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Why I am voting Yes

Old 09-25-2015, 03:02 AM
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Default Why I am voting Yes

I am going to share the reasons I am going to vote “yes” on this agreement. I want to make a couple of points clear. First, this wasn’t a easy decision, and I completely understand the frustration of those who choose to vote “no”. Second, I’m not going to belittle anyone regardless of his or her position, or debate on and on with anyone. I am just (at great risk I might add) sharing the reasons I think we can go farther with this TA than we can if we wait for the next deal. All our perspectives contain some bias, and my biased perspective comes as a WB captain living in an FDA. I looked at how the things I liked or didn’t like affected my family and me. The perspective I offer will be different than 4200 other FedEx pilots. A single LAX based FO, a divorced captain approaching retirement, or a flex instructor with special needs child will all likely have their own take on the goods and others in the deal, as will each of you. What I will offer, however, on the cautions going forward is the perspective of someone who has done a bit of work in and around ALPA since 2008 and someone who was there during the first interim contract.

There are some things I really like about the deal. They are:

Heath care is industry leading. The Purple Plan is a very good program, the buy up plan is preserved, and the Geo-Plan is improved. Premiums go up to a max of about $250 per family more in 6 years per month, and amount easily absorbed by the pay raises. The fact we even get to keep what we have is winning in this environment.

Six week bid months scared the Bejesus out of the crew force. I’d bid six weeks in advance every month if I could, but I understand that’s my opinion. Longer range visibility of my schedule helps me with both business and personal life planning. I don’t have a problem with 6 week bid months. My understanding is they company cannot use them without MEC approval now anyway based on a letter put out by the MEC recently.

FDA improvements are appreciated. As a parent with one child in domicile, the education improvement adds $10,000 after taxes directly to my family, or $60,000 after taxes during this contract. The flex or LAX FO may not benefit, but this is a huge win for our family.

Bidding for training dates is a win. Although I probably did my last upgrade at FedEx (unless we put 777s in Anchorage!), and made a bunch of money in passover pay, this section will help a lot of pilots. If you have big life events pending (weddings, college graduations, etc.) and are on the training later you are at the mercy of the company and your ACP if you need a day off. Now you can exercise your seniority and have a vote when you go to school. That’s a huge quality of life win for anyone who is considering an upgrade. If they screw with your training you still get paid, and you unlike passover pay don’t even have to fly that month to capture the windfall.

I like the secondary line improvements and the ability to ask for R days on a secondary line. You no longer have to burn vacation in a secondary line if you want to save it for later use or sell back. No involuntary conversions are also a win. I think trip trading is going to get a lot more effective with increase visibility of other trades and the ability to proffer trips. I like the fact that PMU is still an option and PMU pay is $125, giving me incentive to never say “yes” when offered sub.

The deadheading section is a tremendous improvement, albeit with the hotel in lieu and business/first class givebacks. When I look back at my 14 years here, there are many times I paid the company just a week after saving them thousands in the previous weeks. This contract eliminates that irritant. This TA also provides a business class seat for many of the intra-theater flights in Asia. As I weighed the HILO tradeoff, I reviewed how many times I used that section of the contract. The total was...well....zero. I have used bank money to travel when deadheads were cancelled, and the ability to use your bank to dash off to a Hawaii visit or Alaskan fishing trip is still there. I have done both of those, but the hotel was on me and I didn’t get paid per diem. YMMV, but I can find a hotel for under $200 bucks about anywhere in the world and with what I make leaving the extra per diem on the table doesn’t seem to be a huge loss. If you have back-to-back deadheads to the same place, you can still use it like we always have. In short—you still buy a ticket anywhere—FedEx just won’t pay for your hotel and pay you to go there. I don’t see that as a concession worth handing back 60-70k a year in increased compensation. The first class issue was discussed in road shows, and while you may be seated in business your travel bank is still credited at the first class rate. Deviate and make your own plans if you want a different seat. I was not LA or ANC based, but I did a lot of deadheading for 6 years as an MD11 FO. I typically got business tickets to Paris or Germany on Delta or American, and even once (ugh) to CAN on China Southern. I didn’t get any first class $10,000 Emirates tickets, so I didn’t see this as a huge change. Now in an FDA, I see the trips to the states twice a year for training as an area I might notice the loss. That said, I flew over in business on American for about $3,000 and it was nice. With the other gains in the section, I am not happy about the giveback but I can live with it.

Some sections left me quite disappointed. They include Pay (3) and Retirement (28).

