Pilot Furlough

[mackintosh1970]

A stagnant global economy and the modernization of the UPS fleet have compelled us to adjust our crewmember staffing levels. As many as 100 of our 2,515 pilots could be affected by the end of 2003.

We have discussed alternatives with the IPA, including a Voluntary Separation Plan and a Voluntary Leave of Absence Program. We will provide details of both programs next week. We hope a sufficient number of crewmembers will accept these offers so furloughs may not be necessary.

However, furloughs remain a reality. Depending on the success of the separation and leave of absence offers, 19 crewmembers could be furloughed immediately. The first 19 crewmembers could be furloughed by the displacement bid posted on Feb. 7, 2003. Barring an unforeseen upturn in business, another 20 could be furloughed by a bid posted in March, and 61 more could be furloughed by September. These dates are subject to change.

The decision to adjust pilot staffing is based on very real and serious business issues. UPS air express package volume is significantly depressed. We first started noticing the decline in our business during the summer of 2001 as the economy began to cool down. Then terrorists attacked our country on 9/11, and the economy did not improve during the remainder of 2001. Nor did it improve during 2002.

To make matters worse, we suffered setbacks to our business during negotiations with the International Brotherhood of Teamsters (IBT) last summer when our non-union competitors lured customers away by reminding them of our strike in 1997. Even though we successfully negotiated a contract with the IBT without any service interruption, we lost a significant amount of business to these tactics. In spite of our best efforts, we've only recovered about two-thirds of that lost volume.

We have responded to lower-than-anticipated volume in a number of ways. Throughout the company, we have cut costs, collapsed districts, restructured regions and business units, laid off drivers and hub workers, retired aircraft and deferred aircraft deliveries. By the end of 2003, we will have parked or retired 34 aircraft. All of those aircraft were three-crew aircraft. As we've replaced them, the new substitutes have been more efficient two-crew aircraft.

We sincerely wish adjustments in pilot staffing were not necessary. We have delayed this decision hoping for some type of rebound in economic conditions. Unfortunately, no rebound has occurred, and we must act to help protect the companys overall competitive position.

 

[almostbrown]

Not good news. I've been in the pool since June '01. Guess I'd better plan on swimming a lot longer.

 

[mackintosh1970]

Any idea how many pilots were hired since you? I'll keep my fingers crossed for you. Good luck.

 

[almostbrown]

I haven't been hired yet. I've been in the hiring pool since late June '01 waiting for hiring to resume. I guess now the wait will be that much longer. Thanks for the good luck wishes

 

[dannyboy]

Hang tough. The wait will be worth it in the long run. Its hard on you now but the payoff will be there.

I had been married for 3 weeks when we went out on strike in 1976. Couldnt even afford the gas to go pick up the meager strike benifits, and had to drop going to college during that time. Tossed
pizzas to eat and keep warm. Wife, as luck would have it, got the measles, and then pneumonia and was off almost the whole time we were out on strike.

Been there done that.

d

 

[mackintosh1970]

Danny, that's awful! But yes, 27 years later, you're still there and going strong.

I was only 6 in 1976 and hadn't even heard of UPS yet, but what happened with that strike? Any comparison to '97? How long was it? Did UPS learn anything useful from that strike?

 

[dannyboy]

THree months. It really sucked. Only a dozen states were under that contract. Should have never happened IMHO. Of course the last two week spitting contest should never of happened either.

If I had not been there for three years at that time, I would not have been able to go back to work as soon as I did. But a lot of the part timers didnt show back up, just got jobs elsewhere. Of course then there was the mass migration of many of our senior drivers to FDX in the 80's. It was a bad place to work at that time, under the local managers we had then. Glad I stuck it out instead of jumping ship like they did. At least 16 drivers most with 10 or more years went to FDX within a month of each other. They (FDX) got a really well trained and area/customer knowledgeable workforce overnight. And one of the exUPSers was on many of their commercials. Ken Sw***** was his name. Really good guy.

Oh well, those were the days.

d PS over half of the drivers we have now were only twinkles in their daddies eyes when I started driving. 60% dont even have 5 years in.

Darn I feel old

NOT!

 

[michael]

Not being familiar with the pilots, their union, or their contract, the reasoning for the furloughs sounds logical and sound. I would be interested in how the pilots themselves see this. Are there any out there that would care to comment?


