FedEx to cancel Boeing jet order if labor organizing law passes

FedEx FDX will cancel an order to buy 15 Boeing BA jets and an option for another 15, if Congress passes legislation that would make it easier for FedEx workers to organize under labor unions.

At issue is whether FedEx loses its status under the jurisdiction of the Railway Labor Act (RLA), which protects companies from local labor action.

FedEx plans to take delivery of 15 Boeing jets starting this year under an existing contract, company spokesman Maury Lane told Reuters. But, he says, "30 out of 45 airplanes we won't be buying if our RLA Status is changed by Congress."

The portion of the Boeing order that FedEx cannot cancel totals $2.5 billion, according to a FedEx regulatory filing. At list prices, the 30 jets FedEx is threatening to cancel are worth about $7.5 billion to Boeing.

The Boeing contract includes language that enables FedEx to cancel the order and the option if FedEx Express employees are no longer covered by the RLA that applies to airlines as well as railroads.

Congress is weighing a bill that would place the company under the jurisdiction of the National Labor Relations Act.

That would allow workers to organize by individual terminals, while the RLA requires a more difficult path to unionization that requires a national vote by every worker at FedEx Express, according to the Teamsters union.

Boeing has not taken a position on the legislation.

Asked if he expected Boeing's lobbying support on Capitol Hill, Lane said: "They understand the issues related to these airplanes; they know that if RLA is changed, then we won't buy these additional aircraft."

Meanwhile, Turkish Airlines says it is purchasing five Boeing 777-300 aircraft, notifying the Turkish stock exchange on Wednesday that it would purchase one jetliner a month between October 2010 and February 2011.