The International Association of Machinists and Aerospace Workers (IAM) announced the result on its website late Thursday night after vote tabulation was completed. 

The union said its negotiating team will “regroup and begin planning the next steps on securing an agreement that our membership can approve.”

IAM chief Jon Holden said earlier this week that the tentative deal was the best contract the union has ever negotiated.

Union leaders and Boeing (NYSE: BA) reached a tentative agreement on Sunday, but rank-and-file machinists immediately expressed unhappiness with it. The last contract was ratified 16 years ago. On Monday, workers rallied outside Boeing’s widebody aircraft plant in Everett, Washington. 

One of the biggest issues is pay. Boeing is offering a wage increase of 25 percent over four years, but union members say it doesn’t include their current yearly bonus. Boeing will also put more matching funds into a 401(k) retirement plan but won’t restore a pension plan that the machinists used to have and gave up in an earlier negotiation. The collective bargaining agreement would also change mandatory overtime so workers will be required to work overtime and weekends less often and it puts in a floating vacation holiday. Workers will also be able to progress through different job responsibilities more easily. 

Workers also complain that the wage increase isn’t high enough, that the pension wasn’t restored and that Boeing’s promise to build a future aircraft type in the Puget Sound region only extends for the length of the contract. Workers still feel betrayed about previous rounds of negotiations in which Boeing twice threatened to move jobs outside of Washington. 

If the strike is authorized and goes on for an extended period the delivery of aircraft and components would stop. That wouldn’t have an immediate effect on airlines but would exacerbate the current backlog of aircraft and further limit the ability of airlines to modernize or expand their fleets to reach new markets. 

A strike comes at a difficult time for Boeing, which has suffered years of losses because of regulatory restrictions following a series of accidents and mishaps, as well as concerns about manufacturing quality and the safety culture that have slowed aircraft production rates. Still, some analysts have said that a production shutdown now isn’t the worst outcome because airlines are grappling with too much capacity as travel demand wanes and aren’t as eager to receive planes as they were last year.

A 10-week walkout in 1995 cost Boeing $100 million per day. The company has lost $27 billion since 2019. 

FedEx pilots in summer 2023 rejected a labor deal negotiated by union leadership and appear to have lost negotiating leverage since then. The air cargo market softened and the pilot shortfall that allowed pilots at some passenger airlines to win substantial deals eventually lessened, reducing pressure on FedEx to raise compensation beyond its target.

New Boeing CEO Kelly”Ortberg has been on the job for a little over a month. 

Editor’s Note: This article first appeared on FreightWaves.

The post Boeing Machinists Reject New Contract, Go on Strike appeared first on FLYING Magazine.

EVA Air and All Nippon Airways recently became the first Asian carriers to equip Boeing 777 freighters with the friction-reducing AeroShark surface film, following the footsteps of Lufthansa Cargo and Swiss International Air Lines.

All Nippon Airways said it began operating its first 777 freighter with the special coating on Sunday and plans to become the first airline to operate both freighter and passenger variants of the 777 with the AeroShark technology by next spring.

Lufthansa Technik, a provider of maintenance and other technical services for commercial aircraft, developed AeroShark with German chemical and coating manufacturer BASF to address the need for more sustainable air transport. The nearly invisible coating is designed to be weather-resistant and simple to apply.

Aircraft surfaces are exposed to UV radiation as well as temperature and pressure fluctuations at high altitudes that can alter smoothness. The low-friction film consists of riblets—small protrusions measuring about 50 micrometers or 0.002 inches—that imitate the hydrodynamic properties of sharkskin and allow air to flow more smoothly over the aircraft during flight. The subsidiary of Deutsche Lufthansa AG estimates the riblet film, which is applied to most of the fuselage and engine nacelles during scheduled maintenance layovers, reduces drag by about 1 percent.

The sharkskin modification’s ability to reduce friction and emissions is slightly better on cargo than on passenger aircraft because the film is applied to a greater area due to the absence of windows, according to BASF.

An All Nippon Airways maintenance contractor applied the specialty film to the 777 freighter, which the airline says will reduce fuel use by 275 tons and greenhouse gas emissions by 881 tons per year. ANA said it will evaluate the real-world effectiveness of the technology in daily operations before deciding whether to expand its use to other 777 aircraft in the fleet.

Taiwan-based EVA Air has signed up to add the low-friction film to its entire fleet of nine 777 cargo jets by 2027, Lufthansa Technik announced late last month. The first aircraft was modified by EVA Air’s affiliate, Evergreen Aviation Technologies, under close supervision and is expected to reenter commercial service early this month. EVA Air expects to save more than 2,750 tons of jet fuel and about 8,600 tons of carbon dioxide emissions per year once the entire fleet is retrofitted.

Lufthansa Cargo, which operates 18 B777 cargo jets, was the first to adopt the sharkskin technology in 2023. It has modified five 777 freighters so far and plans to gradually apply the coating to the remaining fleet by 2027, spokesman Jan Paulin said. Lufthansa Cargo has previously said that it will save more than 4,400 tons of jet fuel per year across its entire 777 fleet, which corresponds to about 53 cargo flights from its base in Frankfurt, Germany, to Shanghai.

Swiss International Air Lines, also part of the Lufthansa Group, in May finished equipping all 12 of its Boeing 777-300 extended-range passenger jets with AeroShark technology. It is considering applying the film to other long-haul aircraft in its fleet, according to the May edition of the airline’s magazine. Last month, Austrian Airlines, another Lufthansa subsidiary, announced it will be the first airline to outfit Boeing 777-200 extended-range passenger aircraft with the surface technology. A total of four 777-200s will receive the application, starting in December. 

There are 19 total aircraft operating with the sharkskin technology in worldwide service.

Lufthansa Technik says it takes about a week to apply the transparent film to an aircraft. The company has regulatory approval to modify two types of Boeing 777 airframes with the AeroShark coating. It plans to seek change certification for additional aircraft types as well as the ability to apply the technology to even larger surface areas, such as the wings, which it claims could further reduce carbon dioxide emissions.

