by both management and union in relation to the job security of 20% of our fellow pilots. Also, it demonstrates the consequences of blindly following the recommendations of an MEC or NC.

(*Current members of the 2010 NC)

JustUnderPar

Biggs? You start another username?

DaRaiders

Hmmmmmmm. Interesting for a first time poster.

Anyway, your point is well taken regarding the "concession" we gave on training days.

Perhaps another ananlysis is needed to see if the company can drop the Min BLGs down to 48/60 so that they can, indeed, furlough.

Cargo Pirate

Nice first post.

⌐ AV8OR WANNABE

OMG! Biggs re-incarnated as a purple pilot?

BOYCAPTAIN

hey steamguage....some of your assumptions are correct and others are way off!!!...like the point of reserve utilization at 80%...company looks for 50%...some points are valid but your post is a stretch!

fedupbusdriver

Bottom line, no furlough at FDX. Too many players in HKG and ANC.

Pecan

Bob??? That you???

SeeDub

Well, who ever he is he got my attention.

I wonder if our union has crunched any numbers like that and what their results were.

FliFast

Is FDX bidding for the 777 and from what I hear at Sticky fingers wasn't the staffing on that plane kinda excessive ?

HKG still does not have the total number of F/O's--won't that staffing be filled first with permnt. bidders instead TDY'ers ?

Just curious..I'm not in the know. Just the Mayor, er messenger.

FF