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FedEx (FDX) Pilots Are a Step Closer to Getting Good Pay Hikes
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FedEx Corporation (FDX - Free Report) received encouraging tidings on the labor front when the union (Air Line Pilots Association or ALPA) representing the company’s pilots voted to approve the tentative deal. The provisional deal was inked by the union and FDX on May 30.
Post inking of the 5-year tentative deal, the FedEx Master Executive Council ("MEC"), which is the governing body of FDX’s unit of ALPA, voted in its favor. The deal on materialization would make the company’s pilots eligible for a 30% pay raise.
Apart from significant pay hikes, the deal includes clauses like a 30% increase in legacy pension for the betterment of pilots’ quality of life. However, the new contract still has some way to go before it becomes effective. The approval of the tentative agreement does not necessarily mean that the deal will be operational.
The provisional deal will become effective only after successful ratification by FDX’s pilots. The voting procedure is a lengthy one and will run from Jul 5 to Jul 24. Ahead of the vote, MEC Negotiating Committee will be undertaking a series of measures including hosting road shows from Jun 20 with the purpose of educating the pilots on the agreement.
Notably, negotiations with the company on pilots’ pay hike and other clauses commenced in May 2021. The contract became amendable in November 2021. In November last year, the concerned parties -- ALPA and FDX entered mediation with the National Mediation Board. Now, that the union leaders have approved the tentative deal, the same would take effect in August, if successfully ratified, and would be amendable in 2028.
With air-travel demand having bounced back very strongly from the pandemic lows coupled with staff shortage in the Zacks Transportation sector, the bargaining power of various labor groups has naturally increased.
As a result of the increased bargaining power, there have been many such deals lately in the sector. For example, earlier this year Delta Air Lines' (DAL - Free Report) four-year contract with pilots was ratified. The approval has made DAL’s pilots eligible for a 34% pay raise over the next four years.
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.
CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter 2019 levels on higher cargo volumes and yields. Copa Holdings' fleet modernization and cost-management efforts are commendable. The Zacks Consensus Estimate for current-year earnings has been revised 22.3% upward over the past 60 days.
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FedEx (FDX) Pilots Are a Step Closer to Getting Good Pay Hikes
FedEx Corporation (FDX - Free Report) received encouraging tidings on the labor front when the union (Air Line Pilots Association or ALPA) representing the company’s pilots voted to approve the tentative deal. The provisional deal was inked by the union and FDX on May 30.
Post inking of the 5-year tentative deal, the FedEx Master Executive Council ("MEC"), which is the governing body of FDX’s unit of ALPA, voted in its favor. The deal on materialization would make the company’s pilots eligible for a 30% pay raise.
Apart from significant pay hikes, the deal includes clauses like a 30% increase in legacy pension for the betterment of pilots’ quality of life. However, the new contract still has some way to go before it becomes effective. The approval of the tentative agreement does not necessarily mean that the deal will be operational.
The provisional deal will become effective only after successful ratification by FDX’s pilots. The voting procedure is a lengthy one and will run from Jul 5 to Jul 24. Ahead of the vote, MEC Negotiating Committee will be undertaking a series of measures including hosting road shows from Jun 20 with the purpose of educating the pilots on the agreement.
Notably, negotiations with the company on pilots’ pay hike and other clauses commenced in May 2021. The contract became amendable in November 2021. In November last year, the concerned parties -- ALPA and FDX entered mediation with the National Mediation Board. Now, that the union leaders have approved the tentative deal, the same would take effect in August, if successfully ratified, and would be amendable in 2028.
With air-travel demand having bounced back very strongly from the pandemic lows coupled with staff shortage in the Zacks Transportation sector, the bargaining power of various labor groups has naturally increased.
As a result of the increased bargaining power, there have been many such deals lately in the sector. For example, earlier this year Delta Air Lines' (DAL - Free Report) four-year contract with pilots was ratified. The approval has made DAL’s pilots eligible for a 34% pay raise over the next four years.
Zacks Rank & a Key Pick
FDX currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the same sector is Copa Holdings (CPA - Free Report) . CPA is currently sportinga Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.
CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter 2019 levels on higher cargo volumes and yields. Copa Holdings' fleet modernization and cost-management efforts are commendable. The Zacks Consensus Estimate for current-year earnings has been revised 22.3% upward over the past 60 days.