FedEx Express is encouraging pilots at its cargo airline to take jobs at a regional passenger carrier because there isn’t enough shipping demand to fill everyone’s flying schedules. It’s the most recent step over the past 12 months to align FedEx’s air network with a pointy decline in package volumes and improve efficiency because the parcel sector settles to a lower post-pandemic baseline that might last years.
Pat DiMento, FedEx’s vp of flight operations and training, said in a Friday memo to flight crews that the airline is “significantly overstaffed” and may’t guarantee pilots greater than the minimum variety of hours set of their contracts.
He urged pilots to think about taking a job with American Airlines (NASDAQ: AAL) subsidiary PSA Airlines, which is offering FedEx pilots an expedited interview process for a captain position, a $250,000 signing bonus, and a direct path to flying for American. Mainline U.S. passenger airlines have successfully replenished cockpit crews after the COVID crisis on the expense of feeder airlines, lots of which have curtailed operations due to shortfall in qualified pilots.
“While I understand this shouldn’t be something that can appeal to each pilot, for those of you who’re frustrated with current flight hours, profession progression, or have just been on on the fence about available options, you could consider this unique opportunity enough of an incentive to make a move,” DiMento wrote. He said American Airlines has enjoyed good relations with FedEx for several years and understands the standard of FedEx pilots.
The memo was published on X, formerly referred to as Twitter, by aviation blogger JonNYC.
FedEx (NYSE: FDX) has about 5,800 pilots on its payroll. DiMento told Express crew members in July that the corporate has a surplus of about 700 pilots, in keeping with reporting by the Wall Street Journal and confirmed by FreightWaves. The variety of excess pilots is probably going greater than that now given the continued deterioration within the parcel and freight markets.
The trouble to trim the pilot workforce follows UPS in August offering voluntary severance packages to senior pilots to eliminate nearly 170 positions. Many UPS pilots (NYSE: UPS) are working the bottom amount of hours allowed.
Pilots who sign on with PSA will fly Bombardier CRJ700 and CRJ900 aircraft with about 65-70 seats, and earn a starting wage of $150-$217 per hour, depending on seniority, in keeping with the PSA recruiting page. PSA’s website says pilots can move as much as American Airlines in five years. It’s not clear if FedEx pilots will probably be on an expedited track.
A FedEx pilot, speaking on condition of anonymity, called DiMento’s letter “incredibly insulting” to veteran crew members who can go straight to a big airline.
“For those of us who’ve been with the corporate before COVID, we’re shocked at the extent of mismanagement we see and management’s disdain for his or her pilots. Pat DiMnto’s letter suggesting that pilots at the-once pinnacle of airline pilot jobs go to a regional airline for five years speaks volumes to their tone deafness concerning the situation they created. Someone flying for FedEx could go to a legacy flying job — Delta, United, American — and have a much higher quality of life and pay and advantages,” he said in an email exchange.
The source said pilots are making less money because flying hours have been drastically reduced within the face of lower volumes, with available flying slots spread thin among the many pilot group. His regular pay has been reduce by 30% this yr and pilots not can secure trips that pay a premium for working on a scheduled time without work. The captain said he knows colleagues who’ve left for other airlines.
Under the prevailing contract, FedEx pilots are paid between $81 and $336 an hour based on aspects equivalent to the sort of plane they fly and their seniority. Pilots typically have a minimum guaranteed 68 hours of labor a month. A junior first officer will earn nearly $102,000 per yr while a senior captain collects greater than $363,000 in pay and advantages per yr flying a median variety of hours.
A captain who works 40 years at FedEx can expect to make barely greater than $20 million in pay, advantages and retirement over his or her profession in comparison with the industry average of about $18.8 million, in keeping with evaluation by aviation analyst Kit Darby. But the full compensation now lags Alaska Airlines, Hawaiian Airlines, Delta Air LInes, American Airlines, United Airlines and UPS, where a pilot could make $24 million. The profession value at FedEx for 30 years of service is best than Alaska, Delta and Hawaiian, but still behind the others.
Freight correction
The FedEx memo underscores how financially difficult the market has grow to be for freighter operators up to now 18 months, with volumes and rates hovering at or below 2019 levels. Global air cargo volumes are down greater than 8% for the reason that first quarter of 2022 and rates were 40% to 50% lower for many of the yr versus 2022 — a function of weak manufacturing, a slow drawdown of excess inventories, retailers’ reluctance to restock due to uncertainty about consumer behavior and macroeconomic crosswinds.
Lufthansa Cargo on Thursday reported cargo revenues were down 43% within the third quarter and that it broke even after a $352 million operating profit throughout the same period in 2022. Other publicly listed passenger airlines, lots of which don’t operate freighters as does Lufthansa, have seen logistics revenues decline 30% to 40% to this point this yr. The worldwide cooling in freight transportation, including airfreight, led Air Canada to cancel an order with Boeing for 2 777 freighters.
