Category Archives: UPS Airlines

The GCAA of the United Arab Emirates issues its final accident report on the UPS Boeing 747-44AF N571UP on September 3, 2010 near Dubai

UPS Airlines‘ (UPS-United Parcel Service) (Atlanta and Louisville) Boeing 747-44AF N571UP (msn 35668) crashed shortly after takeoff from Dubai on September 3, 2010. The General Civil Aviation Authority (GCAA) of the United Arab Emirates (UAE) has issued its final accident report.

Accident Synopsis:

On September 3rd 2010, a Boeing 747-44AF departed Dubai International Airport [DXB] on a scheduled international cargo flight [SCAT-IC] to Cologne [CGN], Germany.

Twenty two minutes into the flight, at approximately 32,000 feet, the crew advised Bahrain Area East Air Traffic Control [BAE-C ] that there was an indication of an on-board fire on the Forward Main Deck and
declared an emergency.

Bahrain Air Traffic Control advised that Doha International Airport [DOH] was ‘at your ten o’clock and one hundred miles, is that close enough?’, the Captain elected to return to DXB, configured the aircraft for the return to Dubai and obtained clearance for the turn back and descent.

A cargo on the main cargo deck had ignited at some point after departure. Less than three minutes after the first warning to the crew,the fire resulted in severe damage to flight control systems and caused the upper deck and cockpit to fill with continuous smoke.

The crew then advised Bahrain East Area Control [BAE-C] that the cockpit was ‘full of smoke’ and that they ‘could not see the radios’, at around the same time the crew experienced pitch control anomalies during the turn back and descent to ten thousand feet.

The smoke did not abate during the emergency impairing the ability of the crew to safely operate the aircraft for the duration of the flight back to DXB.

On the descent to ten thousand feet the captains supplemental oxygen supply abruptly ceased to function without any audible or visual warning to the crew five minutes and thirty seconds after the first audible warning. This resulted in the Captain leaving his position. The Captain left his seat and did not return to his position for the duration of the flight due to incapacitation from toxic gases.

The First Officer[F.O], now the Pilot Flying [PF] could not view outside of the cockpit, the primary flight displays, or the audio control panel to retune to the UAE frequencies.

Due to the consistent and contiguous smoke in the cockpit all communication between the destination [DXB] and the crew was routed through relay aircraft in VHF range of the emergency aircraft and BAE-C. BAE-C then relayed the information to the Emirates Area Control Center (EACC) in the UAE via landline, who then contacted Dubai ATC via landline.

As the aircraft approached the aerodrome in Dubai, it stepped down in altitude, the aircraft approached DXB runway 12 left (RWY 12L), then overflew the northern perimeter of the airport at 4500 ft at around 340 kts . The PF could not view the Primary Flight Displays [PFD] or the view outside the cockpit.

The PF was advised Shajah International Airport [SHJ] was available at 10 nm. This required a left hand turn, the aircraft overflew DXB heading East, reduced speed, entering a shallow descending right-hand turn to the south of the airport before loss of control in flight and an uncontrolled descent into terrain, nine nautical miles south west of Dubai International Airport.

There were no survivors.

Read the full report including the causes: CLICK HERE

Copyright Photo: Michael B. Ing/AirlinersGallery.com. N571UP is pictured departing from Anchorage International Airport prior to the accident in Dubai.

UPS starts to add Blended Winglets to its Boeing 767-300F freighters

UPS Airlines (United Parcel Service) (Atlanta and Louisville) has unveiled a new look for its flagship Boeing 767 fleet by adding winglets as a part of its sustainability efforts to save fuel and reduce emissions.

These wingtip devices, which are arrow-shaped surfaces attached to the tip of each wing, enhance the overall efficiency of the aircraft, saving fuel by reducing drag while also lowering noise emissions by improving take-off performance. The modifications will save UPS more than six million gallons of fuel each year and reduce carbon dioxide emissions by more than 62,000 metric tonnes. UPS estimates approximately a four percent fuel savings on each 767 flight.