Editor’s Note: This article first appeared on FreightWaves.

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Several passenger airlines have established pathways with flight schools to facilitate the recruitment of new pilots, but New York-based Atlas Air is one of the only known cargo airlines to work directly with a flight school on a dedicated pilot training academy.

Spartan Education Group, which provides government-approved training programs and career pathways for pilots and aviation technicians at a handful of U.S. campuses, announced Monday that it has opened the Atlas Cadet Academy at its West Chicago, Illinois, flight school. The initiative offers participants a defined avenue to potential first officer positions with Atlas Air, which also operates Boeing 767 and 777 widebody aircraft.

In addition to the normal curriculum covering essential aeronautical knowledge and preparation for FAA certification and rating exams, the academy will provide customized instruction and firsthand exposure to the airline’s culture. The idea is to facilitate integration of new employees and give Atlas Air better control of the labor pipeline. 

Unlike a typical flight school where graduates can eventually be recruited by any airline, the academy clears a lane for students to work at Atlas Air.

“We work very closely with Atlas to design a program that creates the skills and competencies that they’re looking for,” said Dan Bregman, Spartan Education Group’s vice president of strategy and development, in a phone interview. “If I’m a university or flight school and I’ve got 20 airlines all recruiting, it’s really tough for me to tailor my program for any one of those airlines, We are recruiting students from day one who are interested in flying for Atlas, which is different from a lot of other partnerships. We don’t want another airline poaching you. We want to keep you focused on this path that you’ve chosen.”

Enhanced training might include flying a 250-mile route with three stops to replicate what a short-haul cargo pilot might experience. 

The Atlas Cadet Academy initiated its first class in June with 13 new students and one certified flight instructor. It will continue to grow each month as more people meet the entry requirements, including an FAA-approved medical exam, and complete the Academy orientation, said Bregman.

Cadets can earn their FAA certifications and ratings (instrument, multiengine, etc.) as quickly as 13 months flying small, single-turboprop planes and then build toward the 1,500 hours necessary to earn an unrestricted Airline Transport Pilot certification by working as a certified flight instructor. (Those who obtain a business degree in aviation only require 1,200 hours of flying time.) After that, each flight instructor will continue training with a minimum of 250 hours in more advanced aircraft—Cessna Caravan, Beechcraft 1900, Saab 340B, and Aerostar turboprop aircraft—flying for unscheduled charter operators Castle Aviation and Planemasters, Bregman explained. Planemasters is co-located with Spartan’s College of Aeronautics and Technology at DuPage Airport (KDPA).

It may take four to five years for a high school graduate to achieve an unrestricted commercial pilot’s license because certification has a minimum age of 23. Spartan’s relationships with Castle Aviation and Planemasters allow fledgling pilots to earn money and build necessary hours until they’re eligible to join Atlas Air. 

The airline employs more than 2,900 pilots. International Aviation Professionals Local 2750, the Teamsters union that represents Atlas Air pilots, says 532 pilots resigned last year and 269 have left the company this year.

Tailored Approach

Bregman said Spartan plans to unveil a proprietary app in late September that will contain features such as supplementary Atlas Air training materials, interview tips and the ability to do virtual fireside chats with Atlas crew members and managers.

Atlas Air doesn’t cover students’ costs or pay Spartan for each graduate but has made an undisclosed investment in the program and provides resources, according to Bregman. Potential program benefits include visits from Atlas Air pilots to discuss professional development and company safety practices, touring Atlas’ flight operations center to see how an airline operates behind the scenes, experiencing a flight simulator, having lunch with executives, and attending training for flight attendants (Atlas operates some 747 passenger aircraft under charter contracts) to gain the cabin crew perspective.

Familiarizing students with the company early on demystifies the hiring process and makes the transition to a first officer much easier, he said.

Cadets can finance their training through a private loan program or get an associate flight degree from the College of DuPage, which provides access to federal financial aid and has a relationship with Spartan. 

Spartan a couple years ago changed its strategy to one that treats airlines, rather than the student, as the customer and the student as the product, said Bregman. The approach resembles the way community colleges work with a manufacturer or other company to develop students with specific skills that make them more attractive hires than someone with generic industry skills. The Atlas academy is similar to a recent program Spartan started with Allegiant Airlines. 

“It allows us to incorporate into the FAA-mandated training other kinds of experiences that we think make you a more competent pilot and enhance your skill set,” Bregman told FreightWaves. “We don’t want our students to be the deer in the headlights. We want them to walk into ground school at Atlas feeling full of confidence that they can do this.”

He made clear that Spartan doesn’t guarantee employment.

United Airlines in February 2022 opened a pilot academy at Phoenix-Goodyear Airport (KGYR) with the goal of training 5,000 pilots by 2030. It is the only flight academy operated by a major U.S. airline. Spartan College also provides an academy program for American Airlines that is less structured than the ones for Allegiant and Atlas Air.

Editor’s Note: This article first appeared on FreightWaves.

The post New Atlas Air Academy Creates Direct Pathway for Hiring Young Pilots appeared first on FLYING Magazine.

The bill gives Boeing (NYSE: BA) a bridge, in case the express carriers need extra capacity, until it can develop a new freighter next decade. Multiple industry sources familiar with the process said FedEx (NYSE: FDX) and UPS (NYSE: UPS) joined Boeing in lobbying Congress for a reprieve from the January 1, 2028, production deadline. The legislation previously passed the Senate and will be sent to President Joe Biden to sign into law.

At face value, a split from international consensus would limit operation of freighters produced between 2028 and 2033 to the domestic U.S. market, but it’s possible some countries could permit access, according to experts. Freighters delivered before the end of 2027 aren’t covered by the enhanced carbon emission rules and won’t face any restrictions. 

Under International Civil Aviation Organization (ICAO) agreements, commercial aircraft manufacturers effectively can’t sell aircraft that don’t meet the 2028 carbon emissions standards. The U.S. Environmental Protection Agency adopted the fuel efficiency standard in 2021 with the FAA following suit in February.