The squeeze is particularly acute for a lot of smaller all-cargo operators that don’t have the large customer base, diversified business lines and robust balance sheet of a FedEx or UPS. Many small and mid-tier cargo airlines are coping with attrition as pilots switch to major passenger airlines.
FedEx management is prioritizing stringent cost controls across the corporate, with a goal of eliminating $4 billion in structural costs by June 2025, including $700 million in annual savings from flight operations. The fee initiative includes accelerating the retirement of aging MD11 freighters, reducing important deck cargo capability flown by its purple tail fleet and outsourcing more activity to 3rd parties, increasing point-to-point flying, downgauging aircraft size on certain routes and diverting more volume to the bottom network. FedEx plans to phase out one other 29 aircraft within the fiscal yr ending May 31.
The combined moves are intended to present FedEx more operational flexibility and permit it to densify its hub-and-spoke system.
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In April, FreightWaves reported that FedEx will close pilot bases in Cologne, Germany; Anchorage, Alaska; and Los Angeles in addition to its heavy maintenance hangar at Los Angeles Airport. It should shift the upkeep functions to its Indianapolis regional hub since the transition to a more modern fleet requires less maintenance capability.
FedEx’s mainline jet fleet grew from 385 in 2018 to 417 in 2022 and now stands at 413, in keeping with the most recent company statistics. The airline continues to receive latest 767 and 777 widebody freighters under a long-standing order with Boeing.
The pilot source blamed FedEx for taking over too many contracts throughout the pandemic boom and rapidly expanding infrastructure when it couldn’t maintain high service levels, a situation previously echoed by equity analysts.
FedEx and UPS domestic flight utilization underperformed against seasonal comparisons for September, in keeping with research by Morgan Stanley transportation analyst Ravi Shanker. FedEx’s flight count tumbled 9% month over month vs. minus 7% on average and is down 11% yr over yr. UPS domestic flight activity fell 12%, double the conventional September dip from August, and stays down 19% against 2022.
“A slowing economy, large customer contract negotiations and slowing pilot retirements with an already overmanned crew force have forced me to just accept the proven fact that I may be seeing more folks that I once personally called to supply a position at FedEx accept offers elsewhere,” DiMento said within the memo. “I even have little doubt that FedEx will proceed to navigate the turbulent market conditions which might be inherent on this business and can remain an important place to work for pilots and others in the long run.”
Contract talks restart
FedEx pilots in July rejected a tentative agreement on a brand new contract that may have increased pay by 30% over five years. Many pilots complained the deal offered weaker job protections, insufficient back pay, bad alternative pension options and pay increases below those recently achieved by pilots at American, Delta, Hawaiian and United airlines.
FedEx, for its part, has said the agreement addressed some quality-of-life issues and offered protections, including making it harder for the corporate to furlough pilots.
In late October, the FedEx Master Executive Council of the Air Line Pilots Association (ALPA) elected Capt. Billy Wilson as chairman through March 2025. He replaces Chris Norman, who stepped down after failing to push through the brand new labor agreement.
Norman, in a Sept. 14 letter to members, alluded to the poor state of relations between pilots and management.
“FedEx pilots don’t trust FedEx in the case of their job security resulting from a mixture of things, particularly management’s public statements concerning greater reliance on third-party lift. This concern will should be addressed by developing latest contractual language, the negotiation of which could also be highly contentious. Beyond that, the FedEx pilots are very concerned about management’s try and drift away from providing a compensation and quality-of-life package that’s competitive with those contracts reached this yr at other major U.S. carriers,” he said.
Upon taking on as head of the governing body for FedEx’s unionized pilots, Wilson said a press release, “Our compensation must be commensurate with our peers while including excellent quality of life with our work rules and a retirement that can provide for pilots in the longer term. During COVID, FedEx pilots stood tall delivering for the corporate and the world while lots of our pilots suffered in inhumane and substandard living conditions including lockdowns and exposure to unknown chemicals. We paid a heavy price for this while the corporate made historic profits.
“I’m committed to bringing all of our pilots together as we reestablish negotiations capitalizing on our diverse views, which only make us stronger, as we move toward a contract we now have earned.”
ALPA and FedEx are scheduled to carry an initial bargaining session Nov. 6-7 in Memphis, Tennessee, under the auspices of the National Mediation Board, said union spokeswoman Courtney Bland.
Scott Struminger, CEO of Aviation at FedEx, said in September at a freighter forum for aircraft buyers and sellers in Seattle, that FedEx offers higher work conditions than business passenger airlines because they typically fly to a destination, rest for a number of hours, and return as a substitute of constructing multiple stops throughout the day.
The FedEx pilot who didn’t wish to be identified said colleagues who were hired throughout the COVID boom feel misled about job perks and never needing to look for an additional job.
“They realize the hype surrounding this job wasn’t true and the standard of life and pay aren’t what they were sold. And since the technique of switching airline jobs and coping with the lack of seniority at the following airline is so onerous, many feel trapped and that they made a mistake coming to FedEx. I imagine there’s numerous regret, but many are keeping it to themselves because they don’t wish to admit they made a profession mistake,” he told FreightWaves.
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