Shaman

Pax carriers and Cargo carrier is not an apples to apples comparison. Comparing the plights of their workforce overlooks the most glaring difference. Competition.

Deregulation has decimated much of the core compensation and benefit stability/gains that the passenger carriers enjoyed in prior to the 80's. The number of passenger airlines that have (and continue to) come and go is staggering. Competition is fierce and the race to the bottom in terms of wages and working conditions anecdotally and empirically appears to be accelerating. Norwegian is working on next leveling that whole game.

The cargo carrier airlines have grown rapidly with few if any new entrants and many smaller weaker carriers simply dying off, as end to end logistic integration became more important. ITs a duopoly and Deregulation has had limited effect because the barriers to entry are simply too high for a southwest type insurrection from multiple carriers.

Amazon has gotten in the game with plenty of cash to burn, but building a similar redundant frame work seems to make less sense than just buying into the duopoly and enjoying the leverage and control while making your competitors sweat.

So if your looking to place a chip and the past is prologue there are compelling reasons to give considerable favor to cargo haulers for stability.

401k's and B funds are NOT a benefit improvement!

It is simply more shifting of risks and costs on to the employee that began in the 70's & 80's and has only accelerated (can you say health insurance premiums?)

But as the man says, "you pays you money and take your chances"

The Walrus

Also, a smaller pax carrier can exploit limited routes to get a foothold into the market. In the cargo world you need to be able to offer unlimited market coverage.

The problem with Amazon is that they have product to fly from their distribution centers to their customers, but nothing to fly back. If half of your flights have no freight I would think that it would not be sustainable.

Patches

From the stock prices.......I think they're loaded with cash for the return trip.

Naven

That is why eventually they will be competing directly with UPS and FedEx and offering delivery service to the public at a much lower cost.

FTFF

When Amazon starts doing business to business B2B deliveries, begins dabbling in the supply chain and logistics industry, or be opens up an international shipping arm then I'll start raising my eyebrows. Online retail is only one slice of the pizza for brown and purple.

Pensions are relatively safe at FX and 5X - Small pilot groups who don't typically live too long after retirement

olly

Let's say you are 45 when hired and work to 65. At FDX, 2%xyears service =40% of high five years of earnings. Assume you max out~$104k annual, 8666 per month at retirement. That's straight to the earner- no survivor benefit. To equal this stream of annuitized income for life you would need about $1.6M "saved" in your B fund.

Think you can accumulate that much in 20 years? that would require $3892/month and average annual returns of 5%. No bear markets, and assume risk of portfolio loss approaching retirement date.

Assume you average $210k across your 20 years of service. You would need in excess of 23% into a 401K to accumulate that $1.6M.

I was a UAL furloughee and lost my A fund, so I'm aware. You must also be aware of the ERISA laws and what is actually required for a corporation to make a distress termination of the a DB plan. Basically bankruptcy and a court and PBCG approved termination. A company can not unilaterally terminate a plan, but the union could negotiate it away in collective bargaining. ( a very, very bad idea IMHO).

I am very satisfied that we have both at FDX.

Play with the #s https://www.immediateannuities.com/i...es-step-1.html http://www.thecalculatorsite.com/fin...calculator.php

PurpleToolBox

Yes, I agree at FDX we have the best of both worlds. We have a 401K and a A Plan. This makes our retirement diversified. Currently federal law requires FDX to keep three times the cash on hand to pay out expected liabilities on the A Plan and that plan is 100% funded.

FDX pilots would have to suffer both a stock market disaster and a company bankruptcy / ALPA sell off to see our retirements go away. All of those things happening simultaneously are unlikely. Who knows what the future holds?

FDX doesn't have a "cash over the top" provision on the Company 8%/9% contribution, but we do have an overall cash over the top provision above the $54,000 415(c) limit (for 2017). This is the result of our Excess Sick Bank pay out which is 72 credit hours times your current pay rate. Here is how it works.

This assumes a widebody Captain with 15 years and he/she maxes out his/her own contributions and maxes out the sick bank.

Company Contribution $21,600
401(k) Pre-Tax Match $500
401(k) Deferral $18,000
Pilot After-tax (5%) $13,500
Excess Sick Bank (72 CH X Pay Rate $304.14 per hour) $21,897.36
TOTAL $75,487.36

But the IRS limit for 2017 is $54,000 so the pilot receives a check back for $21,497.36.

If you are healthy and max your sick bank, you will receive cash over the top.

If you are 50 or older, you can contribute an additional $6,000 in catch-up contributions above the IRS $54,000 limit.

Flaps50

Thanks Olly, we need to have guys start informing our group of what the A plan is actually worth before our pilots make a collectively bad idea come to fruition. The senior bubbas that have 25 years here are already maxed out with the A plan, they would likely be happy to sell us younger cats down the river to walk away with more B plan plus the their maxed out A plan. IMO, We can not let this happen.

Having two tiers of retirements here at Fedex is also a bad idea IMO, we don't want to have 1/2 the group voting for only their piece of the retirement pie when it comes to negotiations; there's no cohesion there. UPS increased their A plan retirement a very generous amount last time, we can start with improving ours on the next contract now and ask for an increased B plan as well since UPS has a 3-4% higher B plan too.

Flaps50

It amazes me how many pilots here don't know about this information. A captain or pilot at FedEx making $265K with a maxed out sick bank can essentially create a 17% Bplan with the sick bank contribution, and that's been that way for a long time. I'm guessing we'd need a 40% Bplan with cash over cap to come close to making us whole for the A plan which would essentially be like buying an annuity for $130K/year.

Without cash over gov't cap there certainly is no reason to negotiate away the A plan because we can max it out as the contract is now.

Additionally, with a diversified retirement when times do get bad there are two layers of retirement that need to be negotiated instead of one, so if you are forced to take concessions you have more layers to be pealed back rather than one.

BoilerUP

The UPS flat dollar defined benefit plan did go up significantly from $3000/year of service for Captains to $4000/YOS ($4100 in 2020 and $4200 in 2021)...but the FedEx 2% FAE defined benefit max benefit of $130k is still more lucrative.