CactusCrew

It could result in less UPS pilots needed in Europe ... so it could mean more furloughs.

We have no crystal ball on how this will effect the UPS Airline and IPA pilots yet, nor do you.

Sideshow Bob

That seems to be the gist of several articles on the issue. With Europe on the edge of the toilet bowl, and the U.S., at best with a DNC-driven rosey outlook (such as it is), many speculate that it might be a bad idea for the company as a whole, nevermind the possible negative impact on line pilots.

That being said, Fed Ex invested heavily in Europe many years ago, and pulled out, which was a mistake (not always a mistake in other endeavors ), and has cost them hugely ever since (I know, it's hearsy to say anything bad about Fed Ex). UPS could have backed out of S.A. and has chosen to stay in play which MAY be a smart move, given that S.A. is predicted by some to be the next China along with India.

Then again, Davis may have blind trusts heavily loaded with TNT stock and he's just driving the price up to enrich himself, and it's just another of several circle jerks so prevalent these days.

Time will tell...

Jonathan E

I wonder about our scope clause? Could they operate it as a separate division? Separate the carbon tax from our current flights?

On a side note, does TNT have 777s?

BizPilot

Quote:
On a side note, does TNT have 777s?

NOPE!
But they do have customers.

BizPilot

I just put my MBA cap back on and in class they said ....

Add plant, property, and equipment in a downturn.

757upspilot

Web site indicates 3 777, 4 747-400

JustUnderPar

Ah. You have much to learn about this place! UPS acquiring TNT does not equal more jobs for UPS Pilots. Just the opposite can happen. Who knows!!!

oldfr8dog

UPS Packages a European Deal

By Tony Daltorio - February 24, 2012| Tickers: FDX, UPS| 0 Comments

Tony is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.


In its entire 105-year history, perhaps United Parcel Service's (NYSE: UPS) boldest move ever is the recent $6.4 billion (9 euros per share) bid launched for its European rival TNT Express. The deal would make UPS the biggest express mail carrier in Europe and could generate about $450 million in synergies thanks to some overlap in their networks.

TNT Express is the smallest of the big four global package delivery companies. The company has a presence in 62 countries, has 16 road hubs in Europe, employs 83,000 people and has a fleet of more than 30,000 vehicles and 60 airplanes.

UPS is a company that is not known for such bold moves, but rather for a "slow and steady wins the race" type of corporate culture. Even in the executive office, it is not prone to rash moves as over its entire history UPS has had only 10 chief executives. In fact, UPS did not even go public until 1999. So this foray into Europe is definitely worth closer scrutiny from investors.

It may come as a surprise to some, but even staid UPS has bought about 30 companies around the globe since 1999 with the largest acquisition being the $1.3 billion purchase of Overnite in 2005. But now finally, UPS is putting its full financial muscle into a deal.

The bid for TNT Express comes at a crucial time for UPS and its rivals such as FedEx (NYSE: FDX). These companies are in a period of moderate but uneven growth (matching the global economy) and are moving to build out their global delivery networks in order to tap into international trade flows. Most deals to date though have been rather small as these companies simply filled in specific service and geographic gaps in their systems.

One can understand the reason for caution among these companies. Look at the last major deal in the package delivery sector – the 2003 takeover of Airborne Express in 2003 by Europe's Deutche Post DHL. Technological glitches led to late deliveries, billing errors and lost customers causing DHL to eventually pull back from the U.S.

However, the deal for TNT should have come as no real shock to investors familiar with UPS. Company insiders are saying that TNT's express business has long been attractive to UPS. According to Doug Caldwell of AFMS Logistics Management Group, the reason for the interest is that TNT has a strong relationship with European multinationals, a valuable long-haul road network and an outsourced operating model that gives it a very flexible cost base.

Another attraction for UPS is that TNT has a sizable presence in two of the BRIC countries – China and Brazil. UPS already has a growing business in China, but it has ambitions on establishing a major presence in Latin America.

But will UPS eventually succeed in its bid, which has already been rejected by TNT?

The main stumbling block could be UPS' main rival, FedEx. It has long been a laggard in the European market ever since it closed its Brussels hub in the early 1990s. The company closed the hub because it got tired of losing money on its European operations. Its generates only 2% of its revenues inside Europe versus 14% for UPS.

So TNT Express may be too enticing to FedEx management as a great way to re-enter Europe in a big way and a bidding war could erupt. It would be a tough fight, but the winner should eventually be UPS as its market capitalization is more than double FedEx's and it generates more free cash flow than its rival. In other words, it has more financial firepower than FedEx.

Huck

Do they outsource any flying?

HercDriver130

TNT certainly has out sourced flying.... last year Atlas flew a -400 for them. There are probably others.