A month after the fiery crash of a UPS cargo jet in Kentucky, negotiators for UPS pilots and the company have restarted negotiations on a new contract with help for the first time from federal mediators.
The talks are taking place as hundreds of UPS (NYSE: UPS) and FedEx (NYSE: FDX) pilots remain idle following the indefinite grounding by aviation authorities of more than 60 MD-11 freighters in the companies’ combined fleets.
The National Transportation Safety Board found fatigue cracks in a structural support for the engine that fell off the left wing on UPS Flight 2976 during takeoff. Boeing has since indicated the MD-11 inspection process and potential repairs could last months, according to publicly released internal communications and actions by affected airlines.
Pilots at UPS, as well as FedEx, say they deserve better pay and benefits after enabling the companies to move freight during the disruptive Covid years and maintain profit growth while their counterparts at passenger airlines secured historic compensation packages.
The first round of negotiations with a federal mediator took place this week via video conferencing, said Brian Gaudet, a spokesman for the Independent Pilots Association. In-person talks will move to Boston, where federal mediator Kevin Barry lives, in January.
The National Mediation Board in September agreed to facilitate talks between UPS and the IPA, which represents 3,500 UPS pilots, after the parties were unable to make substantial progress on a new contract over 18 months, said IPA President Bob Travis in a phone interview last month. Discussions were delayed by the 43-day government shutdown.
UPS pilots agreed in 2022 to extend their contract an extra two years, primarily to give the Teamsters union space to negotiate a contract for 340,000 ground workers. The pilot contract became eligible to be amended on Sept. 1.
“UPS made some of the largest historic profits in their history during COVID, and our pilots’ expectation is that we receive nothing less than those passenger counterparts made in their contract gains. Our pilots have patiently waited to get a new contract, and UPS has not delivered yet,” Travis said. “They need to reward this pilot group for the contributions we’re making to their bottom line.”
The pilot group at UPS continues to grow because of the one-year-old transport contract with the U.S. Postal Service and overall market strength, the union chief noted. Three years ago UPS employed 3,200 pilots.
UPS profit growth has been halved since halcyon days of the pandemic. The company had net income of $6.7 billion and $5.8 billion, respectively, over the previous two years. It posted a $3.8 billion net profit for the first three quarters of 2025.
Labor relations in the airline industry are governed by the Railway Act, which prohibits workers and employers in critical interstate commerce from strikes or lockouts until a lengthy series of bargaining steps, including federal mediation, are completed. Federal mediators have the power to hold parties in mediation indefinitely.
Before a strike can take place, the NMB must first decide that additional mediation efforts would not be productive and offer the parties an opportunity to arbitrate the dispute before a special panel. If either side declines the arbitration, both parties enter a 30-day “cooling off” period, after which the parties can engage in self-help — a strike by the union or a lockout by management.
Arbitration in the airline industry is rare because both sides must agree to it. And, the NMB historically has been very reluctant to open the door to potential strikes, which airlines often use to their advantage in negotiations.
And getting to the point of a legal strike doesn’t end there. The law allows the president to create an emergency board to investigate a labor dispute and issue a report within 30 days if the parties reject binding arbitration. That is followed by another 30-day period to consider the board’s recommendations and reach an agreement. If no agreement is reached at the end of the second cooling-off period, the parties may take action.
FedEx collective bargaining
About 275 pilots at UPS and 500 FedEx pilots have been sidelined by the mandated MD-11 grounding. The UPS pilots are pay protected under their current contract. The FedEx MD-11 pilots are getting paid for unflown assignments in December, but it’s unclear exactly what pay formula will be applied to them after that.
FedEx pilots are frustrated by their own protracted contract talks, which started in March 2021. The sides have been in federal mediation for more than three years.
Union members in July 2023 narrowly rejected a tentative agreement between management and union leaders, citing concerns over outsourcing provisions, pay and benefits, and quality of life issues such as scheduling. The failed deal led to an internal blame game and the ouster of elected representatives on the Air Line Pilots Association’s FedEx Master Executive Council. The NMB in 2024 declined a union request for the sides to be released from mediation.
In late September, the Master Executive Council issued a formal vote of no confidence in FedEx CEO Raj Subramaniam, saying the ongoing corporate restructuring and cost initiatives are hurting the company’s shareholder value.
“Under his tenure, FedEx has abandoned a people-first culture and embraced a narrow profit-first mindset that jeopardizes the company’s future,” union leadership stated in a memorandum. “Over the past three years, a narrow focus has eroded employee trust, weakened loyalty, and continues to jeopardize operational reliability in what is now a highly competitive marketplace.”
As part of the belt-tightening, FedEx closed a pilot base in Cologne, Germany. ALPA claims that flying carried out by the airline’s 757 fleet within Europe has since been handed to third-party contract carriers.
But FedEx’s stock price has nearly doubled from a low of $149 in September 2022 to $274 today. Investors are mostly pleased by the Network 2.0 strategy to consolidate U.S. and Canadian express and ground delivery networks and the elimination of billions of dollars in structural costs. The international version of the streamlining effort is called Tricolor. It involves realigning the air network into separate express parcel and deferred freight operations, and reducing use of regional air transport in favor of less-than-truckload networks.
“FedEx remains committed to bargaining in good faith and reaching an agreement that is fair to everyone involved. As we work toward a new agreement, we will continue to deliver industry-leading service to our customers around the world,” the company said in a Sept. 17 statement on its website. The tentative agreement in 2023 included a 30% pay increase and other benefits.
FedEx’s most recent offer included an immediate 24% pay rate increase and a 40% increase over the life of the agreement, plus additional quality of life provisions, which it says would make its pilots the highest paid in the cargo industry.
“The FedEx network is evolving to meet market demand and customer needs. While we experienced a reduction in domestic dayside flying in October 2024 with the expiration of the U.S. Postal Service contract, international flight hours for FedEx pilots are up year-over-year. This is partially due to our successful Tricolor initiative, which has introduced new international flights operated by our widebody aircraft, including flights to and from Asia, Europe, and Central and South America. FedEx has a substantial European presence that is anchored by our hub at Charles de Gaulle, the largest hub in our European network. As we continue to adapt to changing market conditions, some intra-European markets are now served with smaller aircraft to more efficiently accommodate current demand,” FedEx said.
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