Tuesday November 3, 8:24 pm Eastern Time
Fedex customers could be left out if pilots strike
By Brad Dorfman
CHICAGO, Nov 3 (Reuters) - Federal Express, the world's largest air express
package carrier, warned on Tuesday that a threatened pilot's strike during the peak
holiday season may drive away some of its biggest customers.
And those customers could be left with no alternative shipping service during the biggest retail season of the year.
''In general, at this time of year, it is very difficult to all of the sudden just start adding capacity,'' said Norman Black, a
spokesman for Atlanta-based United Parcel Service [UPS.CN], Fedex's largest express package competitor.
The FedEx Pilots Association (FPA), which represents about 3,200 pilots, plans to mail strike-authorization ballots to its
members on Wednesday, with results from the vote due the first week of December.
The union has said if a strike is approved, the pilots could walk out any time during December. It is unclear whether the
pilots would have to be cleared to strike by the National Mediation Board.
The union has already voted not to work voluntary overtime as of Nov. 9.
FedEx, a unit of Memphis, Tenn.-based FDX Corp. (NYSE:FDX - news), is in negotiations for what would be the
first-ever union contract at the carrier. Issues include wages and scheduling.
An FPA spokesman said the company left the bargaining table Friday night when the union did not accept the company's
latest offer by a midnight deadline.
A spokesman for the company said new talks have not been scheduled.
In a letter to employees last Friday, FedEx Chief Executive Theodore Weise warned that the company is on the brink of
losing several large customers who must finalize shipping plans for the holiday season.
If there is a strike, FedEx would continue to operate with a limited air network and expanded ground network, Weise
said.
Even so, competitors might be hard pressed to add more business during the already loaded holiday period.
''There's not going to be a lot of ways to move this stuff around Christmas,'' said John Pincavage, an analyst at Warburg
Dillon Read.
The situation differs from the strike by the International Brotherhood of Teamsters at UPS in August 1997, which
occurred during a less busy time, he said.
UPS will consider shipping for any customers that are willing to sign a contract extending beyond the holidays, Black
said. But the company already plans to add about 90,000 seasonal workers for the holidays, and may find it hard to add
more capacity, he said.
The U.S. Postal Service has contingency plans in place to handle overflow from FedEx, but is also concerned about
existing demands during the period.
The service will try to ''facilitate the handling of increased Express Mail volume without compromising existing mail
service,'' Sandra Harding, a spokeswoman, said.
UAL Corp.'s (NYSE:UAL - news) United Airlines, which is trying to increase its share of the premium shipping
customers, will try to add service where it can. But planes are already full, a spokeswoman said.
Complicating matters for shippers is a decision by unionized pilots at Seattle-based Airborne Freight Corp.'s
(NYSE:ABF - news) Airborne Express not to fly voluntary overtime as part of a labor protest.
FDX shares closed up 93.75 cents at $54.75 on the New York Stock Exchange. |