“UPS continues to lead the industry in sustainable business practices,” said David Abney, UPS chief operating officer. “With the widest portfolio of services in the industry, we are constantly looking for ways to reduce emissions, and drive down operating costs so our customers have the solutions they need to compete in a global economy. These winglets are a perfect example of sustainability in action. They are good business and good stewardship.”

UPS currently operates 54 of the 767 aircraft with five on order. The company plans to have winglets on all 767 aircraft by the end of 2014. Winglets are already installed on UPS’s 747, and MD-11 fleets, and the A300-600 has a similar device called a wingtip fence.

The modifications will add approximately five and a half feet of span to each wing, and each winglet is 11 feet tall. Aircraft weight will increase by nearly 3,000 pounds due to the weight of the winglets and the extensive structural reinforcement of the wing structure. Even at this size and weight, the winglets will still reduce the amount of fuel used per flight.

Winglets improve the aerodynamics of the wing by extending the length of the wing and reducing the amount of drag, which is the force that opposes an aircraft’s motion in the air.

The winglet project is a sustainability initiative implemented by UPS Airlines. The company already operates one of the cargo sector’s youngest and most fuel-efficient air fleet, and is working to reduce its carbon intensity an additional 20 percent by 2020 from a 2005 baseline. Other highlights of the airline’s fuel conservation efforts include computer-optimized flight routes, aircraft taxi time management, and alternate-fuel ground support equipment.

Copyright Photo: Joe G. Walker. The first, Boeing 767-34AF ER N304UP (msn 27242) lands at Boeing Field (King County) in Seattle with the new device.

UPS:

UPS reports record earnings per share

UPS (United Parcel Service) (UPS Airlines) (Atlanta and Louisville) announced record 2012 fourth quarter and full year adjusted diluted earnings per share of $1.32 and $4.53 respectively, with the U.S. Domestic segment leading the way. The company generated annual free cash flow of approximately $5.4 billion, a testament to operations execution and the emphasis UPS places on capital efficiency. UPS estimates that Hurricane Sandy reduced earnings per share by approximately $0.05.

UPS recorded a fourth quarter mark-to-market, non-cash, after-tax charge of $3.0 billion for its company-sponsored pension and post-retirement benefit plans. Although the plans exceeded their expected rate of return, these incremental gains were more than offset by a 120 basis point decline in year-end discount rates. As a result, on a GAAP basis, diluted earnings per share for the quarter fell to a loss of $1.83. For the full year, reported diluted earnings per share were $0.83. This adjustment does not affect cash flow, required pension funding or benefits paid to plan participants.

UPS expects full year earnings per share to be within a range of $4.80 – $5.06, an increase of 6-to-12% compared to 2012 adjusted results. The company also raised guidance for 2013 share repurchases from $1.5 billion to $4.0 billion.

Adjusted

Consolidated Results

4Q 2012

4Q 2011

Revenue

$14.57 B

$14.17 B

Operating profit (loss)

($2.78 B

)

$2.05 B

$1.20 B

$2.02 B

Operating margin

(19.1 %

)

14.1 %

8.4 %

14.3 %

Average volume per day

18.8 M

18.3 M

Diluted earnings (loss) per share

($1.83

)

$1.32

$0.74

$1.28

During the year, UPS delivered more than four billion packages. For the quarter, it delivered 18.8 million pieces per day, an increase of 2.9% over the prior-year period.

Overall consumer spending for holiday shopping fell slightly below expectations, however; UPS still delivered more than 500 million packages, including almost 28 million on its peak day, both new records.

Cash Position

For the year ending Dec. 31, UPS generated $5.4 billion in free cash flow after capital expenditures of $2.2 billion. UPS repurchased 21.8 million shares for approximately $1.6 billion and paid dividends totaling $2.1 billion, up 9.6% per share.

Copyright Photo: Joe G. Walker. Boeing 747-45E (BCF) N579UP (msn 26062) climbs away from Anchorage International Airport (ANC).

UPS-United Parcel Service:

UPS to drop its bid to acquire TNT Express due to expected EC disapproval

United Parcel Service Inc (UPS) (UPS Airlines) (Atlanta and Louisville) will drop its bid to acquire TNT Express N.V. (Hoofddorp) because it now expects the European Commission (EC) to deny the acquisition.

