FedEx: Labor Bill Endangers Plane Purchases

FedEx is holding billions of dollars worth of business – and jobs – over the heads of Congress and the Obama administration by conditioning future aircraft purchases on keeping its parcel drivers away from the National Labor Relations Act.

The express carrier notes in its March 22 quarterly earnings report filed with the Securities and Exchange Commission that an option exercised in January to purchase 30 Boeing 777 aircraft is contingent on “there being no event that causes FedEx Express or its employees not to be covered by the Railway Labor Act.” FedEx also holds an option to purchase another fifteen 777s from Boeing.

The condition puts pressure on lawmakers to withdraw language currently in the Federal Aviation Administration reauthorization bill requiring FedEx Express workers to be covered under the more union-friendly National Labor Relations Act.

As part of the NLRA, FedEx parcel truck drivers could be unionized by the Teamsters union one terminal at a time, as opposed to all at once in a potentially more expensive nationwide campaign required under the RLA.

Donald Broughton, an analyst with Avondale Partners, estimates the value of each aircraft at $225 million, putting the value of the investment at close to $7 billion, with an option to spend another $3 billion.

“It’s one of the smartest political moves I’ve seen in a long time,” Broughton said of FedEx’s investment contingency, pointing out that it would create thousands of jobs at Boeing, jet engine maker GE, and hundreds of subcontractors.

“We find it more than a bit intriguing that now Congressmen will have to vote against Boeing, GE, and the creation of thousands of unionized jobs for machinists (and several other trade unions) in order to change the labor law status of FedEx in an attempt to possibly help the Teamsters union.”