Category Archives: UPS-United Parcel Service

UPS adds the Boeing 747-8F freighter

The new Boeing 747-8F Intercontinental Freighter

UPS Airlines is adding the newer and larger Boeing 747-8F Intercontinental Freighter to its Boeing 747-400F freighter fleet.

The first to be delivered was N605UP which was handed over on September 29, 2017.

The pictured N607UP completed its first flight on October 6, 2017. The new freighter became airborne in about 3,500 feet at Paine Field near Everett, WA.

In October 2016 Boeing announced an order for 14 747-8 Freighters for UPS. The agreement also includes an option to purchase an additional 14 of the cargo airplanes.

The 747-8s will enable UPS to begin a cascade of aircraft route reassignments that will add significant air capacity to the company’s busiest lanes, thereby optimizing global air network capacity well beyond the impact of adding new cargo jets.

The 14 aircraft are to be delivered between 2017 and 2020.

In addition, the 747-8 offers training and operating efficiencies to UPS. Pilots of the company’s existing 747-400 fleet will enjoy a common equipment rating, allowing them to fly both aircraft types. Further, UPS will realize greater economies of scale in maintenance and ground handling by operating the -8 aircraft.

The 747-8 freighters carry 34 shipping containers on its main deck and 14 in its lower compartments.  The -8 has a cargo capacity of 307,600 pounds, or approximately 30,000 packages and a range of 4,340 nautical miles.

N605UP arrived at the Louisville (SDF) base and is currently operating crew proving flights around SDF. It will enter revenue service later this month.

The 747 fleet usually operate from SDF to Anchorage, Alaska for refueling, and then on to its hubs in Asia.

Copyright Photo: UPS Airlines (UPS-Worldwide Services) Boeing 747-8F N607UP (msn 64265) PAE (Nick Dean). Image: 939437.

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UPS exceeds forecasts for the second quarter, international operating profit jumps 17%

UPS (United Parcel Service) (UPS Airlines) (Atlanta and Louisville) today announced second quarter 2015 diluted earnings per share of $1.35, a 12% increase over adjusted results for the same period last year. All three segments improved operating profit and margin, led by International and Supply Chain and Freight performance.

The company continued:

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Highlights:

  • All Segments Improve Profitability and Expand Margins
  • International Operating Profit Jumps 17%
  • Export Shipments up 5.5% with Strong Intra-Europe Growth
  • Supply Chain and Freight Operating Profit Climbs 18%
  • Revenue Growth Dampened by Changes in Currency and Fuel Prices
  • 2015 EPS Growth at Higher End of 6%-to-12% Guidance Range

Currency exchange rates and lower fuel surcharges reduced total reported revenue growth. Total revenue declined 1.2% from the same quarter last year to $14.1 billion. Pricing initiatives continue to drive base rates higher.

“During the quarter, UPS continued to invest for the future by expanding capacity and launching new capabilities that provide higher value to customers,” said David Abney, UPS chief executive officer. “The strong momentum in our International segment is expected to continue and gives us confidence in achieving the upper end of our guidance range.”

On a reported basis, operating profit increased $1.2 billion, and diluted earnings per share was up $0.86. In the second quarter of 2014, UPS reported diluted earnings per share of $0.49, which included a $665 million after-tax charge for the transfer of certain post-retirement liabilities to defined contribution healthcare plans.

Total company shipments increased 2.1% over the second quarter last year to 1.1 billion packages, led by U.S. Deferred Air products and International Export shipments.
Cash Flow

For the six months ended June 30, UPS generated $3.3 billion in free cash flow. The company paid dividends of $1.3 billion, an increase of 9.0% per share over the prior year. UPS also repurchased 13.5 million shares for approximately $1.4 billion.

U.S. Domestic Package

U.S. Domestic revenue increased $140 million over the second quarter last year to $8.8 billion. Shipment growth was led by Deferred Air products up 15% and UPS SurePost which increased more than 8%. Total daily deliveries grew 1.8% due to a slower pace of B2C (business-to-consumer) growth.

Operating profit was $1.2 billion, up $35 million or 3.0% over prior-year adjusted results. Operating margin expanded to 13.6% as improved pricing and productivity offset higher benefit costs.

