FedEx Acts to Reduce Strike Vulnerability

Federal Express Corp. said it plans to restructure its operations to make the company less dependent on its unionized pilots, who have refused to work overtime after labor talks stalemated and the company walked out of the negotiations.

The FedEx Pilots Assn., the independent union that represents most of the company’s 3,500 pilots, is conducting a mail-in strike authorization vote. Ballots are due to be counted Dec. 3.

Theodore L. Weise, FedEx chairman and chief executive officer, announced contingency plans Nov. 10 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, a division of Memphis, Tenn.-based FDX Corp., would use leased aircraft and flight crews from other companies for more of its operations, 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 upcoming 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.”

Union spokesman David Lee said the company’s restructuring plan “is just another pressure tactic to try and break the union.” Mr. Lee said that FedEx’s overnight delivery service has always been the company’s “forte.”

“I don’t know how they could continue that without the pilots; it’s unrealistic,” Mr. Lee said from union headquarters in Louisville, Ky.

The new plan is also the latest indication that the company’s long-standing feud with its increasingly organized pilots is far from over. FedEx accused 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.

edEx left the negotiating table last month after talks with the union 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 what airlines FedEx was working with, or the cost of the restructuring plan.

Federal Express, the world’s largest air cargo delivery company, serves 211 countries around the world and moves 3.1 million packages a day, and more than 4 million a day during the holiday season. FDX also owns the former Caliber System, including RPS, Caliber Logistics, Viking Freight and Roberts Express.

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