On March 19, 2012, UPS announced its intention to acquire TNT Express for $6.7 billion. On September 5, 2012, UPS announced it expected to close the deal in early 2013 subject to EC approval.

UPS will pay TNT a termination fee in the amount of EUR 200 million.

TNT Airways (Liege) is a subsidiary of TNT Express. TNT is now expected to remain independent.

UPS issued the following statement:

United Parcel Service, Inc. announced today (January 14) the European Commission (EC) has informed UPS and TNT Express that it is working on a decision to prohibit the proposed acquisition of TNT Express.

UPS submitted an initial remedies proposal on November 29, 2012 and subsequently revised the proposal twice. UPS began the competitive review process with the EC in March 2012.

Scott Davis, UPS Chairman and CEO said, “We are extremely disappointed with the EC’s position. We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction. The combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting growth in Europe in particular.”

Upon prohibition by the EC, the Offer Condition relating to EU Competition Clearance will not be fulfilled and UPS will pay TNT a termination fee in the amount of EUR 200 million and will withdraw the Offer.

Further announcements will be made once the European Commission has issued its formal decision. The decision is expected to be adopted formally in the coming weeks.

Top Copyright Photo: Michael B. Ing. Boeing 747-44AF N572UP (msn 35669) climbs away from Anchorage International Airport (ANC).

UPS:

TNT:

Bottom Copyright Photo: Rainer Bexten. Southern Air’s Boeing 777-FHT N778SA (msn 39286) arrives at the Liege, Belgium sorting facility.

UPS and TNT Express send their merger “remedies” paperwork to the European Commission

United Parcel Service, Inc. (Atlanta and Louisville) and TNT Express N.V. (Hoofddorp) (TNT Airways) have announced, in line with Dutch disclosure requirements, that remedies have been submitted to obtain competition clearance from the European Commission (EC) for the acquisition of TNT Express by UPS. The offer of remedies does not change the terms and conditions of the Offer by UPS for TNT Express.

The proposed remedies aim to address the EC’s concerns regarding the competitive effects of the intended merger on the international express small package market in Europe. UPS and TNT Express continue to be fully committed to the merger and are working closely with the EC in order to gain competition clearance allowing completion of the transaction in early 2013. As part of the approval process, the EC will market-test the remedies on a confidential basis.

The proposed remedies comprise the sale of business activities and assets in combination with granting access to air capabilities. Eligible buyers of these activities will have to ensure the long-term viability of the divested activities and continuity of customer service.

No further details of the confidential discussions or proposed remedies will be revealed at this stage. The discussions are ongoing, which means that the offered remedies may be subject to change.

UPS and TNT Express believe their merger will help create a more efficient logistics market, thereby improving the competitiveness of Europe and the solutions offered to businesses and consumers. Customers and consumers will benefit from a broader portfolio of services and better global access, along with lower supply-chain costs overall and improved service levels in terms of timing and reliability.

UPS and TNT Express value their employees highly. Both UPS and TNT Express will follow the required consultation and advice procedures with their works councils with regard to these remedies.

In accordance with EU Merger Regulation, the timing of the remedies submission extends the EC’s review period by 15 business days to February 5, 2013.

Copyright Photo: Michael B. Ing. UPS’ Boeing 747-44AF N571UP (msn 35668) climbs away from Anchorage International Airport.

UPS-United Parcel Service:

TNT Airways:

International growth fuels UPS to a third quarter operating profit

UPS-United Parcel Service (UPS Airlines) (Atlanta) reported yesterday (October 23) on its third quarter financial results. Here is the statement by the company:

UPS) has announced third quarter 2012 adjusted diluted earnings per share of $1.06. The International segment led the way with its highest third quarter in history generating $449 million in operating profit, up 7.7% over the prior-year period. UPS updated its full-year 2012 guidance for adjusted diluted earnings per share to a range of $4.55 to $4.65, reflecting greater confidence in fourth quarter execution.

On a reported basis, third quarter 2012 earnings per share were $0.48. In August, the company announced a decision to restructure pension liabilities for certain employees. As a result, UPS recorded an after-tax, non-cash charge of $559 million during the quarter.

