Connect and get the inside scoop on Airline Companies

Welcome to Airline Pilot Forums - Connect and get the inside scoop on Airline Companies

If this is your first visit, be sure to check out the FAQ. Join our community today and start interacting with existing members. Registration is fast, simple and absolutely free.


User Tag List

Post Reply
 
Thread Tools Search this Thread
Old 11-18-2009, 03:57 PM   #1  
Gets Weekends Off
Thread Starter
 
Gunter's Avatar
 
Joined APC: Aug 2006
Posts: 3,931
Default FDX - Will 4a2b be permanent?

From a well thought out, and positive, article this part caught my eye.

Quote:
over the past 18 months, FedEx has slashed costs by about $3 billion; half those cuts are said to be permanent. The reductions have involved, among other things, cuts in base salaries...
Still Packing Up Profit - Barrons.com


I think the plan is to make as many of our "optimizations" and "cuts" as permanent as possible. Are they setting the stage now for a new baseline of precedent? What can we do to prevent these grabs from taking root forever?
Gunter is offline  
Old 11-18-2009, 04:08 PM   #2  
Gets Weekends Off
Thread Starter
 
Gunter's Avatar
 
Joined APC: Aug 2006
Posts: 3,931
Default

The article -

Quote:
Still Packing Up Profit

By LAWRENCE C. STRAUSS

The package-delivery giant is set to serve up outsized earnings in the next economic upcycle, due in part to its growing global presence.


FEDEX SHARES HAVE MORE THAN doubled since closing at 34.28 on March 9, handily outpacing the Standard & Poor's 500 Index, as investors poured into cyclical stocks likely to rebound early in an economic upturn.

Although the global economy remains shaky, FedEx (ticker: FDX) has upside for the long haul. It has a growing footprint in big overseas markets like China, enough operating leverage to boost earnings when volumes ramp up, and solid growth at its very profitable FedEx Ground unit. In fact, FedEx and its main rival, United Parcel Service (UPS), "are likely to become a global duopoly, and both companies have nearly insurmountable barriers to entry," says Keith Schoonmaker, a senior stock analyst at Morningstar.


The industry's tough dynamics were illustrated when Germany's DHL pulled out of the U.S. domestic package-delivery business in January. But there are stirrings of an economic recovery, as evidenced by FedEx's projection that on Dec. 14, which it expects to be its busiest day in 2009, it will transport more than 13 million packages -- compared with 12 million on 2008's peak day. That's a roughly 8% increase in volume. On average, it ships more than 7.5 million packages daily.

When the economy recovers, "FedEx will be in an even better position than it has been in the past," says Rob Pickels, a senior analyst at asset manager Manning & Napier, which owns FedEx shares. He estimates that the company, which had profit of $3.67 a share for its most recent fiscal year, can earn $7 to $9 in a more normal economy. "Maybe it takes a while for demand to get back to prior levels," Pickels adds, "but FedEx is leaner and will have more market share and more earnings power in the next upcycle." FedEx made $6.67 a share for its fiscal year ended May 2007, before the economy tanked.

Launched in 1971, the company has evolved from a speedy-delivery organization into a multifaceted transportation specialist, having expanded into areas like logistics support. FedEx can bundle a suite of products to customers. Its 65-year-old founder, CEO Frederic Smith, has been in charge for nearly 40 years, and shows no signs of slowing down. "I don't have any plans to go anywhere for the foreseeable future," he says.

FedEx shares have been a good investment over the past 10 years, with a total annual return of 5.7%. That's way ahead of larger rival UPS, whose annual return is minus 0.3%, and the S&P 500, which is at minus 0.9% for the span.

The company's most recent earnings results, which beat expectations, nonetheless illustrate many of its obstacles. An asset-intensive operation, FedEx has budgeted $2.6 billion this fiscal year for capital expenditures, including new aircraft. Its profitability hinges on revenue growth to offset those high fixed costs. For the quarter ended in August, revenue slid to $8 billion, down 20% from a year ago, amid the weak economy and lower fuel surcharges. Net income was 58 cents a share, down from $1.23. Operating margin fell to 3.9%, versus 6.3%.