On a reported basis, operating profit increased $992 million after the transfer of certain post-retirement liabilities to defined contribution healthcare plans, which occurred in the second quarter of last year.

Continued improvements in base rates were offset by lower fuel surcharges. Revenue per package was flat, as changes in fuel surcharges dropped reported yield by almost 300 basis points.

International Package

Currency-adjusted International revenue was up 1.5% over the same period last year. UPS daily Export shipments increased 5.5%, primarily due to an 8.5% increase in intra-Europe shipments. The strong dollar drove U.S. imports higher, while U.S. exports were down slightly.

International operating profit increased $81 million, or 17% over the adjusted results for the same period in 2014. Network improvements, volume growth and pricing initiatives all contributed to expanded operating margin and increased profitability. The segment experienced growth from middle-market accounts and improved premium product sales.

On a reported basis, operating profit increased $108 million after the transfer of certain post-retirement liabilities to defined contribution healthcare plans in the second quarter of last year.

Underlying base rates were up across all regions, though revenue per package decreased 2.4% on a currency-neutral basis. Lower fuel surcharges reduced reported revenue per package by about 350 basis points.

Supply Chain & Freight

Supply Chain & Freight revenue declined 4.5% to $2.2 billion, due to Forwarding revenue management initiatives, currency and lower fuel surcharges at UPS Freight. Operating profits improved $31 million, or 18% over the adjusted results for the same quarter 2014, driven by gains in Forwarding.

On a reported basis, operating profit increased $113 million after the transfer of certain post-retirement liabilities to defined contribution healthcare plans that occurred in the second quarter of 2014.

UPS Forwarding operating profit and margin expanded as the business unit continued to implement a disciplined pricing strategy across key trade lanes. The unit also benefited from improved market conditions and customer mix. Forwarding tonnage and revenue dropped during the quarter, primarily due to revenue management initiatives and the impact of currency fluctuations.

Distribution revenue increased at a mid-single digit growth rate. Growth in Mail services, Healthcare and Aerospace industries contributed to revenue improvements.

UPS Freight revenue declined 2.5% due to lower fuel surcharges and a drop in tonnage driven by changes in customer mix and slowing market growth. LTL (less-than-truckload) revenue per hundredweight growth remained positive, with a 1.4% gain.

Outlook

“The second quarter results reflect continuing gains in our International business,” said Richard Peretz, UPS chief financial officer. “Even though the U.S. economy appears to be growing at a slower pace, our global portfolio and performance reinforces our expectations to attain the higher-end of the guidance range.”

The company’s guidance for 2015 full-year diluted earnings per share is $5.05 to $5.30, a 6% to 12% increase over adjusted 2014 results.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 767-34AF N302UP (msn 27240) arrives in Anchorage, Alaska.

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UPS reports 1Q earnings per share were up 14%

United Parcel Service-UPS (UPS Airlines) (Atlanta and Louisville) reported first quarter net income of $1.03 billion.

Here is the full financial announcement:

UPS announced first quarter 2015 diluted earnings per share of $1.12, a 14% increase over the prior year period. Operating profit increased 11% to $1.7 billion, with all three segments contributing. Revenue management actions and robust International shipment growth drove the operating profit improvement.

Total reported revenue of $14.0 billion was up 1.4% over the same quarter last year. Revenue growth was 3.6% after adjusting for foreign currency changes.

“The first quarter results were favorably impacted by our continued investments and revenue management initiatives,” said David Abney, UPS chief executive officer. “These actions delivered high value to our customers and shareowners. We are on track to achieve the company’s long-term financial targets.”

Total company shipments increased 2.8% to 1.1 billion packages, led by European export growth of 9.4%.

Cash Flow

For the three months ended March 31, UPS generated $2.4 billion in free cash flow. The company paid dividends of $636 million, an increase of 9.0% per share over the prior year. The company also repurchased more than 6.7 million shares for approximately $680 million.
U.S. Domestic Package

U.S. Domestic first quarter revenue increased 3.8% to $8.8 billion. Daily package volume improved 2.4%, lifted by growth in Deferred Air, up 12% and UPS SurePost, up 7.0%. Shipment growth rates slowed, as the company chose not to pursue some lower-yielding contract renewals.

