Nervous patrons deserting UPS
Associated Press
ATLANTA — United Parcel Service Inc. said Wednesday that it expects to meet its second-quarter financial targets, but acknowledged that rivals are starting to collect some of its business as contract talks with the Teamsters continue.
Bloomberg News Service
UPS, the world's largest freight hauler, affirmed its forecast of earnings of 50 cents to 55 cents per share. Analysts expect UPS to earn 54 cents per share, according to a consensus survey by Thomson Financial/First Call.
UPS courier Raymond Jones makes a delivery in Atlanta. The company and its Teamsters union are still far apart on contract issues as a July 31 deadline nears, causing worried customers to use other shippers. The two sides say they will avoid a strike.
The UPS contract, which covers about 230,000 workers — the Teamsters' largest employer — expires July 31. Union members have authorized a strike if no deal is reached.
UPS said package volume was down 2 percent in April and May from last year's levels, but fell 4 percent in June as the contract deadline approached.
"We've said all along the risk of volume being diverted would increase the closer we got to contract expiration, and diversion will accelerate if there's no agreement soon," said Scott Davis, UPS' chief financial officer.
A half-month Teamsters strike in 1997 cost the company an estimated $750 million and strained businesses across the country.
Negotiations are taking place this week in Washington. Health insurance costs and pension benefits remain sticking points, Teamsters spokesman Bret Caldwell said.
"The company has a long way to go," he said. "The best way to end diversion is for the company to conclude these talks."
Separately, UPS is determining how it will supply an estimated 70 million to 100 million of its shares that are likely to be needed since the company was notified Tuesday it will be added to the Standard & Poor's 500 index.
Mutual funds and other investments that track the index buy shares of each company in it. UPS will be added to the index after the market closes July 19.
UPS has previously told regulators that 30 million shares of Class B stock would be sold by the Annie E. Casey Foundation and the UPS Retirement Fund if it were included in the S&P 500.
Company officials are still working on the timing and other issues related to the stock, UPS spokesman Norman Black said.
UPS shares rose $2.51, or more than 4 percent, to close at $63.25 Wednesday on the New York Stock Exchange.
