Logistics giant FedEx (FDX) has reached a tentative agreement with the Air Line Pilots Association (ALPA) after years of negotiations. The ALPA, which represents more than 5,000 of FedEx’s pilots, has been holding talks with the company since May 2021. The negotiations between the parties were overseen by the National Mediation Board.
Claim 30% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Details of the Tentative Deal Between FedEx and ALPA
Citing the union, Reuters reported that FedEx has agreed to raise pilots’ hourly wages by nearly 40% this year, followed by an annual hike of 3% from 2028 through 2030. Additionally, captains would receive up to $150,000 in retrospective pay to cover raises missed during negotiations, while first officers would get up to $102,500.
The tentative agreement will be presented to the FedEx Master Executive Council (MEC) for their review. After MEC’s approval, the tentative agreement will be subject to a ratification vote by the FedEx pilots.
It is worth noting that in 2023, FedEx’s pilots rejected a tentative agreement that offered a 30% wage hike and improved pension benefits to address younger pilots’ concerns about outsourcing.
FedEx has been focused on combining its ground and air-delivery networks to enhance efficiency and cut costs. However, the company’s initiatives have sparked complaints from the union due to disruptions to pilot scheduling and other issues.
Is FDX Stock a Buy, Sell, or Hold?
FedEx is on track to spin off its freight business (FedEx Freight) into a separate publicly traded company on June 1. Recently, Argus raised its price target for FedEx stock to $400 from $350 and reiterated a Buy rating, appreciating the company’s progress on its transformation plan. Additionally, Argus noted improvement in the company’s margins despite a soft demand environment.
Overall, Wall Street is confident about FedEx’s potential to streamline its business and deliver long-term growth. FedEx scores a Moderate Buy consensus rating based on 17 Buys, six Holds, and one Sell recommendation. The average FDX stock price target of $404.35 indicates 8% upside potential.
