UPS Plans to Furlough 300 Pilots

UPS plans to furlough at least 300 of its airline pilots, but the company insists it will continue its effort to find a solution with the pilots’ union that would avert or mitigate the layoffs before they take effect. UPS employs about 2,800 pilots.

UPS has been working with its union, the Independent Pilots Association, 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,” says Bob Kekites, president of UPS Airlines. “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.”

The pilot furloughs, if required, would be but 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, $1.4 billion 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 Jan. 8 it was streamlining its entire domestic U.S. small package structure, eliminating 1,800 management and administrative positions across the country.