Times are tough all around.
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Pilot Over Manning Road Map
FCIF 08-0744 (Admin)
December 31, 2008
By now, most of you are aware that the Company is taking significant action on a broad basis in response to the deteriorating economic conditions we face. In this environment it is critical that we find the most efficient means of servicing our customers. Doing so entails an analysis of our route structure, fleet requirements and staffing assumptions. The purpose of this communication is to advise you where I believe we are right now, and where I think we are headed.
We are in a significantly overmanned state that cannot be sustained any longer. Although we have worked very hard to find and justify additional flying in order to offset our over-manned situation, it is now clear that those efforts will be overshadowed by macro-economic conditions. Airline Scheduling has dramatically reduced the flight schedule to more correctly match the airplane capacity with market demand. This reduction in flying contributes additional surplus pilots to our already excess flight crewmember staffing and will more than offset any additional flying we may be able to generate. To be a little more specific, the following is a list of factors that are required and/or contribute to this situation:
Reduced flight hours associated with route reductions and consolidation
Early retirement of DC10 aircraft.
Parking of A310 aircraft due to excess fleet capacity
Replacement of B727 aircraft with B757
Slower introduction of 777 airplanes into the system, 4 to 5 per year through 2012
Age 60 retirement change (Fair Treatment for Experienced Pilots Act)
With these business realities in view, earlier today, we advised ALPA of our intention to reduce the Minimum Bid Period Guarantee to the minimums set forth in Section 4.A.2.b. of the contract (48 CH in a four week bid period and 60 CH in a five week bid period). This is effective beginning with the February, 2009 bid period. In February, we expect average BLG's to be well above those minimums. Conditions are very fluid and we will be constantly reevaluating the situation. As we have consistently done in the past, we will mitigate crew position staffing concerns to the extent practicable with BLG management. Contract provisions described in Section 25.D. continue to apply to line construction and we will make every effort to balance line values where possible.
An excess posting on most aircraft types is targeted for the February/March 2009 timeframe due to the factors mentioned above and especially the large number of aircraft scheduled for storage. This will create further downward pressure on junior pilots in crew positions where the over-manning situation is most acute.
Section 23, Furlough, remains a possibility depending upon the severity of the continued economic downturn. Current projections indicate that revenue operations require fewer than 4,000 active pilots for the next several years. Considering the slowing rate of attrition, this condition translates to surplus pilots even with reduced BLG's (the surplus is over 700 if one assumes historically normal BLG's). Retirement forecasts indicate no more than 35 to 50 pilots per year will retire for the next three years. After 2012, retirement rates are expected to return to rates of 150 to 200 per year through 2017, as were anticipated prior to the regulated age change.
The economic crisis will have a long lasting impact on FedEx - an impact that will be felt years after the economy rebounds. This is particularly true at FedEx Express because we offer the premium priced services in the FedEx portfolio. Customers who have switched to lower priced services are not likely to switch back even in better times. Also, many customers are downsizing in ways that will reduce the number of packages they ship with us well into the future. In fact, some of our current customers may no longer be in business by the time the economy rebounds. These realities dictate that FedEx take measures to permanently balance our cost with expected volume and revenue levels for the extended future.
No-one likes to be the bearer of bad tidings. I feel strongly, however, that I owe it to you to be candid about the challenges our management team sees ahead of us. These changes and realignments are not easy for anyone concerned, however, the need to make adjustments, carefully realigning schedules and aircraft lift to load requirements to contain costs and manage the airline realistically, is paramount. By implementing these measures, we aim to secure the future of our operation and our collective futures. Regardless of your status and position on the seniority list, it is imperative that we all stay focused and continue to operate safely and reliably despite all of the external pressures we are facing.
Thank you for your time, dedication and continued professionalism,
Captain Paul E. Cassel
Vice President, Flight Operations
FedEx Express