The pay rates have been increased, albeit not as much as our pilots expected. One bit of perspective I will share is when we surveyed back in 2008-10, pay rates were not anyone’s top issue, or even in his or her top 4. As a pilot group, I don’t remember FedEx pilots clamoring for a better than a 3% raise until they saw their contemporaries at American and Delta get some major contract improvements over the last 2 years. That doesn’t mean pay isn’t vital, just that the NC wasn’t sent into the job with the mandate to get the highest pay rates ever seen. They were initially told to fix work rules, commuting, reserve, and unscrew 4a2b. Oh...and get us a raise too... If you draw a 3% slope since the 90s, we have pretty much averaged a 3% raise every year since then. The 2006 contract was no different, and the pilot group was largely happy with those rates. One subtle facet of this deal that I see overlooked is that for years FedEx hourly rates were at a discount to the legacy rates. In the 90s, we didn’t match Delta’s rates, but with our work rules, vacation, and other perks many of our crew force still matched or exceeded their contemporaries’ W-2s and overall earnings. After 9/11, our pilots moved to the top of the industry through the back door, as the legacies gutted their contracts. With this contract, however, for the first time FedEx pilots have established pay rates grouped at the top of the industry with hourly rates that match the highest rates at the legacies. This was NOT the case in the 1998 contract or past deals. We now have firmly established our hourly rates, not just our paychecks, at the top of the industry. With our work rules, vacation, insurance, retirement, etc. we are going to be making a LOT more than our legacy contemporaries. Don’t take my word for it—ask your legacy friends what they are making. I know there are some green slips at Delta bumping up some FO’s paychecks, but at the Jetlag last week I sat next to a Delta 777 captain who said he’s never made more than 250k a year. I think with these rates, the retirements coming at the end of 2016, and the general manning disaster at FedEx many of our pilots are going to make a lot of money on this contract at strait pay rates, and an absolute killing on some occasional draft, volunteer, and revision pay. I started getting WB captain pass in 2009, but by year 5 of this contract our FOs will be making more than that on straight FO pay. I understand 2019 dollars aren’t the same as 2010 dollars, but at those rates even our FOs are going to be doing very, very well. Everyone needs to look at the rates, take the calculator out, and figure out what they think they will make with these rates and the bump to the B plan. A 10% bump followed by a 3% raise is less than I anticipated. When I looked closer at the numbers, however, I came up with 60-70k the first year in increased pay. It’s less than I wanted. It might be less than we could have gotten. It is still a very good salary.

Retirement is the area I think is most disappointing in this deal. No improvement to the A plans means lessening of value of my future compensation. My “magic number” I wanted was a 300k cap, or a (before deduction) $150 vice 130k retirement salary. That’s 20k a year, or $1600 a month or so, before taxes, about 15 years from now. At strait pay, a 35 hour trip (typical FDA pairing) will pay $10,000-$11,500. So, if once a year, I get bumped from a trip, or pick up an extra trip, or get drafted for a 5 day pairing I can throw that money in my own investment account to offset the loss. Would I rather have FedEx just pay me more in retirement? Yes. But making 300k or so as a widebody captain or over 200 as a widebody FO gives our pilots a chance to make some pretty good money here and now, and then invest for their future as they see fit. My father died at 60. I hope to be 100. But either way, there comes a point when I focus on what I make now verses what I might be making in 15-25 years. Is passing up another 3-5k a month right now for a 1500 dollar benefit down the road smart, or should I grab the money now and invest some of it myself? I don’t like where are on the A plan in this TA. I am not sure, however, that all shifting to more of a “pay me NOW” mindset won’t work better for the entire pilot group.

