FedEx paid $625 million under pilots’ agreement in third quarter
Key Facts
FedEx paid a one-time $625 million related to pilot wage increases during the quarter ended September 30, 2026, according to the company’s filing with the U.S. Securities and Exchange Commission. The payment was made under the new collective agreement between Federal Express and the Air Line Pilots Association, ALPA. Pilots ratified the agreement on June 9, 2026, and it took effect on June 29, according to the association. 83% of participants voted in favor of the agreement, with turnout at 98.5% of eligible pilots.
The agreement includes changes to work rules, wage-rate increases and adjustments to the retirement plan, according to a FedEx filing. Its terms included an initial 40% increase in the pay rate. ALPA said ratification ended negotiations that lasted nearly five years. The association added that the agreement addresses compensation, retirement, schedules, work rules and job protections. These terms place the announced payment within a broader agreement, while the company’s filing links the $625 million to the increase in the pay rate.
The payment disclosure coincided with FedEx reporting revenue of $22.9 billion for the quarter ended September 30, compared with $20.4 billion in the same period of 2025. Adjusted operating income was $1.20 billion, versus $1.03 billion a year earlier. Adjusted diluted earnings per share reached $3.74, compared with $2.93 in the third quarter of 2025, an increase of about 28% year over year. The CEO said revenue grew 12% year over year and adjusted operating income rose 16%. He said the company offset pressure from purchased transportation rates, the new pilots’ agreement and incentive compensation expense.
The company said its improved third-quarter operating results benefited from higher parcel yields and volume, as well as structural cost savings. The improvement was limited by higher purchased transportation rates, wage increases and incentive compensation expense, along with the financial impact of changes in global trade policies. On the earnings call, management estimated the agreement with pilots would affect the fourth quarter by about $100 million. It said the agreement would be a total burden of $200 million on adjusted earnings in calendar year 2026. It also expected the contract’s impact to continue in the first half of 2027 before easing in the second half.
FedEx raised its forecast for revenue growth in calendar year 2026 to about 12%, from a previous estimate of about 11%. It also raised its adjusted diluted earnings-per-share range to $18.00–$18.60, compared with a previous range of $16.90 to $18.10. Management forecast adjusted free cash flow of about $4 billion during calendar year 2026. On pricing, the company announced a 5.9% increase in average parcel shipping rates effective January 4, 2027. The CEO said the company remains focused on profitable growth and lowering its cost to serve through disciplined operational execution.
FedEx shares closed at $304.58 on October 28, 2026, according to EL7 data. The close followed $307.10 on October 27 and $300.58 on October 26. The EL7 data provided does not include an intraday price range for October 28. Comparing the three closes puts the stock’s daily move in its recent context without specifying the session’s trading range. The agreement itself becomes amendable in December 2030, according to ALPA.