But FedEx has considerable operating leverage. When revenue does improve, its costs won't grow as quickly, thereby boosting profit. What's more, over the past 18 months, FedEx has slashed costs by about $3 billion; half those cuts are said to be permanent. The reductions have involved, among other things, cuts in base salaries, merit raises and 401(k) matches.

BY FAR THE LARGEST REVENUE producer is FedEx Express, a global-transportation network that reaches more than 220 countries. For fiscal 2009, which ended in May, the Express unit accounted for $22.4 billion, or nearly two-thirds, of total revenue. With its unionized pilots, extensive fleet of aircraft, landing fees and other costs, it is an expensive business to run. Hence its operating margins are typically lower than those of FedEx Ground. However, Express boasts healthy operating leverage, especially internationally. When global trade fully revives, it could get a nice boost.
[Fedex chart]

Meanwhile, FedEx Ground, which covers North America and Puerto Rico, "is a great diversifier to help the company protect its margins during hard times," says Morningstar's Schoonmaker, who puts FedEx stock's fair value at 101. In the most recent quarter, Ground's revenue was down only 2%. One reason for Ground's superior operating margins is that it has significant variable costs, in great part because it uses independent drivers, working under the FedEx brand. These pickup and delivery contractors' weekly compensation is largely based on the number of stops and packages. Last year, the ground unit accounted for about 20% of total company revenue, compared with 11% in 2000.

Also encouraging is that FedEx has increased its share of the U.S. domestic ground-parcel market to 22%, as measured by volume, from 10.6% in 1999, according to the Colography Group, a transportation-consulting firm in Atlanta. UPS's share fell from 75.3% to 67.7% over that stretch. (FedEx also has picked up market share in its Express and Freight operations, Colography says.)

The use of the independent contractors, however, is a concern to some. This arrangement has led to a fierce legal fight between FedEx and the Teamsters union, which represents UPS employees. The dispute hinges on whether independent contractors should be classified as employees, thereby making them eligible to join a union. FedEx maintains that the contractors run their own businesses. In a big victory for FedEx in April, a federal appeals court ruled that FedEx Home Delivery contractors at two Massachusetts locations were properly classified, overturning an earlier ruling by the National Labor Relations Board. If this classification ever is overturned -- and several legal challenges remain -- it would hurt the company's bottom line. However, "it feels like FedEx has been winning more battles than it's been losing in the recent past," says Justin Yagerman, a research analyst at Deutsche Bank who rates Fedex a Buy and has a 12-month price target of 98, or 20% higher than the stock's current level.

One of the recent bright spots for Ground is Smart Post, which specializes in smaller packages delivered from businesses to consumers, with the U.S. Postal Service handling the last leg of delivery. This enterprise dovetails with the growth of e-commerce.

FEDEX FREIGHT IS IN A TOUGH stretch, owing to poor pricing and excess industry capacity. Revenue fell 27%, to $982 million, in the first quarter, and margins shrank. Nevertheless, competitor YRC Worldwide (YRCW) has struggled under a huge debt load, while FedEx has a much stronger balance sheet. "FedEx is probably more focused on market share and building up a long-term book of business" in freight, says Yagerman. For now, FedEx has better pricing power in Express and Ground, where it plans to pass along rate increases in January.

While the economy remains FedEx's biggest wild card, there are encouraging signs, among them U.S. gross-domestic-product growth at an annualized 3.5% in the third quarter and a 0.7% increase in U.S. industrial production in September. And FedEx's Ground and Freight segments notched positive month-over-month volume trends during its most recent quarter, while International Priority's shipping volume within the Express unit rose for a second straight quarter.
[chart]

Even amid the downturn, FedEx has continued to invest heavily in its infrastructure. One area it has focused on: better aircraft and related equipment, on which it's spending $1.2 billion this fiscal year. For example, Boeing 777Fs cut travel times between the U.S. and Asia by one to three hours, compared with FedEx's existing MD-11s, and are much more fuel efficient. By next April, the company plans to have four 777Fs in service, and it plans to add many more over the next decade.

