Federal Express encouraged some of its pilots to apply for jobs elsewhere this week. Speculation has swirled around layoffs, the economy, but there might be something else at play.
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Federal Express Suggests Pilots Apply To Regional Carriers
Federal Express is telling pilots they may want to work somewhere else, and is going so far as to partner with a regional airline on a landing page directed solely at them.
“As I recently communicated, our Flight Operations are significantly overstaffed. Air cargo demand remains down, with decreased revenues and volumes similar to 2019 levels. Consequently, Bid Line Guarantees on most of our fleets are at or near minimums and will probably stay there for the foreseeable future. This low demand is not unique to FedEx but is an industry-wide issue impacting the major cargo carriers.
As you may have noticed, the passenger industry is not facing the same issues, and those carriers continue to hire pilots at a pace we haven’t seen in recent history with no apparent end in sight.” FedEx VP Flight Operations, via OneMileAtATime
Contract talks failed a few months ago with FedEx pilots rejecting up to a 30% increase in their contract. Labor groups (specifically pilots) at all commercial carriers in the US have recently signed new deals with huge increases, which this writer suggested may be unsustainable.
Contract talks are set to resume this week.
Interesting Timing
It’s no secret that shippers across the United States begin preparing for the holiday season months in advance. Inside of seven weeks to Christmas many of the preparations are completed and it’s a waiting game for Black Friday, Cyber Monday, and the following four weeks to Christmas. This has traditionally been an all-hands-on-deck period for shippers like UPS and FederalExpress. To suggest pilots are overstaffed at FedEx may mean that projections have a lighter year than last year planned.
Fellow Boarding Area blogger, Gary Leff of View From The Wing, notes that this could be an indicator of a downward trend in the economy. Many economists have speculated that consumer spending has to come down and the economy simply has to slow at some point. Perhaps this is at that point.
But there’s another trend line that is also out of economic alignment and that could be another reason that pilots are encouraged to go elsewhere.
Is Something Else Afoot?
Despite record contracts at nearly every domestic US carrier, airlines still face a pilot deficit. This has airlines like United, American, and Delta competing for talent by creating ever-higher pilot contracts still need more support as the pilot population continues to age out and retire. But FedEx might find it easier to consolidate its flying schedule rather than compete on contracts at a rate unsustainable for the cargo delivery service.
Just look at the offer that American’s regional PSA is making FedEx pilots:
“COMPENSATION & BONUSES
• Experience Bonus: $250,000
- $175,000 paid in first paycheck
- $75,000 paid at one year anniversary
• Hotel Expenses up to $250 per month for eligible commuters
• Starting Wages $150-$217 (Pilot Pay Scale)
• Longevity Credit Match (pay, retirement, time-off)
• Line Check Airman Career Path at 200% pay credit” – PSA
The URL for the above is: https://psaairlines.com/fedex-pilots and it’s made clear that PSA approached the FedEx VP of Flight Operations and Training.
Leadership for FedEx noted that some pilots remain dissatisfied with hours and scheduling. Aside from an economic slowdown, it’s my theory that FedEx simply doesn’t see a long term future where they will be able to maintain pilot salaries elevated more than 30% above today. They know that when contract talks resume, they will only have enough money to go around to ensure the viability of the contract and its ability to deliver going forward. They will have to reduce the workforce to meet the pay raise demands so they are homing those pilots elsewhere. While it could align with a general slowdown in demand for its cargo operations, it’s also possible to look at the landscape and decide that the current pandemonium around pilot contracts cannot last, and try to build a labor relationship it can honor.
It’s also thought to be a better work-life balance and pay structure at cargo carriers. By suggesting they consider a regional, perhaps it’s also a way to say, “put your money where your mouth is” in that FedEx knows the other carriers might be begging for pilots, but the FedEx job is actually better.
Conclusion
Federal Express may have told pilots to try a regional to reduce its workforce ahead of labor negotiations. It may have also given the suggestion because it sees an economic slowdown ahead and would rather not layoff workers that may be happier elsewhere. It’s also possible that the company is simply unwilling to go higher in negotiations and would be able to meet more demands with fewer pilots on the payroll. Whatever the reason, it’s an odd partnership but keeps things interesting especially this close to the holiday rush.
What do you think? Why is FedEx encouraging its pilots to leave and fly at regional carriers?
There is little here, or anywhere, in addressing which pilots in fact FedEx is encouraging to take this offer. Is this offer across the board? There is a big difference between those FedEx pilots flying MD-11’s to HKG and those flying small regional props they use to places like Pierre, SD. For those whose life is flying cargo wide bodies to better destinations I seriously doubt they are going to “trade up” for a regional jet to Fresno and a 8 hour layover at the airport Holiday Inn. For those at entry level at FedEx they might see the PSA offer as attractive…but is that who corporate wants to see go? Of course not, for obvious reasons.
As to the economy, FedEx has long been the leading indicator to the economy. These days though old formulas seem to be wrong. It will be interesting to see if those old formulas still hold true. More likely, the old is out and Bidenomics is indeed shaping a new and better reality.
Most any union contracts has a “Last hired, first fired” clause. Those with the lowest seniority (and lowest pay grade) would be the first let go by FedEx.
The pressure will be on the most junior to take the offer with the AA regional.
While I’m not sure you’re correct your premise seems sensible. Why not have the more disgruntled pilots seek employment elsewhere while times are good?
Federal Express announced last May as of June 2024 they are merging with FedEx Ground. Possibly this suggests consumers will not always want to pay a premium for the faster service, if not needed. I can only imagine that this will change how much air cargo is required, and therefore pilots. I see this as an adjustment to the economy, rather than a downturn. Hopefully.
If you read the memo it’s clear that this reply from FedEx is in response to those pilots not happy about working only the min hours. The fact that FedEx is going even further by working a deal days a lot.
The “one pilot” flight deck will be implemented first at a cargo carrier.
Other cargo carriers will follow and eventually cargo aircraft will be flown by video gamers sitting in an office somewhere just like the USAF drone program.
This will eventually proven even safer than having actual humans fly and the cockpit of your next flight in 2035 will have one person sitting there just to keep an eye on things,
.
The USAF has tens of millions of drone hours to show how safe remote operation is and the migration will be inevitable.