With its last annual revenue at $87.9 billion, FedEx (FDX) is currently the largest express transportation company and cargo airline in the wold — as of this year, the shipping giant employs over 5,800 pilots and has more than 400 jets in a fleet built around being able to bring packages to anywhere in the world within days.
But on Sept. 29, the FedEx Master Executive Council of the Air Line Pilots Association (ALPA) representing these pilots put out a formal vote of no confidence in company chief executive Rajesh Subramaniam ahead of a looming shareholder meeting in which he discussed first-quarter earnings and his vision for the company’s future.
The no-confidence vote has no legal binding but is meant to show investors who have generally been happy with good financial performance that there is trouble behind the scenes.
“Eroded employee trust, weakened loyalty and continues to jeopardize operational reliability”
“Under his tenure, FedEx has abandoned a people-first culture and embraced a narrow profit-first mindset that jeopardizes the company’s future,” the memorandum voted on by a majority of the union members reads. “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.”
A vote of this type also signals to shareholders that the risk of protests and potential strikes could be on the horizon and risk disruption to operational efficiency. Back in June, more than 300 FedEx pilots picketed in front of the company’s headquarters in Memphis as part of salary negotiations that go back to 2021.
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The no-confidence letter names Subramaniam-led programs such as DRIVE and Network 2.0 as part of an efficiency push that led to the closure of shipping centers and layoffs. The cost-cutting measure that have fallen under different names and programs have initially focused on consolidation of sorting facilities and optimization of routes but have also resulted in job cuts.
In August, 611 supply chain workers at the Memphis hub received layoff notices as the company relegated a large portion of its business at the hub to a new third-party logistics provider.
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Here is what a no-confidence vote means for FedEx pilots and investors
Up until now, the cost-cutting measures were generally well-received by investors as they resulted in a better bottom line and continued a string of profitable quarters.
With the no-confidence vote bringing an early sign of potential rumblings and not all being rosy behind the numbers, FedEx shares dipped slightly once news of the no-confidence vote was made public on Tuesday afternoon.
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“When Mr. Subramaniam assumed the role of CEO in June 2022, he inherited an enterprise built on an inspirational philosophy championed by founder Fred Smith,” the MEC wrote in reference to the People-Service-Profit principle envisioned when the company was incorporated in 1971. “In contrast, Mr. Subramaniam has prioritized corporate restructuring initiatives over people and purpose.”
In response to reporter questions on the no-confidence vote, FedEx issued a statement saying that it “remains committed to bargaining in good faith and reaching an agreement that is fair to everyone involved.”
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