Randall Haase, who runs the Baron Fifth Avenue Growth Fund (BFTHX), which has a FedEx stake, says that the company will capitalize on the growth of global trade, ramped-up e-commerce, and just-in-time inventory restocking. "They are in a great position," he says.

FedEx gets about 25% of revenue overseas, but that will rise, given its strong footprint in China -- it opened its Asia-Pacific hub in Guangzhou -- as well as India, Mexico, Canada and the U.K. Says CEO Smith: "We have a huge opportunity to expand our international business, and we are doing so."
The Bottom Line

Buoyed by its profitable ground unit, growing overseas business and good operating leverage, FedEx looks like a good investment bet. Its shares, at 82, could climb to about 100.

FedEx deserves kudos for its overall strategic plan and vision, but some critics say it overpaid for copy-shop Kinko's, which it acquired in 2004 for $2.4 billion. "Kinko's is an asset-intensive drop box," says Morningstar's Schoonmaker. "And buying a copy shop turned out to be ill-timed, due to increasing use of electronic media and home printing."

FedEx argues that the FedEx Stores, formerly Kinko's, provide an entree to the retail market and generate about $1 billion in annual package revenue that is very profitable because walk-in customers typically pay up for its services. And it has added Web-based capabilities for customers.

In any case, says Baron Fifth Avenue's Haase, "as the economy gets better, their business is going to improve tremendously." In the meantime, FedEx is delivering enough value to keep long-term shareholders happy.
Gunter is offline  
Old 11-18-2009, 04:34 PM   #3  
Gets Weekends Off
 
MajorKong's Avatar
 
Joined APC: Dec 2007
Posts: 169
Default

In the meantime, FedEx is delivering enough value to keep long-term shareholders happy.

That is why I am in this business-to keep the shareholders happy at my contractual guaranteed expense. They can kiss my cab driving a$$.
MajorKong is offline  
Old 11-18-2009, 04:51 PM   #4  
Gets Weekends Off
 
NoHaz's Avatar
 
Joined APC: May 2007
Position: let it snow, let it snow, let it snow
Posts: 750
Default

Quote:
Originally Posted by MajorKong View Post
In the meantime, FedEx is delivering enough value to keep long-term shareholders happy.

That is why I am in this business-to keep the shareholders happy at my contractual guaranteed expense. They can kiss my cab driving a$$.
.... and to think I've been doing this for the money all along. How shallow and un-new-american of me. I think I'll buy some carbon credits and make myself feel more worthy and I promise not to complain about my next trip revision.
NoHaz is offline  
Old 11-18-2009, 06:10 PM   #5  
Line Holder
 
sparkmo's Avatar
 
Joined APC: Aug 2006
Position: MD11
Posts: 49
Default

4.A.2.b should be here for some time with the fast an loose scheduling going crazy. ANC 2189/25Nov has a buisness class 2 leg dh (SEA-HKG) with 1815 block and 2045 duty - so much for having a contract
sparkmo is offline  
Old 11-18-2009, 08:37 PM   #6  
Gets Weekends Off
 
MX727's Avatar
 
Joined APC: Aug 2006
Position: 1559
Posts: 1,492
Default

If it didn't go away for peak, I don't see it going away through the spring.
MX727 is offline  
Old 11-18-2009, 08:41 PM   #7  
Gets Weekends Off
 
PurpleTail's Avatar
 
Joined APC: May 2006
Position: HKG
Posts: 514
Default

Quote:
Originally Posted by Gunter View Post
I think the plan is to make as many of our "optimizations" and "cuts" as permanent as possible. Are they setting the stage now for a new baseline of precedent? What can we do to prevent these grabs from taking root forever?
Pray, and I do mean pray, for an arbitrator that has some common sense and can logically apply the intended language of 4.A.2.b. We need to have some faith in the process, as painful and lengthy as it is, and hope for the best. The company will test every limit they can that benefits them and the bottom line. You my friend are nothing more than a cog in the system to them. Any and ALL loose language in the next contract must be cleaned up.
PurpleTail is offline  
Old 11-18-2009, 08:56 PM   #8  
Gets Weekends Off
 