Even if post-2027 freighters end up being limited to domestic flying, it makes sense for FedEx and UPS to buy them, said Tom Crabtree, a Seattle-based industry consultant and former Boeing market analyst, in an email exchange with FreightWaves.

“The 767-300 production and converted freighter provides the lowest trip costs of any widebody freighter in production today while simultaneously allowing service to smaller markets where 50 metric tons of payload, or more, simply isn’t needed,” Crabtree said. “They also have sufficient range to serve international markets to/from Europe and/or northern South America from the U.S.”

Boeing stopped making the 767 as a passenger jet many years ago. It also supplies a tanker variant for militaries. FedEx and UPS are the only customers for the 767-300 freighter. Traditional cargo airlines opt for used 767s that have been converted to a cargo configuration because they don’t have the consistent, daily volumes of integrated express carriers and can’t afford more expensive new models.

UPS was the launch customer for the Boeing 767 freighter in 1995. The parcel logistics giant has 88 B767-300s in its fleet, including 10 converted freighters, and 19 additional factory aircraft on order from Boeing. 

“We expect to receive all outstanding orders before that time,” said UPS spokeswoman Michelle Polk.

FedEx has 137 B767s flying in its network, with 15 more deliveries scheduled through mid-2026, according to the company’s latest statistics.

Aviation publication The Air Current was first to unearth the 767 freighter waiver, tucked away on page 1,038 of the FAA bill. The language doesn’t mention the 767 by name, but the maximum takeoff weight of 180,000 kilograms to 240,000 kilograms squarely fits the 767.

Boeing officials have increasingly signaled that they plan to develop a freighter version of the 787 Dreamliner as a replacement for the 767F, but the first delivery is expected to take at least eight to 10 years.

“The 767F continues to be the most environmentally sound mid-size freighter available. We are working with our customers and are in communication with regulators regarding the requirements for this market segment,” Boeing said in a statement before the vote. “As we look ahead to future medium-widebody freighter options, the 787 is a natural place for us to look. We continue to evaluate our options in this space and are listening to our customers. Any future decisions regarding whether to launch a new program, will be largely driven by customer needs and market demand.”

Without the exemption, FedEx and UPS could be limited to Airbus A330 converted cargo jets, a model neither currently operates, if they need more medium-widebody aircraft in four or five years. The feedstock for 767 conversions is drying up because passenger airlines like Delta and United are holding on to aircraft longer than anticipated in response to supply chain, manufacturing and engine-related problems that have delayed delivery of replacement aircraft. The airlines probably won’t be ready to let go of the 767s until “they are well beyond the age of conversion or have too many flight cycles and flight hours accumulated on them to make it worth a while to convert it,” said Crabtree.

The new law will enable Boeing to compete with Israel Aircraft Industries, which installs 767 conversion kits, and an Airbus subsidiary that rebuilds A330s into freighters, and give it time to bring a 787 freighter to market, said the former chief editor of the biennial Boeing World Air Cargo Forecast. And A330 conversion providers would be able to demand higher pricing without that competition.

“Express firms like the certainty of production freighters even though they are more expensive than conversions of the same airplane models,” he said. That certainty takes the form of more consistent delivery schedules and meeting of specifications.

FedEx and UPS put pressure on Congress to keep the 767 option open and keep the playing field level until Boeing brings out the 787 freighter, the sources said.

Many have interpreted the carve-out to the international fuel efficiency standards to mean that noncompliant aircraft will be prohibited from flying outside the United States. But there is no universal enforcement mechanism. ICAO’s carbon emission standard will be implemented by individual countries as new domestic regulations updating their system for certifying aircraft types. Production will essentially be banned starting in 2028 because noncompliant models will not be certified for sale by civil aviation authorities in their area of jurisdiction.

Countries that ban the sale of noncompliant models are likely to ban aircraft with an exemption from entering their airspace on the basis of having an unfair advantage.

But an aviation industry source, who didn’t want to be identified because of the political sensitivity of the topic, said FedEx and UPS access to airspace in foreign countries would depend on what individual governments are willing to accept. Smaller countries that typically follow FAA and European Union regulations rather than certify aircraft themselves might have fewer qualms with allowing exempted 767s to operate.

Boeing also continues to deliver 777 cargo jets to FedEx and other airlines around the world. The FAA reauthorization doesn’t provide a waiver for the 777, probably because it is a transcontinental aircraft that wouldn’t make economic sense to operate only in the domestic market.

Editor’s Note: This article first appeared on FreightWaves.

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The announcement came shortly after the agency sent a team of experts to Istanbul to investigate an emergency landing Wednesday by a FedEx (NYSE: FDX) Boeing 767-300 freighter when its front gear failed to deploy.

The NTSB will meet June 6 in Washington, D.C., to hear presentations from investigators, deliberate over the draft report, and vote on proposed findings, probable cause, and safety recommendations related to the near crash on February 4, 2023.  

A preliminary report said that a FedEx 767 freighter was only 150 feet above the ground when pilots realized a Southwest Airlines jet was preparing to take off on the same runway and aborted its landing at Austin-Bergstrom International Airport (KAUS). The FedEx pilots also warned the Southwest crew to abort its takeoff. The FedEx aircraft veered sharply to the right and pulled up to avoid a collision.

In Turkey, the transport ministry said the aircraft, arriving from Paris Charles de Gaulle Airport (LFPG) on Wednesday morning, informed the control tower at Istanbul Airport (LTFM) that its landing gear failed to open and touched down with guidance from the tower, sliding to a stop.

Turkish authorities are leading the investigation of the incident, with the NTSB providing support. 

The aircraft involved is a 10-year-old Boeing 767. FedEx Express operates 137 B767s, more than any other jet aircraft in its fleet, according to the latest quarterly report. The airplane will be out of service for an undetermined period while the investigation continues and repairs are made, but FedEx has other planes in reserve.

FedEx said in a statement it was cooperating fully with investigators. No crewmembers were injured. 