“Our results were achieved in an environment of slowing global trade and changing market dynamics,” said Scott Davis, UPS chairman and CEO. “This not only highlights the flexibility of our business model; it illustrates the breadth of the UPS product portfolio in meeting the needs of customers.”

		Adjusted
Consolidated Results	3Q 2012	3Q 2012	3Q 2011
Revenue	$13.07 B		$13.17 B
Operating profit	$0.77 B	$1.66 B	$1.67 B
Operating margin	5.9 %	12.7 %	12.7 %
Average volume per day	15.5 M		15.1 M
Diluted earnings per share	$0.48	$1.06	$1.09

During the quarter, UPS delivered 15.5 million packages per day, a 2.9% increase over the prior-year period.

Cash Position

For the nine months ending Sept. 30, UPS generated free cash flow in excess of $3.6 billion. The company repurchased 18.5 million shares for approximately $1.4 billion and paid dividends totaling $1.6 billion, a 9.6% increase per share over the prior year.

Capitalizing on credit market conditions, during the quarter UPS issued $1.75 billion of debt. Proceeds will be used to pay notes that mature in January 2013. The company ended the period with $9.0 billion in cash and marketable securities. The primary uses of these funds will be the acquisition of TNT Express and debt repayment.

		Adjusted
U.S. Domestic Package	3Q 2012	3Q 2012	3Q 2011
Revenue	$7.86 B		$7.77 B
Operating profit	$129 M	$1,025 M	$1,046 M
Operating margin	1.6 %	13.0 %	13.5 %
Average volume per day	13.2 M		12.7 M

U.S. Domestic revenue increased $94 million over the prior-year period, driven by a 3.7% gain in daily package volume. Adjusted operating profit declined $21 million, impacted negatively by one less operating day and the timing of the fuel surcharge.

On a reported basis, operating profit was $129 million as a result of the pension restructuring previously mentioned.

Rapid e-commerce growth drove gains in daily volume, with Ground and Deferred up 3.0% and 9.3%, respectively. Next Day Air volume expanded 5.7% over the prior-year period, as retailers continued to utilize UPS Next Day Air Saver to differentiate their offerings.

Base rate improvements were more than offset by lower fuel surcharges, and changes in product and customer mix. Consequently, revenue per package declined 0.8% from the same quarter last year.

International Package	3Q 2012	3Q 2011
Revenue	$2.94 B	$3.06 B
Operating profit	$449 M	$417 M
Operating margin	15.3 %	13.6 %
Average volume per day	2.3 M	2.3 M

The International segment produced operating profit of $449 million, its highest third quarter ever. Operating margin was up 170 basis points over the prior-year period to 15.3%. Export package growth, network changes and currency translation contributed to this improvement.

Revenue declined 3.7%, as the impact from lower fuel surcharges and currency exceeded the benefit from the 1.2% growth in daily Export volume.

For the first time in several quarters, Asia exhibited growth in Export package volume, benefitting from product launches and easier comparisons. Although the rate of growth in Europe has slowed, it remained positive.

Supply Chain and Freight	3Q 2012	3Q 2011
Revenue	$2.27 B	$2.34 B
Operating profit	$188 M	$203 M
Operating margin	8.3 %	8.7 %

Operating margin for the Supply Chain and Freight segment remained strong at 8.3%. Operating profit was down $15 million, as declines in Forwarding were partially offset by improvement in UPS Freight.

The Freight Forwarding unit was pressured by overcapacity in the market, especially out of Asia. Revenue decreased as lower yields offset modest tonnage gains.

Although the Distribution unit experienced strong revenue growth, investments in healthcare capabilities and infrastructure weighed on margin expansion. Recently, UPS opened three new healthcare distribution facilities in Sydney, Australia and in Shanghai and Hangzhou, China.

UPS Freight revenue increased 3.6% as shipments per day were up slightly. LTL revenue per hundredweight and gross weight hauled improved over the prior year period, resulting in operating margin expansion.

Outlook

“UPS performance this quarter reflects the ability of our global network to adapt to soft macro conditions,” said Kurt Kuehn, UPS chief financial officer.