Total revenue per package was up 1.3% primarily due to UPS Ground yield increasing 3.1%. Base rate improvements more than offset an approximately 200 basis point drag from lower fuel surcharges. The expansion of dim-weight pricing, implemented last December 29, also contributed to higher yields.

Operating profit increased to $1.0 billion, an 11% improvement from the prior-year period. Operating margin expanded 70 basis points, driven by productivity gains.
International Package

International operating profit was $498 million, up 14% over the prior-year period. Volume growth, pricing initiatives and lower fuel expense all contributed to improved profitability. Operating margin expanded 280 basis points to 16.8%.

Total International revenue of $3.0 billion, increased 2.4% for the quarter on a currency-neutral basis, compared to the reported decline of 5.0%. Lower fuel surcharges also weighed on revenue growth.

Worldwide Export yield contracted 5.2% on a currency-neutral basis, with the majority of the decline due to an approximately 300 basis point reduction in fuel surcharge revenue. Product mix changes and stronger intra-regional shipment growth also contributed to the lower yield.
Export shipments jumped 6.7% led by European growth of 9.4%. In Europe, UPS Export volume has grown at an annual rate of approximately 9% over the past 10 years.

Supply Chain & Freight

Revenue in the segment increased 1.3% to $2.2 billion, driven by growth in Distribution and UPS Freight. Revenue growth was lowered by currency exchange rates and reduced fuel surcharge revenue. Operating margin expanded to 6.9%, generating operating profit of $151 million.

Although Forwarding revenue declined due to currency changes and revenue management actions, profitability was improved over the same period last year. Congestion at the West Coast port terminals created challenges for many Ocean Freight customers. The flexibility of the UPS portfolio allowed customers to accelerate their ocean freight or reroute to non-affected ports.

The Distribution business delivered solid top-line growth as more customers in the Healthcare and Retail industries realized the benefits of UPS supply-chain expertise. Operating profit and margin was limited by continued investments in technology and infrastructure.

UPS Freight revenue was up 2.3% resulting from gains in LTL and Ground Freight Pricing products. Lower fuel surcharges weighed on the revenue growth rate. LTL shipments per day increased 3.5% over the prior-year period.

Outlook

“Solid performance across all three business segments was led by positive momentum in International, gains from revenue management and productivity improvements in the U.S.,” said Kurt Kuehn, UPS chief financial officer. “We remain on plan to meet our guidance for full-year 2015 diluted earnings per share of $5.05 to $5.30, a 6%-to-12% increase over our 2014 adjusted results.”

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 767-34AF N346UP (msn 37868) approaches the runway at Anchorage.

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UPS pilots picket the UPS investor conference

The Independent Pilots Association, representing the pilots of UPS-United Parcel Service (UPS Airlines) (Atlanta and Louisville) provided an informational picket line yesterday (November 13) at the 2014 UPS Investor Conference. The union issued this statement:

The UPS pilots, represented by the Independent Pilots Association, conducted an information picket at the 2014 UPS Investor Conference held at the Grand Hyatt New York.

“We conducted this picket to inform the investment community that UPS has neglected its airline operations by failing to finalize the pilot contract,” said IPA President, Captain Robert Travis. “We prefer to reach a negotiated agreement with UPS, but with our talks now entering a fourth year, we question whether UPS is equally committed to a resolution.”

“UPS pilots have reaffirmed our intention to fly this Christmas by not seeking a release from the National Mediation Board. This holiday season, we remain committed to safe and reliable delivery,” said Travis. Under the Railway Labor Act a request for release, if granted by the NMB, could lead to a 30-day countdown to a strike, or lockout.

The IPA invites the investment community to learn more about its dispute with UPS at http://www.ipapilot.org. “Investors will want to stay informed. As UPS pilot labor talks continue, we will keep you apprised of developments” said Travis.

UPS and IPA have been following the Railway Labor Act process for the last 39 months; direct negotiations for 29 months and mediated talks for the past 10 months. Direct negotiations began in September 2011 and continued through January 2014. In early 2014, UPS and IPA jointly requested federal mediation. The National Mediation Board docketed the case in February 2014 and assigned a staff mediator to oversee further negotiations. The parties have been in mediated talks since February 2014.

The Independent Pilots Association represents the 2,600 pilots who fly globally for United Parcel Service.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-4R7F N582UP (msn 29053) lands in beautiful Anchorage, Alaska.