Video of the incident shows the airplane’s back wheels touching down, followed by its fuselage, with sparks and smoke coming from its underside. 

Boeing is under public scrutiny for a series of safety incidents involving the 737 Max narrowbody and for production concerns related to the 787 Dreamliner. But manufacturers aren’t responsible for maintenance or other uncontrollable circumstances that could cause a malfunction years after an aircraft enters service.

Storm Recovery

Meanwhile, FedEx also had to deal with disruptions and damage from severe weather incidents in the United States.

The FedEx Express global air hub in Memphis, Tennessee, experienced “substantial” delays Wednesday night due to severe thunderstorms that created hazardous operating conditions, the company said in a service bulletin. It alerted customers that some packages scheduled for delivery on Thursday could arrive late. No damage was reported.

Meanwhile, a tornado slammed into a FedEx Ground facility in Portage, Michigan, on Tuesday evening, causing extensive damage. FedEx said some service delays are likely to be seen with inbound and outbound shipments across portions of Michigan, but it is diverting incoming shipments to lessen the impact on service. Several team members sheltered in place inside the facility during the storm. There were no serious injuries, the company said in a customer alert.

Editor’s Note: This article first appeared on FreightWaves.

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The decision represents the latest case of an all-cargo airline throttling back on fleet expansion plans made during the COVID-19 crisis when a shortfall in shipping capacity sent rates through the roof and made freighters valuable assets.

Northern Air Cargo, which serves communities in Alaska from its base in Anchorage, lost $12 million in the 12 months ended September 30, according to data on airline performance metrics compiled by the U.S. Bureau of Transportation Statistics.

The idled cargo jets wear the brands of sister companies Aloha Air Cargo and Miami-based StratAir. Northern Air Cargo operates planes on behalf of both businesses.

The three companies are part of privately held Saltchuk Resources, a diversified freight transportation, logistics and energy distribution conglomerate based in Seattle. In 2021 and 2022, Saltchuk’s leasing subsidiary bought seven used Boeing 767-300 passenger jets and has been sending them to a Boeing partner site in Singapore to modify into main-deck freighters for the cargo airlines.

NAS Aircraft Leasing Co. (NALC) received two 767-300 converted freighters from Boeing in January and April and moved them to a storage facility until market conditions improve, Saltchuk Aviation spokeswoman April Spurlock said in an email.

Aircraft tracking site Flightradar24 shows the airplanes are being stored in the desert at Roswell Air Center in New Mexico.

“Throughout 2023 and 2024, the global air cargo market has experienced elevated costs and shifting market dynamics which has led to depressed pricing and cargo yields,” Spurlock said. “Due to this softening of the cargo market, Northern Air Cargo has taken steps to reduce its overhead costs and increase its revenues.”

The two new cargo jets will eventually replace aircraft the company will return in the near future when their lease ends. NALC currently leases three 767s from Air Transport Services Group (NASDAQ: ATSG), according to aviation analytics firm Cirium. A decision on when to place the new 767s into service will depend on several factors, including market conditions in the Caribbean and in Central and South America, where StratAir operates, she added.

StratAir is an airfreight logistics provider that charters airlift from NAC. It currently utilizes four 767 freighters operated by NAC.

Northern Air Cargo and Aloha Air Cargo operate a total of 16 aircraft: nine Boeing 737-300/400 Classics, a newer 737-800 and six 767-300 medium widebodies. All 767s are on NAC’s operating certificate and flown by NAC pilots. Saltchuk Aviation swaps aircraft among carriers as needed. One of the 767s flown by NAC for StratAir out of Miami to places such as San Juan, Puerto Rico, and Lima, Peru, for example, has an Aloha Air Cargo livery.

Aloha Air Cargo, which had a profit of $30 million in the fiscal year that ended September 30, operates interisland routes in Hawaii and to Seattle and Los Angeles. On a combined basis, Aloha and NAC posted $18 million in net income for fiscal 2023.

NALC has taken delivery of six converted freighters so far. It has not started work on the seventh Boeing conversion yet, and there is no firm date to do so, said Spurlock.

There are costs to keep an airline dormant, such as storage, regular maintenance to ensure electrical and hydraulic systems don’t deteriorate, and special maintenance service when a plane is reactivated. But industry professionals say it is cheaper to ground an aircraft than operate it if load factors are low.

NAC also laid off three administrative personnel as part of its effort to reduce costs, said Spurlock.

The airfreight market has been steadily recovering since a 16-month downturn hit bottom late last summer. During the first quarter, cargo volumes increased about 12 percent year over year, based on the average metric from various data providers. Industry analysts expect annual growth of about 3.5 percent over 2023 levels. But cargo growth varies by region, with major trade lanes out of Asia boosting the global average. North America, for example, had the weakest growth in February of any region, according to the International Air Transport Association. Also, Northern Air Cargo, Aloha Air Cargo, and StratAir play in specialized markets that are subject to their own unique dynamics.

Saltchuk Aviation and Northern Air Cargo aren’t alone in feeling the consequences of the freight recession in 2022-2023.

Miami-based Amerijet, which competes with StratAir, recently went through a restructuring with new ownership and returned six Boeing 757 converted freighters to lessors less than two years after acquiring them. FedEx Express is parking a portion of its fleet because of soft parcel demand. Canada’s Cargojet abandoned plans to acquire eight Boeing 777s and convert them for cargo. Air Canada backed out of a deal with Boeing for two 777 factory freighters. GlobalX, a startup charter operation in Miami, is concentrating fleet expansion on the passenger side of the business, rather than cargo. And Air Transport Services Group has sharply cut back on capital expenditures and postponed sending some aircraft to conversion sites.

Editor’s Note: This article first appeared on FreightWaves.

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“The Independent Pilots Association Executive Board was informed that UPS HR is resuming their pilot hiring process to account for the additional volume surge that will occur as the year progresses,” the union said in a statement shared with FreightWaves. “The initial projected estimate for hiring is expected to be 300+ additional crew members, which is subject to adjustment once the network plan for the additional USPS volume is finalized.”