hyperone's Avatar
 
Joined APC: Oct 2006
Position: 777 Capt
Posts: 402
Default

Quote:
Originally Posted by sparkmo View Post
4.A.2.b should be here for some time with the fast an loose scheduling going crazy. ANC 2189/25Nov has a buisness class 2 leg dh (SEA-HKG) with 1815 block and 2045 duty - so much for having a contract
I hope whoever gets that pairing lets Scheds know that that is an illegal sequence when they are assigned the trip. And I also hope they know can deviate from the scheduled d/h and get a first class, direct ticket, with the new accepted fare being whatever the cost of that new first class, non-stop ticket is.
The relevant sections of the CBA are:

Chap8.A.4.c.iii.
If the deadhead is scheduled for more than 16 hours duty, the following shall apply:
(a) The flight must be a non-stop flight.

Chap8.C.3.a.v.
If a pilot scheduled for a nonstop deadhead over 16 hours on duty, who is not booked in first class, deviates from the scheduled flight in order to obtain first class on another carrier, the following shall apply:
(a) the pilot shall include with his deviation expense report an e-mail from corporate travel indicating that first class was not available on the originally scheduled flight at the time the booking was made; and
(b) the provision of the e-mail in Section 8.C.3.a.v.(a) (the preceding paragraph) shall entitle the pilot to be reimbursed for his deviation ticket up to the full fare first class cost of a direct, nonstop deviation flight on the planned routing, regardless of his deviation bank value.

Might be worth giving your SIG in ANC a heads up to prevent some guys having a lot of pain getting that pig fixed.
hyperone is offline  
Old 11-18-2009, 10:03 PM   #9  
Gets Weekends Off
 
vschip's Avatar
 
Joined APC: Aug 2006
Position: 11 f/o
Posts: 149
Default

Quote:
Originally Posted by sparkmo View Post
4.A.2.b should be here for some time with the fast an loose scheduling going crazy. ANC 2189/25Nov has a buisness class 2 leg dh (SEA-HKG) with 1815 block and 2045 duty - so much for having a contract
If anyone sees a new x-pairing, and something doesn't look right, please read the following and let the new ALPA committee deal with it(from FDXMEC 100 fastread 11/17/09):

Here's a plug for the new Operational Revision and Xtra Pairing (ORX) Sub-Committee. There are many X-pairings and trip revisions in our system and the Association has no collective visibility into these pairings and their adherence to the CBA. You are the eyes and ears for the union. Please e-mail [email protected] if you know of or are assigned a pairing that you believe to be questionable or outside of the build parameters. Please provide a pairing number, date of operation and a short description of the issue at hand and email it to [email protected]. Again, it does not need to be a pairing that you are assigned; we've already had a third-party ID of a revision that wasn't in accordance with the CBA.
vschip is offline  
Old 11-19-2009, 06:04 AM   #10  
Banned
 
Joined APC: Aug 2006
Posts: 257
Default

YES!

$4a.2b WILL be permanent. We lost.

So,
1 You ll work less for less for some. Others will work more for less since the are JR.

2. You'll study more on your own time see HUD (11) or S.Amer (30). See #1 work more for less.

3. You'll print all your own bid packs. Costs you time and $.

4. You'll print your own manual if you want a paper copy....

WE LOST !

Id take bets and give Odds just know how to collect WE lost 4a2b 2:1
skeebo2 is offline  
 
 
 

 
Post Reply
 



Thread Tools Search this Thread
Search this Thread:

Advanced Search


Related Topics
Thread Thread Starter Forum Replies Last Post
FDX - NWA/Delta Miles Compilation Lindy Cargo 35 02-07-2010 01:27 PM
OK, you can end 4a2b now (FDX) KnightFlyer Cargo 23 11-12-2009 07:10 PM
FDX Trick or Treat: Embracing 4a2b? NightBusDriver Cargo 37 11-03-2009 07:12 AM
FDX Insider Sales Timeoff2fish Cargo 0 09-26-2009 06:57 AM
Proposed RLA Change for FDX Rambler Cargo 8 03-12-2009 07:59 AM


All times are GMT -8. The time now is 03:20 AM.