“While there is some uncertainty around the magnitude of the holiday shopping season, we are confident in UPS’s ability to deliver,” Kuehn continued. “As a result, we enhanced our guidance by narrowing the range, maintaining our previous midpoint. We anticipate 2012 adjusted diluted earnings per share to be within a range of $4.55 to $4.65, an increase of 5%-to-7% over 2011 adjusted results.”

Copyright Photo: Michael B. Ing. McDonnell Douglas MD-11 (F) N292UP (msn 48566) completes its final approach into Tokyo (Narita).

UPS:

UPS takes delivery of the 50th Boeing 767-300F freighter

Boeing (Chicago) and UPS (United Parcel Service) (Atlanta and Louisville) celebrated the delivery today (May 22) of the cargo operator’s 50th 767-300 Freighter (767-34AF ER N352UP, msn 37875). The airplane joins the world’s largest 767Freighter fleet.

The 767 Freighter is based on the popular 767-300ER (extended range) passenger airplane. Able to carry approximately 58 tons (52.7 tonnes) of revenue cargo with intercontinental range, the 767 Freighter is ideal for developing new long-haul, regional or feeder markets.

UPS benefits from the 767’s established schedule reliability, performance and operational advantages. Schedule reliability — an industry measure of departure from the gate within 15 minutes of scheduled time — is over 98 percent for the 767. UPS boasts a 767 Freighter fleet reliability of over 99 percent.

In addition to the 50 767 Freighters, Boeing also has delivered 75 757-200 Package Freighters and eight 747-400 Freighters to UPS. The Louisville, Kentucky-based logistics services provider has nine more 767 Freighters on order.

UPS Slide Show: CLICK HERE

UPS’ first quarter earnings per share grow by 10%

UPS-United Parcel Service (UPS Airlines) (Atlanta) issued the following statement:

“UPS announced first quarter 2012 diluted earnings per share of $1.00, a 10% improvement over the prior-year period. A consolidated revenue increased 4.4% to $13.1 billion. A operating profit for the U.S. Domestic and Supply Chain and Freight segments increased 13% and 19%, respectively.

Consolidated Results	1Q 2012	1Q 2011
Revenue	$13.14 B	$12.58 B
Operating profit	$1.57 B	$1.47 B
Operating margin	11.9 %	11.7 %
Average volume per day	15.6 M	15.0 M
Diluted earnings per share	$1.00	$0.91

During the period, UPS delivered approximately 1 billion packages, a 4.3% increase. Rapid e-commerce growth combined with growing demand for lightweight shipping solutions contributed to these results.

In March, UPS announced its intention to acquire TNT Express. This addition will further expand UPS’s portfolio of solutions and geographic footprint. The complementary strengths of both organizations will create a customer-focused global platform and a leader in the logistics industry.

Cash Position

For the quarter ending March 31, UPS generated $1.8 billion in free cash flow. Capital expenditures were $417 million, including the delivery of three Boeing 767-300 aircraft. UPS repurchased 7.1 million shares for approximately $550 million and paid dividends totaling $534 million.

In February, UPS announced a 10% increase in its regular quarterly dividend to $0.57 per share. The company has maintained or increased its dividend for more than four decades and has more than tripled the payout since going public in 1999.

U.S. Domestic Package	1Q 2012	1Q 2011
Revenue	$8.00 B	$7.54 B
Operating profit	$995 M	$880 M
Operating margin	12.4 %	11.7 %
Average volume per day	13.24 M	12.67 M

For the quarter, U.S. Domestic revenue increased 6.1% driven by daily volume growth of 4.5%. Operating profit improved 13% over the prior year period with margin expansion of 70 basis points.

Daily volume for deferred products jumped 9.9% and UPS Next Day Air volume climbed 5%, driven primarily by on-line retail growth. Ground volume improved 4% on strong demand for lightweight shipping options.

Increases in revenue per piece produced by higher base rates and fuel surcharges were mostly offset by changing product and customer mix as e-commerce continued to drive volume growth.

