UPS to cut 300 pilot jobs

UPS has said it will lay-off at least 300 of its 2,800 airline pilots. The company announced it had been working with its union, the Independent Pilots Association (IPA), for the past year to identify ways to cut operating costs to avoid any pilot furloughs.

Last June, the IPA identified significant savings through voluntary programs such as pilots taking short- and long-term leaves of absence; military leaves; job sharing; reduction in flight pay guarantees; early retirement, and sick bank contributions. UPS subsequently agreed it would not furlough any pilots in 2009.

The two sides have been working cooperatively ever since to identify additional cost-cutting initiatives that would eliminate the threat of layoffs entirely. Subsequent discussions have failed, however, to identify sufficient operating savings.

If the furloughs go forward, they would be phased, with the first 170 pilots receiving notices in 2010. The initial group would be furloughed in May.

“Even though the economy has begun to turn around, UPS anticipates a very gradual recovery and a continued need for belt-tightening,” said UPS Airlines president Bob Lekites. “This is a painful decision for our people, but one that is right for the on-going health of our business.

“But we haven’t given up on this process,” Lekites continued. “We continue to go well beyond our contractual obligation to seek a ‘win-win’ solution to avert furloughs.”

The pilot furloughs are one of many steps the company has taken over the past two years to match its resources to economic conditions. UPS has engaged in a company-wide, $1.4bn cost-cutting effort that included a freeze on management salaries in 2009; suspension of the match for 401(k) plans; trimming capital expenditures, and retiring older aircraft.

Most recently, UPS announced on 8 January it was streamlining its entire domestic US small package structure, eliminating 1,800 management and administrative positions across the country.

“Companywide, we will continue to evaluate all opportunities and make adjustments as necessary to ensure our company is well-positioned to emerge stronger than ever as the economy continues to recover,” said Lekites. “We applaud our pilots for the way they’ve joined with UPS in trying to tackle this problem and hope we can identify a mutually beneficial outcome.”