TNT may sell aircraft, cut jobs after UPS deal failure | AviationBrief – Your Daily Aviation Intelligence Brief
TNT is considering cutting its headcount and selling some of its long-haul fleet after the European Commission blocked its planned tie-up with United Parcel Service (UPS) .
Speaking at the release of the company’s full-year results, interim CEO Bernard Bot said TNT Express is now “looking firmly at a standalone future.” However, he added that “trading conditions remain difficult” and TNT Express now needs to press ahead with “a number of actions which were suspended because of the UPS offer.”
He added that TNT Express will detail its new strategy March 25. “We are clearly aware that further urgent improvements are required,” Bot said. “This will be more comprehensive than just cost measures. We will be looking at the company as a whole.”
Under the revamp, TNT Express will divest its domestic businesses in Brazil and China, although its international activities to these countries will continue.
Job reductions will “more than likely” also form part of the measures. “We have to restructure our operating and overhead levels. That will impact staff, but I don’t want to conjecture too much here and now when plans have not finalized,” Bot said.
TNT Express is also reassessing “structural solutions for its air capacity,” after plans to sell some of its long-haul fleet were put on hold during the UPS talks.
“We have three Boeing 777s and two 747s. One of our 747s is semi-grounded, operating one rotation per week into China. This is not a situation we are comfortable with,” Bot said. “We are looking at various alternatives to reduce the fleet. The 747s may be the first target, but we will be looking at the 747 and 777 fleet as a whole to see what we can do to reduce capacity. We don’t need that many aircraft.”
TNT Express’ two airlines TNT Airways and Spanish carrier Pan Air may also come under scrutiny during the review, according to interim CFO Jeroen Seyger. TNT Express struck a deal to sell the airlines to Air Contractors parent ASL Aviation, conditional on the UPS deal.
“This was a conditional sale related to the UPS transaction because they could not be owned by a non-European legal entity,” Seyger said. “That doesn’t mean we would exclude any option in the future, but it is not as straightforward as it was at the time when we were pursuing the merger with UPS.”
TNT Express’ adjusted full-year revenues fell by 1.7% to €7.1 billion ($ 9.5 billion) in 2012, while its adjusted operating income for the year decreased 16.4% to €188 million.