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UPS set to pick up the pieces
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November 12, 1998: 3:18 p.m. ET
Package carrier says it's bulking up air, ground capacity in case of FedEx strike
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NEW YORK (CNNfn) - United Parcel Service, the largest private express package carrier in the United States, said Thursday it is bulking up its operations to handle extra deliveries in case pilots at rival Federal Express go on strike.
"UPS has additional air and ground capacity that can be used to accommodate the needs of domestic and international shippers who may be seeking alternatives in light of the labor situation at Federal Express," UPS said in a brief statement Thursday.
UPS made its overture as FDX Corp. unit FedEx, the world's largest air freight company, faces the looming possibility as early as December of a strike by its 3,500 pilots over compensation, flight scheduling and retirement.
On Wednesday, FedEx began taking steps to help reduce the company's reliance on the pilots, with whom management broke off talks last month after deadlocking over pay and overtime issues in the first-ever contract negotiations between the two sides.
The brinkmanship has continued, with the pilots now threatening to strike on the eve of the bustling holiday shopping season, FedEx's busiest time of year.
The FedEx Pilots Association, which represents more than 3,000 FedEx pilots, mailed strike ballots Monday. A two-thirds vote in favor would allow the union to call a strike as early as Dec. 3.
In a news release Wednesday, FedEx said it would use other carriers to supplement its U.S. operations and to operate its international network.
"We have the operational flexibility, the financial stability and the resolve to meet our customers' needs during the peak shipping season," FedEx President and Chief Executive Officer Theodore Weise said in the release.
Atlas Air Inc., a Golden, Colo.-based provider of freight flights for commercial airlines, said Thursday it will fly three Boeing 747 jumbo cargo planes for FedEx.
Under terms of the contract, Atlas said it will provide FedEx with the aircraft, crew, maintenance and insurance for airport-to-airport international freight services for a guaranteed number of operating hours each month. Federal Express doesn't operate any 747 freighters.
"We are pleased to announce this agreement with FedEx representing the extension of a long-term relationship," Michael Chowdry, chairman, chief executive officer and president of Atlas Air, said.
Chowdry added: "Atlas has been having discussions with FedEx as a potential customer since our decision to purchase the ultra long-range, high-payload 747-400F. The 747 is uniquely suited to the global route structures of international operators such as FedEx."
Atlas Air's customers include such leading airlines as Alitalia, British Airways, El Al, KLM and SAS. The company had about $400 million in revenue in 1997.
UPS posted a third-quarter profit in 1998 after taking a loss in the year-earlier period following a 15-day strike.
The company said Thursday it was "bulking up" its air and ground capacity and "has various ways of handling additional volume by taking advantage of the largest air and ground distribution infrastructure in the world."
Meanwhile, FedEx posted a message on its Web site Thursday warning it may be temporarily unable to offer some services, including FedEx First Overnight, which guarantees delivery by 8 a.m. the next day, in the event the pilots strike.
FedEx spokesman Gregory Rossiter said it was too early to tell whether other overnight services would be affected as the holiday shopping season gets underway.
Shares of FDX Corp. (FDX) were down 1-3/16 at 52-3/8 Thursday afternoon on the New York Stock Exchange. Atlas Air stock climbed 2-1/8 to 36-3/8 by mid-afternoon. 
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