The Independent Pilots Association is the bargaining representative for about 3,200 pilots at UPS (NYSE: UPS). 

UPS beat out FedEx Express last week for the five-and-a-half-year postal service contract, which FedEx (NYSE: FDX) had held for more than 20 years. The call for pilots runs counter to initial assessments from analysts that UPS would need to add few, if any, aircraft to support the postal service because of its ability to lean on its high-performing linehaul truck network to move a portion of the volume. FedEx has acknowledged recent difficulties turning a decent profit on its postal business and UPS was expected to address that by running a leaner air network.

UPS also gave buyout packages last year to 193 of the most senior pilots to reduce costs amid a downturn in the parcel market. 

Spokeswoman Michelle Polk confirmed UPS is recruiting 170 pilots, as currently posted on its external job boards.

The hiring number provided by the union covers the number of pilots UPS is likely to hire over the next year or so. A source familiar with pilot scheduling and staffing said UPS has to phase in new pilots because there isn’t enough capacity to train a full cohort at once.

Postal flights are primarily operated during the daytime, opposite the express overnight network. 

The postal service has prioritized moving mail by ground as much as possible over the past three years, resulting in a $500 million reduction in revenues for FedEx during that time. FedEx realized $1.6 million in revenue during fiscal year 2023 from its air contract with the mail agency, according to research by David Hendel, a transportation attorney at Culhane Meadows.

UPS has about 292 freighters in its mainline fleet, which is 43 percent smaller than FedEx’s. FedEx also has about 2,400 more pilots than UPS.

There is no indication that UPS will slow the phase out of its aging MD-11 fleet. The company last year retired six of the aircraft and plans to remove more than that amount this year. The MD-11s are being replaced by 767 freighters. UPS has 21 more 767s on order from Boeing. 

Editor’s Note: This article first appeared on FreightWaves.

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The FedEx Master Executive Council voted for Captain Jose Nieves, a Boeing 757 pilot who has been at FedEx for 28 years, to lead the union’s 5,800 members, the Air Line Pilots Association announced late Tuesday.

Nieves replaces Captain Billy Wilson, who was elected October 30, 2023 for an interim term through March 2025 but was voted out this month in the face of growing opposition. A large subset of disenchanted pilots willing to take a more aggressive stance versus FedEx management pushed the vote.

Wilson took the helm when predecessor Christopher Norman resigned in the wake of last summer’s union rejection of a tentative agreement that leadership endorsed as delivering industry-leading improvements on pay, retirement and work-life balance.

Nieves’ term will run through March 25, 2025.

“FedEx pilots are facing challenges unlike any in recent years, and I believe this is a critical time in our union’s history,” said Captain Nieves, in a news release. “At the top of that list of challenges is standing up to a company that has explicitly demonstrated a failure to value its pilots and employees. . .“Our pilots grow more unhappy with FedEx management by the day. It is past time for management to come to the table with a contract that recognizes our value. This is my primary focus, and the work begins today.”

Both sides have been negotiating a new labor agreement for three years and have been under the supervision of the federal National Mediation Board since October 2022. On March 8, the Air Line Pilots Association asked the NMB to declare an impasse and release the parties from mediation, the first step necessary to launch a strike action.

The new MEC leadership, responding to supporters who felt the previous board was too willing to make concessions, has made clear its willingness to take the gloves off and use any means available under the Railway Labor Act to press FedEx for better benefits. The union says it believes FedEx is not willing to change its bottom line from the deal agreed to last summer.

FedEx Corp. last week reported adjusted earnings of $3.86 per diluted share, well above analysts’ estimates of $3.45 per share, with operating income up 19 percent in the third quarter. Operating profit for the Express segment, which is responsible for the air network, nearly doubled after the company idled more aircraft, reduced flight activity and pared other costs. The lower flying levels also mean less pay for pilots.

FedEx has not invoked language in the existing contract that allows the airline to go below minimum guarantee pay for a four-week period when available flying time falls below certain thresholds, according to a message from a pilot who asked to remain anonymous to protect job security. FreightWaves reported early this year that such a move was possible because of the sluggish demand. But domestic flight activity subsequently picked up, according to research by Morgan Stanley.

FedEx stock increased 6 percent on Tuesday, reaching a three-year high of $288.99 per share.

The pilots union says FedEx’s improved performance demonstrates the company can afford a better compensation package. It took umbrage with FedEx announcing another $5 billion share buyback program. A group of pilots conducted an information picket outside the New York Stock Exchange when FedEx reported its earnings on Thursday to draw attention to their agenda.

The FedEx pilots, who once were near the top of the pay heap, want a contract similar to ones won by counterparts at American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. Even pilots at Hawaiian Airlines and Alaska Airlines achieved sizable raises last year.

Cockpit crews appear to have lost leverage since airfreight and parcel demand began falling in mid-2022. FedEx also faces the strong possibility of losing some, or all, of its U.S. Postal business later this year. But the pendulum is slowly swinging back to growth, with global air cargo volumes up more than 10 percent for the first 2.5 months compared to the same period last year and the small package market projected by some to grow about 4 percent per annum over the next three years.

Editor’s Note: This article first appeared on FreightWaves.

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Despite strong membership divisions, there appears to be greater unity within the Air Line Pilots Association’s (ALPA) Master Executive Council as a new guard begins to exert control. And internal communiques obtained by FreightWaves also indicate that council members, including long-serving incumbents, share the view that FedEx (NYSE: FDX) is stringing out the labor dispute.

“Whether you are of the opinion that we should have waited longer or that we’ve waited long enough, we MUST embrace the imperative that we all work together. We are ONE TEAM on this side of the table, ready to negotiate a deal that recognizes our value to OUR corporation, and a deal that the corporation can easily afford,” the MEC said in a note to members that was signed by all 14 council representatives. “On the other side of the table is the other team, intent on dividing and conquering us. You need to decide if you’re on OUR team or THEIR team. There are no other choices, no neutral sideline or fence to stand or sit on. We stand together, or we all fail.”

