Federal Express Plans Restructure to Lessen Dependency on Pilots

Federal Express said its plans to restructure operations could make the company less dependent on its 3,500 unionized pilots, who have refused to work overtime.

Theodore L. Weise, FedEx chairman and chief executive officer, on Tuesday announced contingency plans that he said would eliminate the use of FedEx aircraft in international flights, use fewer company planes on domestic flights and strengthen its ground network with leased truck carriers.

The company would resort to leased aircraft and flight crews from other companies, Mr. Weise said.

FedEx operates a ground fleet of 40,500 vehicles worldwide.

The company is looking to guard itself against service disruptions during the Christmas shopping season, the busiest time of the year for the package delivery industry. "There’s no question the plan was brought about by the uncertainty of a possible job disruption," said company spokesman Jess Bunn. "The goal is to ensure our customers that we are doing everything we can to meet their needs."

The action is also the latest indication that the company’s long-standing feud with its increasingly organized pilots is far from over. FedEx accuses the pilots of being shortsighted and uncooperative, while the pilots say the company is anti-union and unwilling to cede any control to its employees.

FedEx, an operating unit of Memphis based FDX Corp., left the negotiating table last month after talks with the FedEx Pilots Assn., which represents most of the company’s pilots, broke down over compensation, retirement and scheduling.

"Our goal has been to negotiate a fair contract with our pilots," Mr. Weise said. "We have made generous offers which, if accepted, would have been among the best in the airline industry." The company said if the union accepts its latest contract offer, most of the restructuring would not take place.

However, Mr. Bunn said that certain aspects of the contingency plan, such as contracts with other airlines, will be phased in immediately and will be long-term agreements. "Unlike passenger airlines, people have a choice of whether or not to use FedEx. Once you lose customers it’s a challenge to bring them back," Mr. Bunn said.

Mr. Bunn would not disclose which airlines FedEx was working with, or the cost of the restructuring plan.