Michael

 

[freight98]

As a pilot for UPS, I'll make a short observation. Go to the UPS web site and listen to the conference call for fourth quarter and year-end financial results. Domestic was 'flat' but international growth was impressive if not staggering. "Excluding non-recurring items, operating profit jumped 133% to $154 million compared to $66 million the prior year." (Quoted from the Flight Ops web site.)

Now, I realize this is a trucking company that happens to have airplanes. But you can't drive a truck across the Atlantic or the Pacific. It takes planes and pilots. I'll grant that we are parking aircraft that require three crewmembers and replacing them with aircraft certified for two crewmember operations. BUT (you knew that was coming) that isn't entirely accurate. For example, the 747 requires a captain, first officer and flight eningeer. As the 747 is being phased out, they're being replaced by MD-11s which are certified for two-pilot operations--EXCEPT when the leg exceeds 8 hours. For flights over 8 hours, an additional pilot, called an International Relief Offocer (IRO) is required to be part of the crew. This is not something required by the contract. It is required by the FAA. So, the company traded a three-crew aircraft for a sometimes three-crew aircraft. Where's the savings (in personnel)? The savings is in how much cheaper it is to operate an MD-11 v. a 747.

That should give you something to ponder. My keyboard is getting hot.

 

[charlie]

Freight98,

While your reasoning sounds logical, the facts show that even with the international growth, international flights account for only a small percentage of total daily UPS flights, and, international flights over 8 hours account for an even smaller percentage. International volume, while profitable, is still a small amount of the total flown volume. Trying to justify potential $200,000 a year salaries + benefits + retirement + training expenses in a declining economy with overall decreasing volume and increasing competition isn't going to fly!

Charlie

 

[upscorpis]

Freight98,

Your point about the 4th quarter call was brought up here before. Here's part of my response to that original post:

2) For the year, 1DA declined 5k/day and deferred air declined 22k/day.

3) Perhaps with the increased flow/hr and streamlined container unload process of the WorldPort hub, fewer smaller a/c are required for volume availability purposes. Now you can fly a 757 in at 12:35am instead of a 727 at 11:30pm and a 727 at 12:30am. During the day operation, some volume may have been shifted to the ground for similar reasons.

4) UPS guided to expect flat volume year over year for the first quarter of '03. This comes after growing the staffing to fly the a/c required for peak, many of which are now sitting as spares.


As part of the 4th quarter announcement, Scott Davis actually mentioned the Worldport has allowed a reduction in volume at regional air hubs due to the increased capacity/hour now in SDF. I could see this translating into some 727's being put on the ground that used to go to the regional air night hubs. That volume can now fly in larger a/c to SDF. I must admit I no longer have visibility into that area of the business though so I am conjecturing. I do have prior UPS experience in that area though.

Another consideration is that most international flights didn't start out full of packages to begin with. There was air cargo on board supplimenting the package volume. There was room in the current system for more packages when they became available. That's no doubt still true today.

Grounding an a/c is a LARGE savings when compared to eliminating a feeder route or a delivery route. Every day, people in the districts are challenged with reducing vehicle usage to save cost without impacting service. In the grand scheme, a/c are viewed in that same manner and due to the cost, there is extra incentive to be creative. I've personally been involved in many a planning session to open up sorts or utilize feeders to reduce the number of a/c in the air, even if only one day a week. Think about all the weekend air sorts that have sprung up in the last 5-7 years. More a/c routes wrung out of the system.

Generally speaking, pointing out one sector of growth doesn't look at the broader picture. UPS does a lot of things to reduce cost that may not be immediately obvious to the uninitiated. Air or international volume growth will not always equate to more a/c routes. For sure, less volume will not.

 

[upscorpis]

Yes, I can spell supplement correctly....

 

[proups]

The pilots are really the only cutbacks that have reached the newspapers.

The ground side of the business has been in the cost cutting mode since mid 2001. The company has almost quit promoting management people, except for critical positions. If we lose a FT Sup, there is a very real concern that we won't get one to replace him/her. Maybe a couple of PT Sups.

The UPS Teamsters are no different. Feeder runs have been cut, and those people can either go back to package (in some cases), or work in the Hub. Delivery routes have been cut and drivers laid off for weeks at a time. This kind of thing does not reach the papers, but it is happening.

To replace large aircraft with smaller, more efficient, aircraft that does not require as many pilots sounds like the movement to automate as many jobs in our hubs as we can!

Bottom line, if we don't get the packages back that we lost to FedEx, this will continue.