ALPA last week asked the National Mediation Board to end bridge-making efforts and allow the parties to resolve differences through arbitration—a move designed to open the door to a possible strike since neither side is likely to agree to a binding decision from an arbitrator. The letter was sent after an 8-6 vote by the MEC that some complained was engineered behind closed doors, rushed through without adequate consideration and taken without waiting for FedEx’s response to the union’s latest demands. 

The bad blood got so bad that some council representatives said they were essentially ambushed by plotters seeking to hijack the negotiations, FreightWaves reported. In a separate correspondence to crew members, a top FedEx official said the union’s shifting stances because of the internal divisions has made it difficult to come to an agreement because it doesn’t know what demands to take seriously. 

ALPA on Thursday blamed FedEx for trying to undermine union solidarity by sowing “inflammatory information and unsubstantiated allegations” in the media, notwithstanding the fact that the internal tensions were clearly spelled out in the organization’s own documents.

“Contrary to attempts to divide our governing body and pilot group, we want to reaffirm that FedEx pilot leadership stands united in its pursuit of a contract that reflects the hard work and dedication of our members. The decision to request a release from the National Mediation Board was not taken lightly, but was made in the best interest of ensuring that a resolution to our contract negotiations was completed in a timely and constructive manner,” the union said in response to the article.

It is unclear when the pilots union made its latest proposal to FedEx, but Wednesday’s membership update from the MEC and an official who was subsequently contacted implied that it happened on Feb. 27, the first day of three mediated sessions in a row. The MEC said it was angered that FedEx failed to give an answer on Feb. 29 and instead said it needed two more weeks before it could address retirement issues.

“A hallmark of the company’s behavior in negotiations has been stall, drag feet and delay. With only two days of meetings scheduled in the month of March, and only one week set aside to meet in April, we simply could not play along with the delay game any longer,” the board said. 

The parties have been negotiating for nearly three years on an updated pilot contract and have been in federal mediation since October 2022. 

The leaders said the delay solidified the view that FedEx had no intention of making improvements to the tentative agreement pilots rejected last summer. A majority of FedEx pilots were displeased with the agreement’s level of job protections, back pay, pension options and quality-of-life considerations and the fact that pay increases were below those recently achieved by passenger-airline counterparts. 

FreightWaves previously reported that FedEx did not plan to increase the value of the rejected deal in the new round of mediated talks. The MEC letter characterized management’s insignificant changes so far as “insulting.” 

Scope Clause

Of particular concern, according to the correspondence, is the company is not addressing pilot concerns that more flying will be outsourced, which would reduce their earnings. ALPA wants to improve clauses in the existing contract that define what type of flying can be done by pilots that aren’t employed by the airline. 

Last year’s tentative agreement would have allowed FedEx Express to place more work during surge periods with third-party airlines without paying a higher penalty. But many pilots were concerned that language prohibiting outsourcing if FedEx reduces flight hours or furlough pilots wasn’t strong enough. Under the existing scope arrangement, FedEx pays a financial penalty to the union that gets distributed to pilots if the company goes above the agreed cap on shipment volume that can be given to charter airlines. Opponents feared FedEx might simply not replace older pilots as they retire and then claim a need to hire partner carriers to meet demand.

The latest union proposal trades smaller monetary penalties for using contractors in exchange for more job protection. The memo accused management of rejecting most of the offer and deferring discussions about reduced crew operations into the future. 

Much of the tension centers on the extent to which FedEx intends to reduce the pilot workforce as it reengineers the air network to reduce structural expenses in response to shifting e-commerce patterns, which have resulted in weaker overnight express volumes. Company executives have outlined a “Tricolor” strategy that would shift a greater percentage of the fleet towards transporting deferred freight, which would be concentrated during the daytime. They have also publicly acknowledged the need to reduce the ranks by several hundred from the current level of 5,800 pilots. 

“By definition, the Orange network is FedEx planes and FedEx pilots, just retimed to go into day sorts versus tighter night sort windows. We discussed that on our Q2 call, and have been unequivocally clear about this in all company communications around Tricolor,” said FedEx spokesperson Caitlin Adams Maier.

The MEC said it wants FedEx to put in writing that FedEx pilots will be used to fly that freight. 

“When you add their scope [suggestion] to their pitifully low pay rate offer and their shuffling of retirement benefits and throw in their insistence on including concessions” on guaranteed flight hours for training or vacation that overlaps with normal downtime “what we’ve been offered from the company is a recipe for another failed tentative agreement,” the MEC told members.

The tenor of the messages reflects recent changes within the MEC. Most of the representatives who endorsed the failed tentative agreement have been recalled and replaced. Initially, only a few representatives were recalled after the failed tentative deal and the new representatives were in the minority. Now they appear to have gained the majority. 

The MEC is looking to fill a vacancy for chairman of the negotiating committee, according to the member update.

Late Thursday, the MEC voted chairman Billy Wilson out of office, an action he predicted last week would happen because of the power struggle and disagreement over the NMB letter’s timing.

“Our request to be released [from NMB oversight] should demonstrate to the company and investors that we will not settle for a subpar tentative agreement nor allow the process to be delayed any further,” the MEC wrote. “The trajectory plotted by the company would never yield a tentative agreement that we as a MEC could endorse, much less one that the membership could overwhelmingly ratify.”

The union has consistently criticized FedEx for citing lower profits as reason for caution on a new pilot contract, noting that the company in December announced a $1 billion accelerated share buyback program. 

During a special in-person meeting at the MEC’s Memphis, Tennessee headquarters on Wednesday, Southwest Airlines Pilots Association president Casey Murray described how a deal was reached in January that would raise pilot pay about 50 percent over five years. The FedEx deal shot down last summer included a 30 percent pay increase over 4.5 years. Murray said the agreements reached at Delta Air Lines and United Airlines set a pattern for a successful outcome with Southwest. 

The MEC plans to conduct an informational picket on Wall Street when FedEx releases quarterly results next Thursday in hopes that investors will convince management to speed up negotiations.  

