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Non-Tech : FedEx (FDX) -- Ignore unavailable to you. Want to Upgrade?

To: Darryl Olson who wrote (229)	11/9/1998 11:19:00 AM
From: Darryl Olson	Read Replies (1) \| Respond to of 524

FedEx: No harm from Strike Threat...Yet Stock of the Day Nov 09, 1998 FedEx: No Harm from Strike Threat...Yet Here's a thought for Christmas: If your package absolutely, positively has to be there overnight, are you going to use Federal Express (NYSE:FDX - news) ? Your answer, of course, probably depends a lot on what the pilots at FedEx decide to do about their current contract. Pilots at the Memphis, Tenn.-based company are very close to going on strike, which could put a serious strain on the cargo company's ability to get your package to its destination on time. And even if the company gives the public an assurance that it will be business as usual, current and would-be customers may not be willing to take a chance. Strike authorization ballots will be held until Monday. They were originally supposed to go out on Thursday, but the pilots' association decided to give contract talks a little more time. If contract talks are unsuccessful, though, ballots will go out. When the vote comes in, which should be during the first week of December, the union's board of directors will decide whether a strike will be called. On top of the strike threat, pilots have also vowed to no longer work overtime, effective today. The strike--should it happen--couldn't come at a worse time. For the last two years, FedEx has done an excellent job of making up ground on United Parcel Service (UPS). A prolonged strike could thwart FedEx's momentum, as customers defect to some of the company's competitors. Moreover, the strike threatens FedEx's always-important Thanksgiving and Christmas seasons, when revenues are plentiful. Since 1994, the company has seen annual revenues climb from $8.5 billion to nearly $16 billion in 1998. You can bet that UPS and the United States Postal service are licking their chops at the prospect of picking up some of FedEx's business. Still, adding additional capacity, say competitors, could be a dicey proposition during the holiday seasons, when most package carriers work at full tilt. That's not to say, however, that they wouldn't be willing to try. FedEx officials, meanwhile, say they have contingency plans in place if the pilots decide to strike, enabling the company to function without missing a beat. The company plans on contracting planes and flight crews from other companies, in addition to tapping its own large fleet of trucks. The dispute between FedEx pilots and FedEx management is about money. The company is offering pilots a 17 percent pay increase over five years. The pilots, however, want 24 percent over the next four years, which includes a 5 percent raise retroactive to a negotiated date. The pilots are basically looking for something similar to what UPS workers won last year. FedEx pilots make about $130,000 annually, little changed since pilots unionized in 1993. Investors, based on FedEx's stock price, seem to be betting that something will be worked out, or that a strike will have little impact on the company. Over the last month, FedEx shares have moved up about 20 percent. Still, you'd have to think that a protracted work stoppage by FedEx pilots would eventually begin to take a toll on the company, especially if it continues well into the early part of the new year--when FedEx competitors would be better situated to handle the excess capacity. In the meantime, if you've got something to send during the holidays, you may not want to wait until the last minute. If you do, it may not absolutely, positively make it on time.