Our retirement is going to change. The FAS laws changed in 2006, and they weren’t changed to protect pensioners. They were designed to protect the PBCG, or Pension Benefit Guarantee Fund. The new standard is that a company must maintain a much higher reserve, including the entire future liability for a new person in the pension. Those new standards make funding a traditional pension almost untenable once the benefit reaches a certain size. The goal of the PBCG was to drive pensions out of the DB game, and reduce future risk to the government, not to protect American workers. After bailing out several airlines, Bethlehem Steel, and other similar events over the years the government doesn’t want to be in the pension insurance business anymore, and want to shift (hint hint) the risk to you. They didn’t come out and eliminate pensions, but they have made it harder and harder to protect them. (Light reading: https://www.worldatwork.org/waw/adimLink?id=15322) At a certain financial payout point, the ability to make sure the fund rides the ups and downs of market cost more than the value of the benefit. (Google: Accrued Benefits funding method). The short version is a company is not required to have a pilots annual expected obligation funded, but the entire obligation funded he can expect in a lifetime once he or she reach a vesting age. The more participants, and the higher the payout, the higher the reserve required. At a certain point the responsibility to make sure the fund has enough reserve to meet the obligation when the market swoons 10-20% can swallow up an entire year’s profit. The monster gets too big to feed. That is not a failure of the NC, pilot force, or even the corporation—its a driven by Washington DC. If this TA passes, or if it fails, the action taken by the company and union will be the same....discussions on restructuring retirement are going to happen. Our junior pilots do not want an A plan that will not increase in value. Our senior pilots want more money out the door. There is room to do both, but not under the current structure. The Block 1 Rep can throw slogans out there or show stock prices for FedEx, but that doesn’t change financial reality or the legislative environment. There might be more money available for every pilot, but to capture the gains we will have to accept a newer structure. One idea being kicked around is a 25% target for a pension with a much larger DC plan. 25% of a 300-400k salary might be a reasonable number that can be managed, but once most of our pilots are making north of 200k (and they will on this deal) it becomes very difficult to provide a vessel that guarantees to pay 50% of the amount of the rest of your life. The high water mark for our DB plan has been reached, and I don’t think rejecting this TA will change that. We might get more for some, and less for others, but getting everyone on a 50% A plan that will be inflation protected forever going forward is just not a realistic expectation.

My prediction is we are going to do some work outside section 6 and address some rebalance options. What is the leverage? The leverage is if FedEx can reduce their future funding obligations (and we hear its a 3 dollar or 4 dollar payment for 1 dollar of pilot benefit) there may be a chance to improve our DC in exchange for a reduced DB obligation..

If I thought rejecting this TA would raise the cap to 300-330 on our A plan and increase our B plan at the same time I would vote no. I don’t think that is ever going to happen with the pension laws crafted they are now.

When I read the complaints about this TA, here are the 4 biggest warts Retirement, pay raise, first class changes and HILO gone in theater

If we kick this back, for the next 12-24 months we will be at current book. The improvements in work rules, Deadheading, and pay rates will be postponed. Some of the gains we gain in other areas may be lost if they are reopened. I would like to preserve the ground we gained in healthcare, section 25, and deadheading. But—supposing we COULD fix those warts, what would be a “good” target?

• Retirement—up cap to 300k. 2 % bump to B plan
• 15% pay bump and 5%/4%/4%/4%...
• First class ticket no change
• HILO—no change

What would that mean to me?

As mentioned, this would be worth $20,000 a year (if you had a 300k high 5) and an extra $2500 a year in your b plan above current TA. That is 20k and $5000 above current book.

WB capt pay would be $303-ish an hour. That’s $17000, or 1416 a month more than this TA. That part is real money. I’d like to have had a > 300 initial rate at DOS.

Nice. Twice a year I’ll use this. Some may use it a lot more...

Good for some—as mentioned zero impact to my family.

So, kicking this back, I am putting all the gains and a raise that matches the last 20+ year average raise here for $1500 a month, a couple first class tickets a year, and $1500 a month more in retirement. That’s not chump change. However, kicking it back is a business decision, not an emotional decision. I am looking at gains in the 60-70 a year range now. To get the extra $18k a year (and I think a 15% pay raise out the door is optimistic) I have to risk all the solid improvements already secured. This is the crux of the issue. Some posters think we can get the extra money by exerting some leverage and kicking the TA back. They think the risk will pay off. They think it will happen quickly. I do not.

