Chairman's Message - 2/28/18
Chairman's Message - 2/28/18


February 28, 2018
Goodwill Bank Withdrawal

n late January 2018, FedEx announced they are committing more than $3.2 billion in wage increases, bonuses, pension funding and expanded U.S. capital investment following the passage of the Tax Cuts and Jobs Act (TCJA). They amplified that announcement with the following allocation plan:

  • Over $200 million in increased compensation, about two-thirds of which will go to hourly team members by advancing 2018 annual pay increases by six months to April 1st from the normal October date. The remainder will fund increases in performance- based incentive plans for salaried personnel.
  • A voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains one of the best funded retirement programs in the country.
  • Investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub will also be modernized and enlarged in a major program the details of which will be announced later this spring.

Let’s begin by applauding that decision on its face. Clearly, sharing some of that windfall with the hourly work force is a welcome development for those families. The pension plan “plus up,” and the expansion plans at IND are absolutely good news to the FedEx pilots and our fellow employees. However, we’re still left feeling that we and certain other employee groups were largely left out of the Company’s beneficence and it’s hard to find a legitimate reason particularly given the wonderful messages of thanks that we received from Flight Management after Peak 2017 and recent ice storms.

After some thought on the subject, I can only conclude that the Company has lost some sight of the significance of the goodwill that defines the relationship between it and us. We can only hope that this decision is not a harbinger of the times ahead.

A different ongoing dispute clearly demonstrates a similar indifference. For years, the company has paid our pilots that retire on December 31st, their accumulated vacation buyout on January 15th of the following calendar year. In December 2016, the FedEx payroll department decided to pay that money on December 30th 2016. That change was immediately detrimental to those retirees in the form of lost B-fund contributions (8%) and other consequences. We were frankly shocked that this happened, and moved to fix what we thought was a clerical error. Well, not so fast. Management took no action to remedy this situation and ultimately claimed the right to do it. We were forced to file a grievance, which is headed to arbitration in May.

When we signed our TA in 2015, we absolutely believed the existing payout method in this circumstance would not be changed, and pilots continued to retire on December 31st with that expectation. Management’s bargainers said not a word about this change and they maintained their silence until after they made the change. They have said that “payroll made the change,” but the reality is that in any event, the Company made this change and they did it with zero consideration to our Union or our retiring pilots.

To be clear, we expect the occasional disagreement or controversy. The contract and our system are too large, complex and dynamic to expect otherwise. There is a process for resolving such situations. But what we can’t tolerate are situations like this where there is no apparent reason or justification for the dispute other than legal arguments developed after the fact to defend a self-serving action.  

You may not be close to retirement, but you should appreciate that the attitude that allowed for this unilateral change to take place, is not limited to retirees. It’s an attitude toward every pilot that could permeate every facet of your job. It’s an attitude that ultimately benefits no one. It is however, an attitude that can change, and we certainly want to change it.

These developments are frankly, disappointing and generate legitimate anger on the part of many. Goodwill is very difficult to create, and can so easily be damaged or destroyed once created. It’s not too late to remedy these situations. Actions like those that I described above leave a lasting effect on the morale of our pilot group, but so do positive and timely remedial moves. We can certainly proceed further down the path of goodwill withdrawals and the negative reactions that will inevitably occur—there are plenty of people who favor that kind of environment, but frankly, that’s not the path to success for the pilots or our Company. It has not worked anywhere, in the long run. Instead, remedial action and a refocus on goodwill in decision-making is the obvious way to go. More than ever before, the time for positive action is now.

Chuck Dyer