2dogs

Here's why:

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.

I was on the "fence" until I read this. This single statement sealed the deal for me...........there is ABSOLUTELY no way I would vote yes on this thing.

My biggest problem with this TA is too much ambiguous language. The company knows that they will be able to "interpret" the language in their favor and essentially negate any pay raise that we may have gotten. Boys (....and girls), we are about to get screwed if this thing passes. This is corporate slight-of-hand. We should all know by now, that if the company is good with it; it's not in our best interest. I sure hope I'm wrong, but I don't think so. We'll see. I've done my part.

kronan

From the same article....think maybe FedEx productivity just might be enhanced a little bit by the 76 MD 10 change?


All of FedEx's year-over-year profit improvement in Q1 came from the FedEx Express division. That was fairly remarkable because revenue in that segment declined 4% year over year. However, expenses declined by an even greater amount because of lower fuel prices and a variety of efforts to increase operating efficiency, such as updating FedEx's aircraft fleet.

Shipping Airline Fedex Fdx Md

FEDEX IS REPLACING OLDER PLANES WITH MORE EFFICIENT MODELS.

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.

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

kronan

8 in 24 day change efficiency


What is amount of rest is FedEx required to give you now before scheduling you to exceed 8 in 24.

Answer, twice the block-minimum of 9 hours (operationally reduced to 8)

Ran into that issue once on a day transcon

I think our transcon scheduling times are more geared towards our customers needs versus a desire to increase pilot productivity

kronan

And if the 8/24 change is a showstopper for ya, you really don't want the pain 117 brings

ancreserve

"Other productivity-enhancing initiatives will more than offset the pilots' higher pay."



I would have guessed they were refering about this:

FedEx Announces Programs Targeting $1.7 Billion In Annual Profit Improvement by End of Fiscal 2016

MEMA300

Every contract we have negotiated has been cost neutral. They just finally acknowledged the fact.

Anthrax

Cost neutral would be okay. Rumor on the street has the company ahead 14%. MORE THAN OFFSET BY EFFICIENCiES IN PRODUCTIVITY!!!!!!

Rock

I HEARD 83%!!!!! It's got to be true because I heard it in caps.

Check 6

Ok Rock...that was funny!

ancreserve

Edited Transcript of FDX earnings conference call or presentation 16-Sep-15

To Alan, I just wanted to ask you about the pilot contract if you don't mind. It looks like its, if ratified, a 10% increase this year and then through the years increasing so that by 2020 it's a 17% increase over 2015 rates.

So an A and a B. One, when do we hear from the pilots about whether it's ratified and two, are those cost increases included in your current guidance? And three, does it address the Cadillac health plan costs that come into effect in 2017? Thanks.

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Alan Graf, FedEx Corporation - EVP and CFO [20]

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It's all related, Helane. We will take it. I will do the first part and give it over to Chris Richards for part two, and if Dave wants to add, that's fine.

We think it's a win-win contract. It is in our outlook for not just this year but our strategic outlook that we always present to our Board in the fall where we as you know are expecting to continue to grow our earnings, our cash flows and our returns. Nothing's changed in that regard.

Also recall that one of the key things that we're doing at Express is modernizing our fleet, and the productivity that we get from that modernization is one of the key reasons that despite a significantly different economic outlook today than when we talked about our profit improvement plan in October of 2012, you saw Express's results and an incredible increase in earnings with a decline in revenue. That's only possible because our cost management. And with that, let me turn it over to Chris on the specifics and then Dave.

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Dave Bronczek, FedEx Corporation - President and CEO of FedEx Express [21]

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I will go ahead and comment real quickly because Alan's right. In our outlook going forward is the pilot contract, which we think is fair and balanced and very positive for the pilots, their families, for the Company, the shareholders.

But it's very much inclusive of our results in our profit improvement now and going forward. And of course, the new fleet helps significantly as well. Chris?

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Chris Richards, FedEx Corporation - EVP, General Counsel and Secretary [22]

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Hello, Helane, it's Chris Richards. As you think about the pay increases included in the contract, you need to keep in mind that our pilots have not had a pay increase since the agreement became amendable two years ago. So that time period is included in this overall increase as well as a six-year term of the agreement once it's ratified. So that total number needs to be considered in the context of that time frame.

With respect to the health care benefits that are provided in the agreement, we've been very pleased that we were able to offer our pilots not only a continuation of a healthcare plan they've had in place, but two consumer-driven healthcare options which are identical to those which are provided to our other employees and have been found to be very attractive to those employees at a lower out-of-pocket rate on a monthly basis than a high care option. So we're pleased and expect to see the pilots take advantage of those plans.

On your question with respect to Cadillac tax, the agreement does specifically provide for a process should the Cadillac tax become of impact during the term of this agreement. It does not provide that the Company will pay some particular portion of that but has a process that will be used between the Company and the union should that come into play at the appropriate time.

Given the uncertainty in the approach on the Cadillac tax nationwide, I have to tell you I expect there to be a lot of conversations and a lot of discussion about what's actually going to happen before the tax goes into effect in 2018. And this agreement specifically allows the flexibility for FedEx and the pilots to take advantage of whatever benefit might come from those larger national discussions.