When I review the votes by the MEC, I don’t think it is an anomaly that two of the four “no” votes came from reps that are on their first term as MEC reps. That is not a slam on Don, Dan, Anita or Mike. Mike has been around a long time, and we often disagreed on many positions. That said, I think he is sincere and doing what he thinks is best. I understand the anger and aggressiveness of the others, because I think I had similar thoughts in 2008 when I was elected. I think there is a fallacy that if we could just put together another, more aggressive NC and refocus our efforts the outcome will significantly different. I do not share that confidence. I have known the last 4 NC chairman, and worked with 3 of them as an MEC rep. Its a ***** of a job, and I have yet to meet one who was “perfect”. Every single one of them was fired or quit at some point. FE was removed/resigned after some disagreements with the MEC chairman. He went on to do good things in other area, but judging by the fact he brought up section 8 charges against some on the MEC I think its safe to say he won’t ever be selected to lead another committee again. JG did solid work supporting BC in 06, and worked again on the interim deals as committee chairman. I supported JG as our NC when we voted him in, and was confident in seeing some great things on the 2010 deal. When he and the team walked in with the first interim deal, which contained the CGN provisions and some FDA improvements, the FOQA and ASAP LOA, a 3% raise, and absolutely nothing else....after months and months of work....we were flabbergasted. That week we were 0 for and 12 against even offering the TA to the crew force. Eventually we did, for reasons beyond the scope of this discussion. The fact there was NOTHING else in that interim deal, after all time and effort put into the deal prior to that was devastating. So—when someone thinks JG is going to waltz in and “fix” what the current group didn’t do right, I will just say he damn sure didn’t get you anything extra in 2010, so I am not sure what 5 years out of the job will do to make it better next time. That’s not a personal slam—I don’t have a name of any white knight to go in and fix it for us. If anyone knows the ups and downs of the job, its JG. But he isn’t magic, nor has he proven any more adept at bending John Maxwell and the other side to our will than anyone else. Ironically, some of the same folks who say we have leverage now were the same folks saying the interim deal was good deal, even though what we have now exceeds the interim provisions in every way. The next guy...RI...is a smart and insightful guy. Sometime after I was off the MEC friction with the MEC led to him leaving. Apparently, he was also not a white knight to solve our problems either. Now SL is in the job, and now he is taking insults and slams from the crowd. Folks, I haven’t seen a single pilot we have sent come back with a “wow” offer. What this group did secure that others did not, however, was some real improvements in section 25 building on some (I thought) real gains in the 2006 deal. This pilot group reminds me of college football fans of a 3-8 team that think they are going to go 11-0 if they just hire a new coach. I don’t, because I’ve seen nothing but lukewarm results from any of them. Wonder why they aren’t more effective at the table? Don’t get ****ed at the FedEx pilot in the suit working for you....go ask that guy on a draft trip how he likes the deal. Apparently, current book is just great for some... Its not the man in the suit they negotiate with, its the rest of us. And some of us still don’t get that...

The other reasons I don’t think we will prevail anytime in the next 12-24 months are wet leases. If the company leases 20 planes, walks all over the scope clause and moves the freight this peak they can either pay us back out of the profit or negotiate the payments away in the subsequent TA. They might do this in exchange for other gains, or perhaps even make us pay twice for what we already won in the last round. I do think there is leverage in the number of potential retirements looming, but at the road show it was pointed out the most common age to retire is 64. Pilots are going to work until the last possible day. The threat of 300-400 guys leaving this peak could be an issue, but it seems nobody will leave for fear of leaving too much on the table. I do not expect a max exodus of pilots walking off the property in disgust, even though its the one thing that could probably create havoc for fleet planners. One of the dissenting voters on the TA was a big age 65 supporter, and actively campaigned for the retroactivity provisions the led to the excess bids of 2008-2010. He and others on the MEC at the time said the expected “new” retirement average age would be 62. It isn’t. Its 64. Now he says a new NC will fix our problems. I thought he was wrong in 2007/2008, and while I wish he were right I don’t think he is any more correct in 2015 on this issue.

One thing JG did bring back to the MEC when I was there was a proposal on increasing 777 pay rates via an override for flights over a certain length (I believe it was 11:35...). Many on the MEC—including me—were eager to instead arbitrate the rates using section 26k of the contract. The ALPA National negotiators, our own counsel, and several MEC members recommended considering the override offer. In my own case, like many on these APC boards and Jetflyers, I had a head full of steam and was pretty confident I was right and we would prevail in arbitration. We know how that turned out, and in the years since I shudder to think about how many trips would have met the over-ride trigger, and how many hours at $24 for Captains and $17 for First officers that we let slide through our fingers. In all the years since, we’ve never improved the 777 pay rate, nor had the override offered as an option again. The ULR override will be nice in the TA if we ever fly over 16, but we missed the chance to put millions of dollars into our crew force’s hands on much shorter trips, and I in hindsight I think we made a mistake. I do not want to see us miss locking in gains when we see a chance to make a solid move forward. It was partly because of this experience that I supported the interim deal. For similar reasons I think capturing the gains offered now on this deal, especially in sections 3, 8, and 25 make it worth signing.

This is a business decision. Each of you may think you are labor, but you are also a business owner—You.INC. Do the math and figure out what you gain in this deal. Write it down, and add it up. Next, subtract what you lost. Then—figure out what you want to get, and what you honestly think you can extract. Ask how long you think it will take. Compare what you think you can extract down the road to what you are offered now, and then make your best decision. In my case, I am mad about some of the givebacks and disappointed at gains that are lower than I wanted. But when I crunch the numbers, and really look closely, I see a fairly good raise, some solid improvements to work rules, and a chance to get back to work at the top of the industry. Based on my past experience, I think delays will gain us much less than some on the boards think we will capture.

