Out of Control Policy Blog

FedEx May Cancel Order of 15 Boeing 777Fs If Congress Passes Unions Bill

Unintended, but very real, consequences.  Air Transport World reports:

FedEx said that it will cancel 15 firm orders for 777Fs if a proposed US House of Representatives bill that calls for the delivery giant to be governed by the National Labor Relations Act rather than the Railway Labor Act becomes law...

FedEx said the change would create "upheaval" and that it no longer would be able to afford the additional 777Fs, "30 out of 45 airplanes we won't be buying if our RLA status is changed by Congress," a company spokesperson told Reuters yesterday.

Avondale Partners analyst Donald Broughton wrote in a research note that "thousands of jobs" at Boeing and GE could be affected if FedEx were to cancel its 777F order. "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. . .in order to change the labor law status of FedEx in an attempt to possibly help the Teamsters union," he commented.

Boeing has taken no official position on the legislative proposal. House Transportation Committee Chairman James Oberstar (D-Minn.), who spearheaded the FAA reauthorization bill, dismissed FedEx's statements as "huffing and puffing."

The Wall Street Journal has the price tag on Boeing's potential loss: "At list price for the planes, the total order could be worth more than $7 billion, although FedEx would likely pay a discounted price."

So just part of the bill's consequences may be thousands in lost jobs and billions in lost revenue.

Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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