Editor’s Note: This article first appeared on FreightWaves.

The post FedEx Pilots Take Harder Line as Contract Dispute Drags appeared first on FLYING Magazine.

An additional 200 to 300 pilots could become redundant late this year if the company, as expected, loses a large chunk of work for the U.S. Postal Service, a senior executive recently told a group of airline employees.

The attempt to shed pilots, who have already absorbed a steep decline in pay, comes as collective bargaining resumes for a new contract.

Management is likely to invoke contract clauses that would allow it to go below the minimum guarantee of 68 flight hours per month when available flying time falls below certain thresholds, said Pat DiMento, FedEx’s vice president of flight operations and training, in a secretly recorded meeting with pilot evaluators that was shared with FreightWaves. Pilots get credit for the minimum number of hours regardless of how many hours are actually flown.

FedEx Express, the largest cargo airline in the world, has essentially been able to pay the equivalent of 200 fewer pilots since the summer by limiting distribution of flight schedules, effectively reducing the current surplus of employees, he said. 

FedEx expects 350 to 450 pilots to accept early-retirement incentives when a deal on a new labor contract is reached, which would allow the company to maintain current minimum credit hours and flight schedules, said DiMento.

In the absence of a tentative contract, the airline would need to reduce the crew list by 200 individuals any way possible to prevent further cuts to pay guarantees. Achieving that figure — through retirement, resignation, leave of absence or offers from competitors — would save the company $50 million per year.

Average daily parcel volume for FedEx Express declined 2 percent and global average daily freight pounds fell 18 percent year over year in the quarter ended Nov. 30. Express volumes were down more than 10 percent for three consecutive quarters through last February and then shrank at single-digit levels for the remainder of 2023. 

FedEx planners are already noticing a decline in January volumes and removing flight hours they previously expected to operate, the flight operations chief recently told the quality control pilots. It was a friendly audience because they are quasi-supervisors that sit between line pilots and management. 

“Unless we get a new contract, it’s [pilot pay] not going to magically fix itself because I don’t see the economy turning around,” DiMento said.

Addressing Labor Pressure In Down Market

Investors were disappointed that major operational savings at FedEx were unable to fully offset lower revenue during the second quarter. Express faces higher labor costs if pilots secure a contract upgrade and newly mobilized mechanics are able to form a union.

Both outcomes are far from certain. 

Workers at Amazon fulfillment centers, Starbucks locations, and other businesses have voted in recent years, for varying reasons, against joining a union. And pilots had more leverage a year ago when major passenger airlines scrambled to refill positions after the pandemic as travel demand spiked. Delta Air Lines plans to hire half as many pilots this year as it did in 2022 and 2023 because the pilot shortage has eased, according to Aero Crew News.

Meanwhile, FedEx is now downsizing internal fleet operations to eliminate excess capacity and is looking to shed pilots amid diminishing parcel volumes.

FedEx cockpit crews, represented by the Air Line Pilots Association (ALPA), in July rejected a tentative contract worth $3.8 billion that would have increased pay by 30 percent over 4.5 years and are back at the bargaining table.

The last round of negotiations, mediated by the federal National Mediation Board, took place Dec. 12-15, and the sides are scheduled to meet again Thursday and Friday. Two more bargaining sessions are set for January.

A majority of FedEx pilots were displeased with the agreement’s level of job protections, back pay, pension options, and quality-of-life considerations and the fact that pay increases were below those achieved by passenger-airline counterparts. Pilots at Southwest Airlines, for example, are considering whether to accept a new contract that would raise pilot pay 50 percent over five years.

After FedEx announced it is accelerating a $1 billion share buyback, ALPA last week said the company should also invest in cockpit crews to provide stability for long-term growth. The union argues pilots deserve to be compensated for the sacrifices and risks taken so the company could earn record profits during the COVID crisis.

Deep division within the pilot group could hamper chances for a quick deal. A slim majority voted to kill the tentative contract, and some wanted to recall the negotiating committee. Those pilots are upset with ALPA for being too accommodating toward FedEx, including in a 2015 contract they say eroded schedule flexibility and other quality-of-life issues. 

Many union members have lost faith in the ability of Capt. Pat May, the chairman of ALPA’s FedEx negotiating committee, to deliver a favorable labor agreement, especially after he did not resign, as promised, when the tentative deal went down last summer, a pilot told FreightWaves. The source asked not to be identified so as not to jeopardize his job or union relationship.  

Pilots over the years left carriers such as American, Delta, United, and Southwest for what they believed were better jobs at FedEx.

“Our work rules are well below our passenger peers. Pay and compensation is starting to lag and stagnant. We fly horrendous schedules which affect our health,” the pilot said. “This entire situation may have killed the best airline job in America.”

Hourly pay scales vary by type of aircraft flown and seniority. A widebody (MD-11 or Boeing 777) captain at FedEx makes $277 in the first year and $326.50 with 12 years on the job, according to data compiled by the Air Line Pilots Association. That compares to $345 per hour in year one at Hawaiian Airlines, a new entrant in the freighter space, to fly the Airbus A330. After a dozen years at Hawaiian, a freighter captain can make $376 per hour. Pilots at UPS make $344 per hour, after an initial probation year, and $366 by year 12.

A veteran FedEx captain pulling a typical 80 to 90 hours per month annually makes about $363,000 in pay and benefits, compared to about $396,000 at UPS, according to analysis by Kit Darby, an aviation labor consultant. A senior captain at Delta Air Lines or United makes about $416,000 per year.

DiMento indicated that FedEx plans to offer the same amount of total money to the pilots in this go round as it did in the tentative agreement, but reallocate it differently between retirement, higher pay scales, signing bonuses or other buckets. 

The worth of the contract will be more than last July because higher pay rates and signing bonuses will have accrued since then and will be retroactively covered in the new contract, DiMento explained.

One of the check airmen, who said he voted in favor of the negotiated contract, questioned if the strategy will work.

