5 Things FedEx Management Wants You to Know
 

5 Things FedEx Management Wants You to Know

Here's #3, highlights mine:


New pilot contract won't hurt earnings

We think it's a win-win contract. It is in our outlook for not just this year but our strategic outlook [...] where we [...] are expecting to continue to grow our earnings, our cash flows, and our returns. -- FedEx CFO Alan Graf

FedEx reached a tentative contract agreement with its pilot union last month. The pilots haven't ratified it yet, but if they do, they will get raises averaging 10% in November, with steady annual raises for the next five years. The agreement also provides a signing bonus of $20,000-$35,000 (depending on seniority) to make up for missed raises in the past couple of years.

While this was a fairly generous contract offer -- and FedEx's pilots were already near the top of the industry in pay -- FedEx's management stated that it won't impact the company's projected profit growth trajectory. Other productivity-enhancing initiatives will more than offset the pilots' higher pay.






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And here's the rest of the article, as applies to us, from the Motley Fool. Apparently they've decided that we are going to vote it in:

Pilots Are About to Get a 10% Raise -- What You Need to Know -- The Motley Fool

"Now consider that although richly compensated, FedEx's 4,200 pilots only represent only about 1.3% of FedEx's 325,000 "team members." Even a large 10% increase in salaries, when applied to such a small sliver of FedEx's workforce, probably isn't going to break the bank -- or even appreciably raise overall labor costs for FedEx.

Simply put, while the money FedEx pays its pilots may boggle ordinary American workers' minds, this is a raise that FedEx can easily afford to pay. And even in the unlikely event that the pay hike does start to pinch profits -- hey, December is just around the corner. FedEx can always hike its prices by another 5% (as it does pretty much every year, like clockwork) to cover the difference.

Problem solved."

Sounds like our Block 1 Rep, DR, was on to something...

Proof that it is just another cost neutral contract.

Is the TA cost POSITIVE (they actually make a profit!) for Management and they just don't want to say that to stock holders until after it's signed?


:eek:

Yes, probably FedEx makes billions of dollars on this TA, by changing the deadheading rules to allow lie flat seats.:rolleyes:

Notice the article claims that FedEx's management states these things, but doesn't say who that is. They make their own conclusion. Does anyone actually believe that this TA is cost neutral, whether they dislike many provisions of it or not? I suspect this is just keeping the shareholders happy and the stock pumped up, trying to not scare them by talking about the cost of it.

Another clipping from the same article

Part of FedEx's recent success has stemmed from its efforts to more tightly manage capacity to match demand. For example, it has cut flights from Asia several times in recent years, instead sending lower-priority shipments in the bellies of passenger airline flights (a shipping method that is somewhat slower but cheaper). FedEx plans to continue this capacity discipline to keep growing its Express division margins.