During the quarter, the company achieved a milestone when the millionth user enrolled in UPS My Choice, the unique consumer-based delivery solution that UPS rolled out in October 2011. My Choice users received more than 7 million shipments and used the service to conveniently control the delivery of 1 million packages.

International Package	1Q 2012	1Q 2011
Revenue	$2.97 B	$2.90 B
Operating profit	$408 M	$453 M
Operating margin	13.8 %	15.6 %
Average volume per day	2.35 M	2.29 M

International revenue was $2.97 billion, an increase of 2.3% compared to the same period last year. Revenue per piece was down slightly, though up 2% on a currency-neutral basis. Continued weakness out of Asia and increased intra-regional volumes also negatively impacted yield growth.

UPS Export volume growth continued to outpace the market at 5.4%, with solid gains in Europe, intra-Asia and Mexico. Operating margin declined to 13.8%, reflecting the impact of increased fuel cost, changing product mix and shifting trade patterns.

During the quarter, UPS increased cargo capacity by more than 50 percent on 20 weekly flights in Latin America and expanded its air infrastructure for western Mexico by establishing a regular flight to Guadalajara.

Supply Chain & Freight	1Q 2012	1Q 2011
Revenue	$2.17 B	$2.14 B
Operating profit	$166 M	$139 M
Operating margin	7.7 %	6.5 %

Operating profit in the Supply Chain and Freight segment climbed 19% on revenue growth of 1.3%. Operating margin expanded 120 basis points to 7.7%.

Operating margin in the Forwarding business expanded due to growth in customized solutions and brokerage services, in addition to improved productivity. However, revenue was negatively impacted by declines in both tonnage and yield as excess capacity in the market continues.

Demand for UPS healthcare solutions drove revenue gains in the Logistics business unit. Operating margin expanded despite the impact of continued investment in the healthcare network.

Earlier this month, UPS announced an industry-first expedited heavy freight option for shipments between the U.S. and Mexico. UPS CrossBorder Connect now allows customers to ship heavy freight on the ground and realize improved transit times over traditional LTL carriers.”

UPS Slide Show: CLICK HERE

UPS to acquire TNT Express

United Parcel Service (Atlanta and Louisville) and TNT Express (Hoofddorp, Netherlands) have reached an agreement for UPS to acquire TNT for an all-cash public offer of €9.50 per ordinary TNT Express share.

Here is the statement:

“The offer price of €9.50 (including any dividend or other distribution other than the financial year 2011 final dividend payment not exceeding €0.004 per share) represents a 53.7% premium to TNT Express’ unaffected share price on February 16, 2012 of €6.18, the day before TNT Express and UPS announced their ongoing discussions. The Offer values the issued and outstanding share capital of TNT Express at €5.16 billion ($6.77 billion).

The combination of UPS and TNT Express will create a global leader in the logistics industry, with annual revenues of more than €45 billion ($60 billion) and will deliver significant benefits for the shareowners, customers, employees and other stakeholders of both companies.

Together, UPS and TNT Express will offer customers an enhanced, integrated global network that will provide greatly enhanced service to customers throughout the world. In addition, the two companies are a strong cultural fit given their intense focus on customer service, operational excellence, employee engagement and good corporate citizenship.

The proposed transaction will accelerate UPS’s growth strategy and increase its geographic diversity and ability to provide customers comprehensive solutions. UPS currently estimates annual run-rate pre-tax cost synergies of approximately €400 to €550 million ($525 to $725 million) a year, achieved by the end of the fourth year after closing. UPS believes that the cumulative pre-tax implementation costs related to achieving these synergies will be approximately €1 billion ($1.31 billion) over the four-year integration period.

UPS and TNT Express believe this transaction will significantly enhance their ability to serve their customers’ complex global logistics needs. Following the transaction, around 36% of the combined group’s revenues will be generated outside the United States, up from 26% today at UPS. The combination underlines UPS’s long-standing commitment to Europe, where it has maintained a presence since 1976, by strengthening its product capabilities through the addition of TNT Express’ leading Intra-Europe road freight network. The combination also enhances UPS’s existing position in fast growing regions such as Asia-Pacific and Latin America.

