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FedEx Pilots Approve Contract

The pact includes an 18% pay raise over four years.
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Pilots at

FedEx

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overwhelmingly approved the company's four-year contract offer, as 94.6% of them voted for ratification.

The contract includes 18% pay raises over four years, starting with 9% the first year, for the 4,700 pilots. Additionally, pilots get signing bonuses as high as $30,000 for a senior widebody captain. Nearly 94% of FedEx pilots participated in the voting.

"We focused on maintaining contact with our pilots and their expectations and working very hard with FedEx management to arrive at ... a sustainable contract," David Webb, chairman of the FedEx unit of the Air Line Pilots Association, said during a news conference Tuesday. He noted there was "no significant public confrontation" with the company.

The contract will take effect Oct. 30, marking the completion of a negotiating process that began more than 30 months ago. The conclusion came quickly, however. Once negotiators at rival

UPS

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reached a tentative agreement in June after nearly four years of talks, a preliminary deal was struck at FedEx in August.

FedEx acknowledged relatively early that pilots deserved a pay raise, Webb said, and hourly rates weren't discussed until near the conclusion of the talks. The crucial issues were retiree health care and job security, he said.

Pilots got "seamless" health care from active status through retirement, as well as job security that Webb called "the crown jewel of our accomplishments." It includes a contract with the parent company, rather than with FedEx Express, and an agreement that "they will not create an alter-ego airline."

Webb said FedEx and UPS "are at the top of the pay rate right now," far exceeding salaries at the legacy passenger carriers whose pilots once ruled the roost. He declined to discuss why only 56.5% of UPS pilots supported their contract, which he said was roughly similar.

Industry sources speculated that UPS suffered from going first in negotiations, establishing a framework that was easily adopted by FedEx. The UPS talks also were hampered by dissension among the pilots. In its talks, UPS had to make up ground to catch up with the rates paid by FedEx.

Last month, FedEx reported that earnings surged 40% for its fiscal first quarter, which ended Aug. 31. During the quarter, the company anticipated the contract's approval and took a 20-cent-a-share charge, equivalent to about $145 million, for upfront expenses including the signing bonus.

In a prepared statement, FedEx Express CEO David Bronczek said that "FedEx Express and ALPA have worked tirelessly over the last two years to reach what we all believe is a competitive and mutually beneficial contract."