Pilots Take Back Seat

FedEx focus shifts to contingency plans in case of strike during busy season 

BY KRISTIN KRAUSE 

Pilot negotiations took a back seat last week as Federal Express focused its efforts on shoring up contingency plans to get the company through its busiest time of the year despite the threat of a strike. 

Strike ballots were sent out to the company's 3,500 pilots on Nov. 9 and are set to be counted on Dec. 3. All indicators are that the pilots, 98 percent of whom are represented by the FedEx Pilots Association, will resoundingly approve a strike. Whether or not one will be called is the big question. 

FedEx is preparing for the worst but refuses to believe that a walk-out by its pilots will disrupt service. The company, which is not bound by the same scope clauses and operating rules that often hamstring passenger carriers during a strike, is arranging for contract lift to move its international shipments. Domestically, FedEx plans to move as many packages as possible over the road using its own trucking network and by hiring contract trucking companies. 

"We have the operational flexibility, the financial stability and the resolve to meet our customers' needs during the peak shipping season," said FedEx Chief Executive Officer Theodore L. Weise. "About 2 percent of our employees are pilots; 98 percent of our employees will remain on the job, committed to delivering the reliable service our customers have come to expect from FedEx." 

FedEx's plan to shift as much business as possible to the ground has drawn fire from both the pilots and the Teamsters union, which has been chomping at the bit to organize the country's largest express carrier for years. 

"If they are able to shift more of their packages to a ground-based operation, it calls into question why is the company still under the Railway Labor Act?" said Teamsters spokesperson Patrick Lacefield. The RLA is the labor law that governs all airlines in this country and requires system-wide ratification for unionization, an uphill battle for the Teamsters which is used to organizing companies at a local level. 

"They should be under the same rule as UPS," said Lacefield. "We are certainly going to be looking into it again on Capitol Hill and raising it anew with the National Labor Relations Board. It seems to me they want to have their cake and eat it too." 

FedEx maintains that its RLA status, which has been called into question on numerous occasions, is rock-solid. "We are clearly an integrated carrier," said FDX Corp. spokesperson Shirlee Clark. "We are going to continue to fly and we'd rather do it with our white, orange and purple planes, but we have to take other steps to protect our business." 

FedEx, in reconfiguring its network in preparation for a slow-down or work stoppage by the pilots, returned two MD-11 freighters it had on lease from Boeing last week. The company also pulled two DC-10s dedicated to South American routes and is redeploying them on interior U.S. routes. The Latin American shipments are now moving by contract carrier. 

"We've gotten where we are for the past 25 years because of our experience in building contingency plans," said Clark. The company is priding itself on keeping its customers as informed as possible and because of those efforts, volumes are remaining steady despite all the publicity of a strike, she said. 

Rallying the other 140,000 employees around the world is FedEx's next challenge. The company is beginning to meet with groups of employees to spell out what they expect from everyone else in the pilots' absence. How much overtime and how much extra work will be thrust upon the drivers, couriers, package handlers and managers remains to be seen, but Clark said the FedEx tradition of pulling together in the face of adversity will prevail. 

Meanwhile, no talks were held between the pilots and management last week and none were scheduled for any time in the near future. "We asked the FPA to submit a counterproposal that is reasonable to the company, the rest of our employees and our shareholders, but we have not seen anything," said Bill Margaritis, FDX vice president of corporate communications. "Right now we are focusing on our preparedness plans," adding that since July the company has presented the pilots with 92 variations of a contract, all of which have been rejected. 

The pilots have been using their time away from the table to consult with members of the National Mediation Board and to get their message out to the media and Wall Street. 

Unlike the UPS strike, when the employees easily won the hearts of the public, the pilots have a tougher story to sell as woefully underpaid and overworked, despite their meager ranking in terms of compensation when stacked up against other airlines.