Service lies at the heart of this proposed transaction. With a combined network and enhanced IT platforms, customers will have access to deeper product capabilities and broader reach through the expanded geographies served, giving them more choice and flexibility to support the growth and globalization of their businesses. The combination also will offer employees greater opportunities to be part of a global, growing and respected business.

Unanimous Support from Executive and Supervisory Boards of TNT Express

After careful consideration of all of TNT Express’ strategic alternatives, the Executive and Supervisory Boards of TNT Express believe this transaction is in the best interests of the company and its stakeholders and intend to support and unanimously recommend the Offer for acceptance to TNT Express’ shareholders. Goldman Sachs International has issued a fairness opinion to the Supervisory and Executive Boards of TNT Express and Lazard B.V. has issued a fairness opinion to the Supervisory Board, in each case to the effect that, as of today, the offer price is fair to the TNT Express shareholders from a financial point of view.

Irrevocable from PostNL

PostNL N.V., holder of approximately 29.8% of the outstanding shares of TNT Express, has committed itself to tender its shares under the offer if and when made. The irrevocable contains certain customary undertakings and conditions.

Corporate Governance and Integration

UPS recognizes that TNT Express’ employees will play a pivotal role in the success of the combined entity and they will be treated accordingly. All employee rights, covenants, and benefits under current ownership will be respected. As a result of the proposed transaction, the employees of the combined group will have broader career opportunities based on our future growth expectations.

UPS has a long-standing history of developing people through its promotion from within philosophy, giving employees the opportunity to hold positions at the highest levels of the company. Additionally, UPS and TNT Express share a common business culture and believe that a combination of the businesses will prove attractive to employees. Throughout integration, the selection and appointment of staff for any function within the newly combined entity, will be subject to applicable laws, and be based on the “best person for the job” principle. In case of potential consequences for employees of the combination, the principle of fairness will be applied as to the impact of redundancies on TNT Express and UPS staff.

UPS spent considerable time evaluating potential integration opportunities as it evaluated this transaction. In the coming months, UPS and TNT Express will work together through the establishment of an Integration Committee to develop plans to combine both companies’ strong networks and customer relationships while maintaining the same level of quality and service associated with both companies. UPS is committed to maintaining an ongoing dialogue with, and to closely involve, employee representatives in line with legal requirements and UPS and TNT Express’ leading employment practices.

UPS recognizes the expertise of TNT Express’ leading road freight network in Europe. It also appreciates the leading role that the road freight management will occupy in the combined group. UPS undertakes to create a meaningful center of excellence for marketing, sales, and operations in The Netherlands. UPS recognizes the significant value of TNT Express’ operations, assets and people in Liège and will seek to continue the future utilization of these operations, assets and people within the combined group.

TNT Nederland B.V. will maintain the mitigated structure regime. After successful completion of the Offer, the Supervisory Board of TNT Express will be composed of at least three members identified by UPS and two members of the current Supervisory Board of TNT Express, namely Shemaya Levy and Margot Scheltema. These two members will function as independent Supervisory Directors within the meaning of the Dutch Corporate Governance Code and shall continue to serve on the Supervisory Board until the third anniversary of the settlement date.

Financing of the Offer

The Offer values 100% of the issued and outstanding share capital at €5.16 billion. UPS intends to finance the Offer by utilizing $3 billion in existing cash on balance sheet and through new debt arrangements. UPS will make a timely certain funds announcement as required by Section 7 Paragraph 4 of the Decree on Public Takeover Bids (Besluit Openbare Biedingen Wft). UPS has a strong financial position and remains committed to maintaining a strong balance sheet.

Pre-Offer and Offer Conditions

The commencement of the Offer is subject to the satisfaction or waiver of the following pre-offer conditions: (i) no material adverse effect having occurred, (ii) no breach of the merger protocol having occurred, (iii) approval of the offer memorandum by the AFM, (iv) no revocation of the recommendation by TNT Express’ Executive Board and Supervisory Board, (v) Stichting Continuïteit TNT Express not having exercised its call option right to have protective preference shares issued to it, (vi) no notification having been received from the AFM that preparations of the offer are in breach of the offer rules and (vii) no order, stay judgment or decree having been issued prohibiting the transaction.