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UPS reports its third quarter operating profit increased 7.8% to $1.3 billion, expects holiday packages to increase by 11%

UPS (United Parcel Service) (UPS Airlines) (Atlanta and Louisville) issued this financial statement:

UPS has announced diluted earnings per share of $1.32 for the third quarter 2014, a 13.8% improvement over the prior year period. Operating profit increased 8.3%, resulting from balanced growth across all three segments.

Daily packages in the U.S. were 6.9% higher as demand from both B2C and B2B customers improved. International Export shipments increased 9.4% with strong growth in both Asia and Europe. UPS delivered 1.1 billion packages around the world, up 6.9% over the third quarter 2013.

Cash Flow

For the nine months ended Sept. 30, UPS generated $2.8 billion in free cash flow. The company paid dividends of $1.8 billion, up 8.1% per share over the prior year, and repurchased 20.6 million shares for approximately $2.1 billion.

U.S. Domestic Package

U.S. Domestic revenue increased to $8.7 billion, up 5.3% over the third quarter 2013. Daily package volume improved 6.9%, led by gains in UPS Ground and Deferred products up 7.7% and 5.9%, respectively. E-commerce continued to drive strong B2C growth, while B2B deliveries were also higher this quarter.

Operating profit was $1.3 billion, up 7.8%. Operating margin expanded 30 basis points to 14.7%. The segment experienced positive operating leverage as investments in new technology and capacity helped lower costs.

Total revenue per package declined 1.5% as base rate improvements were offset by changes in customer and product mix. UPS SurePost shipments increased more than 50%, contributing to the mix change.

During the quarter, UPS announced the expansion of its Access Point alternate delivery solution to the New York City and Chicago areas. Plans were announced to add locations in other U.S. cities, in addition to more than 4,400 existing UPS Stores, by the end of 2015.

International Package

International revenue increased 5.5% to $3.2 billion on daily package growth of 6.7%. Export products jumped 9.4% with gains from all regions of the world. Shipments out of Asia grew 16% and Europe was up 14%.

Operating profit improved 10.3% to $460 million. Operating margin expanded 70 basis points over the prior year period, to 14.5%. Revenue and cost initiatives implemented during the quarter contributed to the margin improvements.

Currency-neutral revenue per package declined 1.0% due to changing product mix and continued strength in shorter trade lanes. Non-premium products continue to outpace premium, putting pressure on yield.

On October 7, UPS announced the acquisition of international e-commerce enabler i-parcel, LLC. The company’s experience and technology in cross-border e-commerce assists U.K. and U.S. based retailers expand their reach to consumers in over 100 countries worldwide.

Supply Chain & Freight

Supply Chain and Freight revenue was up 7.4% to $2.4 billion, resulting primarily from growth in the Distribution and UPS Freight business units. Operating profit was 7% higher at $215 million, and operating margin was 8.9%.

Forwarding revenue was higher primarily due to increased International Air Freight (IAF) tonnage which was aided by high-tech product launches and Government sector gains. Operating profit improvements in North American Air Freight and Ocean Forwarding were more than offset by continued pricing pressure in IAF.

Distribution revenue increased more than 10% over the same quarter last year. Strong demand from Healthcare and Retail sector customers contributed to the growth.

UPS Freight revenue increased 7.9% to $810 million. LTL shipments were 4.7% higher and revenue per hundredweight improved 1.1%. Operating profit and margin expanded from the third quarter last year.

Outlook

The company announced its expectations for the upcoming holiday season. UPS expects shipments delivered during the month of December to climb 11% over the prior year. As previously announced, the company committed an additional $175 million in operating expense and $500 million in capital expenditures to enhance its capabilities and prepare the network for peak and future volume growth.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 747-4R7F N582UP (msn 29053) departs from Anchorage.

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Video: Plane Pull at Miami: UPS Americas employees, friends and family showed their support for United Way of Miami-Dade by coming out to pull a Boeing 757 weighting more than 110,000 lb. at the UPS Americas 2014 Plane Pull. The high temperatures didn’t stop the attendance of more than 250 people at the fundraiser event. Together, we pulled for a great cause.

