UPS Plans First Pilot Layoff Ever

The company says it will lay off 54 pilots on Sunday because its flights have decreased.
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(UPS) - Get Report

will lay off 54 pilots on Sunday, the first pilot layoff in its history.

"We are undertaking this furlough because we have more crew members than we need to operate our airline," said UPS spokesman Norman Black, in a prepared statement. "We are flying 48 fewer aircraft (214 vs. 262) than we were at our peak in 2003." Additionally, UPS said it is flying 15% fewer block hours than it did in 2007.

The Independent Pilots Association, which represents 2,800 UPS pilots, said the 54 layoffs represent the first step in plans to lay off 300 pilots.

"What makes this furlough truly unfortunate is that our pilots took it upon themselves to give-up pay and benefits to produce $117 million in guaranteed savings for UPS, enough to keep these 300 pilots employed well into 2011," said Robert Thrush, IPA president, in a prepared statement.

Under the program, implemented in April 2009, "UPS pilots were able to generate cost savings for UPS by taking reductions in flight pay guarantees, taking unpaid leaves of absence, participating in job sharing, taking military leave, contributing unused sick bank time and taking early retirement," he said.

Thrush questioned why the layoffs are coming as the economy improves. UPS

profits rose 37% in the first quarter. Profits

exceeded guidance in the fourth quarter, as the recovery gathered steam. The pilot layoffs were announced in February.

Black said "UPS is not a company with a culture where job cuts are the norm," but called them "the right thing for our business." He said the company retrained about 100 DC-8 pilots after their airplanes were retired, "but there simply are not places for all of the additional crew members. At an average expense of $185,000 per year in pay and benefits, a well-run airline cannot afford to just 'carry' pilots in hopes that business will improve quickly."

-- Written by Ted Reed in Charlotte, N.C.