If and when made, the consummation of the Offer will be subject to the satisfaction or waiver of the following offer conditions: (i) a minimum acceptance of 80% of the TNT Express ordinary shares on a fully diluted basis, (ii) relevant competition clearances for the Offer having been obtained, (iii) no material adverse effect having occurred, (iv) no breach of the merger protocol having occurred, (v) no revocation of the recommendations by TNT Express’ Executive Board and Supervisory Board (vi) Stichting Continuïteit TNT Express not having exercised its call option right to have protective preference shares issued to it and having agreed to terminate its call option subject to the Offer being declared unconditional, (vii) no notification having been received from the AFM that preparations of the Offer are in breach of the offer rules and (viii) no order, stay judgment or decree having been issued prohibiting the transaction.

UPS and TNT Express have done extensive preparatory work on the required competition filings. UPS is confident that it will secure all relevant competition approvals.

On termination of the Merger Protocol because of the competition offer condition not being satisfied or waived, UPS will forfeit a termination fee to TNT Express equal to €200 million.

Competing Offer

UPS and TNT Express may terminate the merger protocol in the event that a bona fide third-party offeror makes an offer which is binding upon such party, exceeds the Offer Price by at least 8% and is considered by the Executive and Supervisory board of TNT Express to be substantially more beneficial to TNT Express. In the event of a competing offer, UPS will be given the opportunity to match such offer, in which case the merger protocol may not be terminated by TNT Express. TNT Express has entered into customary undertakings not to solicit offers from third parties.

On termination of the Merger Protocol on account of a competing offer, TNT Express will forfeit a termination fee to UPS equal to €50 million.

Indicative Timetable

UPS and TNT Express will seek to obtain all the necessary approvals and competition clearances as soon as practicable. The required advice and consultation procedures with TNT Express’ Central Works Council, European Works Council and unions will be commenced immediately. The cooperation of TNT Express is conditional upon Central Works Council advice.

It is UPS’s intention to submit a request for approval of its offer document to the AFM within 8 weeks from today and to publish the offer memorandum during Q2 2012 in accordance with the applicable statutory timetable. TNT Express will hold an informative Extraordinary General Meeting (EGM) at least 6 business days before closing of the offer period in accordance with Section 18 Paragraph 1 of the Decree.

Advisors

Morgan Stanley, UBS and Bank of America Merrill Lynch are acting as financial advisors to UPS; Goldman Sachs is acting as financial advisor to TNT Express and Lazard is acting as financial advisor to the Supervisory Board of TNT Express.

Freshfields Bruckhaus Deringer is acting as legal counsel to UPS; Allen & Overy is acting as legal counsel to TNT Express.”

TNT Express (NYSE Euronext: TNTE) is one of the world’s largest express delivery companies. On a daily basis, TNT Express delivers close to 1 million consignments ranging from documents and parcels to palletized freight. The company operates road and air transportation networks in Europe, the Middle East and Africa, Asia-Pacific and the Americas. It employs 77,000 people and runs a fleet of 30,000 road vehicles and 46 aircraft. TNT Express had revenues of €7.25 billion ($9.51 billion) in 2011.

TNT Slide Show: CLICK HERE

UPS Slide Show: CLICK HERE

Is UPS getting closer to acquiring TNT Express?

UPS-United Parcel Service (Atlanta and Louisville) may be getting closer to acquiring TNT Express. Both companies were due to update the market today but any deal will probably be announced after today according to this report by Reuters.

All concerned parties, including the unions, are being consulted. TNT’s performance is a concern for UPS.

Read the full report: CLICK HERE

TNT Express N.V. (Hoofddorp, Netherlands) is an international express and cargo delivery services company that competes against UPS and FedEx. The company has fully-owned operations in 65 countries and delivers documents, parcels and freight to over 200 countries.

Formerly an operating division of TNT N.V., TNT Express was demerged from its parent company on May 26, 2011. TNT N.V. has subsequently been renamed as PostNL.

TNT Express aircraft operate under the IATA code of TAY of TNT Airways.

TNT Slide Show: CLICK HERE