UPS’ pilots issue this statement regarding its unresolved contract and the upcoming holiday rush

UPS Airlines’ (United Parcel Service) (Atlanta and Louisville) pilots, represented by the Independent Pilots Association, have issued this statement:

“Will United Parcel Service deliver this Christmas? That’s the question that manufactures, shippers, retailers and consumers have been asking. While we can’t speak to all aspects of UPS’s operations we can say that despite UPS not finalizing our contract we remain committed to delivering this Christmas season,” said Independent Pilots Association spokesperson Brian Gaudet.

Gaudet went on to say, “UPS has done a lot to avoid a repeat of last year’s holiday delivery troubles: it developed and funded a $175 million Peak Plan; finalized its labor contract with the Teamsters; increased its seasonal hires by seventy-three percent. But UPS didn’t do everything it needed to; UPS neglected its air operations by not finalizing the contract with its pilots. We are now in our fourth-year of contract talks with UPS. In spite of this drawn out negotiation, the IPA remains committed to delivering this holiday season. But we encourage UPS, for the benefit of its customers, to close out this critical unfinished business.”

To help make this point the IPA has taken out full-page ads in the Asian, European and Eastern U.S. editions of the October 24 issue of the Wall Street Journal (below).

The Independent Pilots Association represents the professional pilots flying for United Parcel Service.

Top Copyright Photo: TMK Photography/AirlinersGallery.com. Airbus A300F4-622R N164UP (msn 853) completes its final approach to the runway at Toronto (Pearson).

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Ad appearing in the Wall Street Journal:

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The NTSB blames the crew for the crash of UPS flight 1354 at Birmingham, Alabama

UPS A300-600F N155UP Crash Birmingham (NTSB)(LRW)

The National Transportation Safety Board determined that UPS flight 1354 crashed because the crew continued an unstabilized approach into Birmingham-Shuttlesworth International Airport in Birmingham, Alabama. In addition, the crew failed to monitor the altitude and inadvertently descended below the minimum descent altitude when the runway was not yet in sight.

The board also found that the flight crew’s failure to properly configure the on-board flight management computer, the first officer’s failure to make required call-outs, the captain’s decision to change the approach strategy without communicating his change to the first officer, and flight crew fatigue all contributed to the accident.

The airplane, an Airbus A300-600, crashed in a field short of runway 18 in Birmingham on August 14, 2013, at 4:47 a.m. The captain and first officer, the only people aboard, both lost their lives, and the airplane was destroyed by the impact and a post-crash fire. The flight originated from UPS’s hub in Louisville, Kentucky.

“An unstabilized approach is a less safe approach,” said NTSB Acting Chairman Christopher A. Hart. “When an approach is unstable, there is no shame in playing it safe by going around and trying again.”

The NTSB determined that because the first officer did not properly program the flight management computer, the autopilot was not able to capture and fly the desired flight path onto runway 18. When the flight path was not captured, the captain, without informing the first officer, changed the autopilot mode and descended at a rate that violated UPS’s stabilized approach criteria once the airplane descended below 1,000 feet above the airport elevation.

As a result of this accident investigation, the NTSB made recommendations to the FAA, UPS, the Independent Pilots Association and Airbus. The recommendations address safety issues identified in the investigation, including ensuring that operations and training materials include clear language requiring abandoning an unstable approach; the need for recurrent dispatcher training that includes both dispatchers and flight crews; the need for all relevant weather information to be provided to pilots in dispatch and enroute reports; opportunities for improvement in fatigue awareness and management among pilots and operators; the need for increased awareness among pilots and operators of the limitations of terrain awareness and warning systems — and for procedures to assure safety given these limitations.

A synopsis of the NTSB report is available at: http://www.ntsb.gov/investigations/2013/birmingham_al/birmingham_al.html

Top Copyright Photo: NTSB.

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Bottom Copyright Photo: Ken Petersen/AirlinersGallery.com. N155UP is pictured on the cargo ramp at New York’s John F. Kennedy International Airport before the tragic accident. Airbus A300F4-622R N155UP (msn 841) crashed on August 14, 2013 while on approach from the north to Birmingham-Shuttlesworth International Airport, Birmingham, Alabama. The crew was operating cargo flight 5X 1354 from the Louisville hub to Birmingham. The two crew members were tragically killed in the crash.