Some of my great friends and many former clients are currently clamoring “no”. Lots of pilots I like and respect are on the “no” list right now. I hope that by sharing my thoughts I don’t jeopardize those relationships. Its not fear that drives me to support this TA, but instead just a tough business decision. I think I will make more money, both long and short term, if we secure these gains and move on. I am not afraid of a fight—conversely I was too eager to fight before and I helped lose some of YOUR money. I think anyone who knows me knows that am not afraid to lean forward when I can and I have used our contract to my advantage many times here at FedEx. I was one of the original “proponents of hysteria”, and have been a load and vocal critic of our MEC at times past. But I also know after watching the NMB in action, arbitration battles, and some of what I’ve seen in DC how incredibly difficult it really is to apply your perceived leverage to good effect. I think some pilots are being driven largely by emotion at the moment. That doesn’t mean saying no is emotional and saying yes is rational, just make sure that whatever your vote finally is that you do some math and give both outcomes some serious thought.

If we turn this down, we’ll wait a while for a deal. There will be some union chaos. The company will push us on scope and work rules for a spell. I’m not afraid of any of that, and my current life and contract and pretty darn good. If 51% or more say no, I will support the team with 100% of my effort and sincerely hope their efforts are rewarded with a better deal. I just hope we don’t have to pay twice for gains we have already secured. Whatever we decided as a group, you can count on my support. For now, however, I am going to vote yes for the reasons and concern’s I’ve outlined.
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Old 09-25-2015, 05:06 AM
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My personal bugaboo is the 8 in 24 daytime relief, what were they thinking? It could really mess up my schedule. But it is not about me so I am voting yes to get new hires 100 bucks an hour at an FDA.
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Old 09-25-2015, 05:10 AM
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Excellent post Albie.
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Old 09-25-2015, 06:08 AM
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I'm with Albie.

Let's vote this one in, and start a commission of trusted souls to begin designing our retirement solution.

It's the time value of money, folks. We'll never get back what a 2-3 year delay will cost.
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Old 09-25-2015, 06:20 AM
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Fantastic post Albie. Thank you for sharing.
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Old 09-25-2015, 07:05 AM
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Rock and FDXLAG take note. This is how you make a cogent argument on the yes side.

While I still disagree with Albie's final analysis, I respect him and understand his reasoning. Just as he said in his post, he's looking at it as an FDA WB Capt, I'm not -- different result. That said, I wish my NC could have produced something that produced a more uniform distribution. It is a shame that the disproportionate distribution of this TA can cause it to look so different depending on who you are.

Well laid out Albie. I hope your internet service drops when it's time for voting. I'm still a no -- by a lot.

To delay for 6-10 years taking up a fight that you know must happen seems irresponsible to me. You acknowledge in your arguments that it's got to get done--so let's get it done. Take the retirement issues for example, if you allow 6-10 more years of inertia to develop, I personally think the odds of changing it significantly approach zero. I can't think of too many instances where procrastinating brings positive results.

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Old 09-25-2015, 07:12 AM
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Great post! I am voting yes also and I think the company will soon be ready to negotiate a new side letter on retirement if this contract is approved. JMHO.
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Old 09-25-2015, 07:23 AM
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Originally Posted by Huck View Post
I'm with Albie.

Let's vote this one in, and start a commission of trusted souls to begin designing our retirement solution.

It's the time value of money, folks. We'll never get back what a 2-3 year delay will cost.
Exactly. The delay in getting a new, marginally better T/A will be expensive.
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Old 09-25-2015, 07:27 AM
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Thanks for the well articulated post. I am in agreement. Sure we would all like more, but the 18-24 months (IMHO) it would take for TA2 would likely not have enough improvements to compensate for the time delay. Agreeing to the TA does not take further negotiations/improvements out of the options box, it merely allows us to continue moving forward. Just like investing, slow and steady wins the race. Betting on a high flying investment (like betting on a vastly improved A plan) is risky and statistically unlikely to pay off.

BTW thanks for posting the link on the pension history. I will read it shortly on my next DH.

Last edited by md11freightdog; 09-25-2015 at 07:28 AM. Reason: clarity
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Old 09-25-2015, 07:39 AM
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The info leaked about a month ago while I was on a 10 day trip. Since then I have flown with no less than 20 different pilots. With close friends and all I have heard one NO and two on the fence voters.

I'm with Albie!
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