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November 23, 1998 3:00 PM, EST

Federal Express said it has received an additional $1 billion line of credit from its lenders to bolster its treasury in case the company’s pilots decide to strike.

Alan B. Graf Jr., chief financial officer for FDX Corp., in Memphis, Tenn., which owns FedEx, the world’s largest air express carrier, said the money supplements the company’s existing $1 billion credit line. He said the addition will allow FedEx “to meet its customers’ needs during the peak shipping season.”

FedEx Spokesman Jess Bunn said getting the extra money is just another step the company has taken to reduce its vulnerability in case of a strike. “It’s just something we have in our back pockets,” Mr. Bunn said. The company will use the money to bulk up its ground operations and to lease additional aircraft if there is a work stoppage.

The FedEx Pilots Assn., which represents most of the company’s 3,500 pilots, has asked for strike authorization from its members. The pilots have already begun refusing overtime assignments to show their displeasure over the lack of a contract.

On Nov. 10, FedEx announced it was reconfiguring operations to make it less dependent on the unionized pilots. As part of its contingency plans, the company said it will no longer use its own planes for international flights, will rely more on leased planes and crews for domestic flights and strengthen ground operations by using more leased truck carriers. It maintains a ground fleet of 40,500 vehicles worldwide.

The company’s request for more contingency credit reflects the long-standing tension between FedEx and the pilots’ union, which is seeking its first-ever contract with FedEx. The pilots say they want better job protection, more control over scheduling and pay raises. The company says it has already offered the pilots raises that would put them near the top of industry pay scales (TT, 11-16-98, p. 4).

On Nov. 16, both sides met with the National Mediation Board in Washington, D.C., as the government sought to reopen the contract talks that broke down Oct. 30. Mr. Bunn said talks with the board were informal and that no new talks have been scheduled. The board oversees labor relations in the air and rail industries.

For the full story, see the Nov. 23 print edition of Transport Topics. Subscribe today.