UPS 4th QTR Earnings Call
02-04-2009, 11:53 AM
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UPS 4th QTR Earnings Call
There were some interesting points in the 4th QTR Earnings Call I think. The link is to the transcript so you can read all of it yourself if you want. I've copied few comments I thought were particularly interesting from a poolie's perspective.
"Perhaps the most significant revenue opportunity stems from DHL’s departure from the US Domestic market. We went after that business vigorously with a well executed plan. We gained significant new volume as a result. We have more opportunities in 2009 as we compete globally with them particularly on volumes in and out of the US. As for the airlift contract, we and DHL had been working on, negotiations are continuing. With reduced scale of airlift need we’re finding it very difficult to reach an agreement."
"The majority of DHL volume is heading towards Ground also."
"During December we experienced a peak season that was very similar to last year, with shipping concentrated during the last week and a half prior to Christmas."
"We pointed out in the past that there are higher fixed versus variable costs in our International network and we’re addressing this issue vigorously. We’ve identified opportunities to reduce block hours in our worldwide air network during 2009 without sacrificing service or footprint."
"Now for some insights into 2009. We have our work cut out for us this year which will likely be even more difficult than 2008, with forecasters not anticipating any real economic recovery until 2010 UPS earnings for 2009 will suffer."
John Mins - BB&T Capital Markets
Where I was getting at was if you break down stuff like aircraft deliveries of what’s scheduled for ’09 of the 767’s and the 400’s?
Scott Davis
Three 767’s and three 747’s come in in ’09.
John Mins - BB&T Capital Markets
The 26 other planes are 2010 and beyond. I was trying to see if its possible to push those back especially with fuel is not as big an issue now if flying the 200’s and some of the older planes is more attractive if you can hold off on those purchases.
Kurt Kuehn
We’re looking at that. At the same time we do intend over time to migrate the DC-8 suite out with aging aircraft directives, it’s likely in the next three to four years that most of those will become uneconomic. We’re balancing that. We do have cash. We think we’ve got favorable terms and if it makes sense to defer out we’ll certainly talk with Boeing and any other providers.
"Perhaps the most significant revenue opportunity stems from DHL’s departure from the US Domestic market. We went after that business vigorously with a well executed plan. We gained significant new volume as a result. We have more opportunities in 2009 as we compete globally with them particularly on volumes in and out of the US. As for the airlift contract, we and DHL had been working on, negotiations are continuing. With reduced scale of airlift need we’re finding it very difficult to reach an agreement."
"The majority of DHL volume is heading towards Ground also."
"During December we experienced a peak season that was very similar to last year, with shipping concentrated during the last week and a half prior to Christmas."
"We pointed out in the past that there are higher fixed versus variable costs in our International network and we’re addressing this issue vigorously. We’ve identified opportunities to reduce block hours in our worldwide air network during 2009 without sacrificing service or footprint."
"Now for some insights into 2009. We have our work cut out for us this year which will likely be even more difficult than 2008, with forecasters not anticipating any real economic recovery until 2010 UPS earnings for 2009 will suffer."
John Mins - BB&T Capital Markets
Where I was getting at was if you break down stuff like aircraft deliveries of what’s scheduled for ’09 of the 767’s and the 400’s?
Scott Davis
Three 767’s and three 747’s come in in ’09.
John Mins - BB&T Capital Markets
The 26 other planes are 2010 and beyond. I was trying to see if its possible to push those back especially with fuel is not as big an issue now if flying the 200’s and some of the older planes is more attractive if you can hold off on those purchases.
Kurt Kuehn
We’re looking at that. At the same time we do intend over time to migrate the DC-8 suite out with aging aircraft directives, it’s likely in the next three to four years that most of those will become uneconomic. We’re balancing that. We do have cash. We think we’ve got favorable terms and if it makes sense to defer out we’ll certainly talk with Boeing and any other providers.
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