“The young guys, their mentality is, ‘We came to this premier airline and we want a premier contract.’ I don’t know if they are going to go for it,” he told DiMento. The total compensation and lifestyle for a veteran FedEx pilot compares very favorably to one at Delta, he added, “but they don’t listen.”

Many pilots were concerned that language prohibiting outsourcing to third-party airlines if FedEx reduces flight hours or furloughs pilots wasn’t strong enough in the tentative agreement, but DiMento stressed management wants to maximize use of its own aircraft and won’t seek operating leases when its own pilots aren’t busy. He said that FedEx wanting long-term transportation service agreements to replace in-house flying undermined passage of the interim contract.

Economic Leverage Shifts

When the parties began negotiations in 2021 to amend the existing contract, the FedEx fleet was maxed out to meet soaring freight and parcel demand, stoked by people buying goods online rather than services because of social distancing during COVID.

The market has drastically changed since then, with e-commerce growth returning to normal and air cargo volumes contracting for nearly 18 months. FedEx Express was hiring pilots as fast as it could and didn’t forecast the severity of the downturn. The company now has more aircraft and pilots than needed to fly current volumes.

There are about 700 surplus pilots out of 5,800 on the payroll, according to FedEx officials. 

In the fall of 2022, FedEx launched an initiative to take out $4 billion in structural costs, especially in the air network, and redesign the entire parcel distribution network for greater efficiency. The air overhaul could make FedEx Express less reliant on aircraft than in the past.

The air and international unit flew fewer hours in 2023, deactivated aircraft until demand returns, accelerated the retirement of older planes, and flew more direct routes. Since the company still has new freighters on order, it’s unclear if the total fleet size will decrease. FedEx last year decided to close three pilot bases in the U.S. and overseas and its Los Angeles airport maintenance facility in 2024. The repair jobs will be sent to Indianapolis.

FedEx is only providing the minimum number of flight hours guaranteed in the existing contract. Pilots are making substantially less money because they have to share a smaller pool of flying assignments. One pilot contacted by FreightWaves said his pay has been cut back 30 percent this year.

In November, management prodded pilots to consider job openings at PSA Airlines, a regional feeder carrier owned by American Airlines, that offered incentives to attract FedEx and UPS pilots.

The FedEx pilot said he had not heard of any colleagues taking the PSA deal. Pilots said in online chat forums that they considered the request disrespectful to veteran crew members who can go directly to a large airline and enjoy superior benefits. PSA did not respond to a message about the success of the recruiting effort.

Since few pilots have been willing to voluntarily leave so far, guaranteed pay could soon fall to about 60 or 61 hours per month, DiMento told the check airmen. That would effectively reduce pilot rolls by an additional 100 individuals and save FedEx about $100 million per year.

He speculated that it would take a $500,000 exit package today to entice some pilots into early retirement because many near eligibility are holding off until a new contract is in place. Normally, about 140 FedEx pilots retire at the end of each year, but only about 40 captains did so in 2023.

When a contract is finalized, FedEx will make it attractive to retire by waiving the requirement for giving notice of early retirement and enhancing the severance package, said DiMento.

FedEx has to balance a new contract offer against the economic realities it faces. It can’t afford to give pilots $500 million extra to close out a deal, DiMento said, when it’s struggling to generate revenue.

“In this business environment, as a pilot you can’t go in there asking for the world. It’s just not going to happen,” he said.

And, the flight operations chief added, the substantial loss of the existing U.S. Postal Service contract means FedEx will have 200 to 300 more excess pilots by October. The Postal Service is in the third year of a transformation plan that includes migrating most air volumes to ground transportation to save money.

• READ MORE: ATI Pilots Seek Federal Mediation on Stalled Contract

Mechanics Mobilize

Meanwhile, FedEx Express mechanics recently launched a campaign to join the Teamsters union.

The organizing effort targets about 5,500 to 6,000 aviation, truck and facility mechanics, and possibly some maintenance workers at FedEx Express, said Teamsters spokesman Matt McQuaid in an email exchange.

Hundreds of technicians have signed authorization cards saying they want the Teamsters to represent them in collective bargaining, the union said in a Dec. 20 news release.

The Teamsters’ goal is to petition the National Mediation Board for a representation election within the next few months, McQuaid said. The NMB will conduct an election if employees or a union is able to collect signatures from at least 50 percent of workers in a potential bargaining unit. Labor relations for airlines are governed by the Railway Labor Act, which highly regulates bargaining procedures that unions and employers must follow, and facilitated by the NMB.

That means any union has the harder task of winning national support across the country instead of organizing individual facilities at the local level.

“The response has been overwhelming,” said Joe Ferreira, director of the Teamsters Airline Division, in a Nov. 13 letter to workers in which he accused FedEx management of engaging in “an anti-union propaganda campaign that grossly misrepresents the factions of your unionization drive, the National Mediation Board process, and disregards federal law.”

According to ZipRecruiter, the average aircraft maintenance technician at FedEx makes $72,000 per year.

The FedEx campaign comes as the Teamsters have tried for more than a year to organize technicians at Delta Air Lines.

“We’re aware the Teamsters are targeting our mechanics at FedEx Express. We respect the right of our employees to choose whether or not to support such efforts. We are incredibly proud of the culture we have built over the past 50 years that empowers our employees’ voices; values their creativity and contributions; and encourages collaboration that is important to them, their career, and our future,” FedEx said in a statement to FreightWaves.

The Teamsters last year chalked up significant wins in the express logistics sector. An aggressive strategy by new President Sean O’Brien forced UPS to grant big pay increases to 340,000 workers while 1,100 ramp workers at DHL Express’ Cincinnati air hub won their first contract, pending ratification, after a 12-day strike.

Satish Jindel, the CEO of consultancy ShipMatrix, said in an interview that “the Teamsters should look for a better target [than the FedEx mechanics] where the law may not limit them and working conditions and wages are bad.”

Editor’s Note: This article first appeared on FreightWaves.

The post FedEx Pilots Face Pay Cuts, Buyouts as Contract Talks Resume appeared first on FLYING Magazine.