TNT takeover?

[precontact]

UPS is attempting buy TNT. How many airplanes and pilots do they have? Do they utilize several companies ala DHL with different seniority lists? Curious what you folks think about this possibility.

[CargoOne]

TNT Airways is around +/- 15x BAE146, 10x 737, a couple of 777 and couple of 744. The rest is wet lease / subcharter.

[hardcase]

FedEx are having a look too!!!

[B-HKD]

First offer was rejected as the BOD has confirmed. However the negotiations are ongoing.

[Acid-drop]

Could be a massive big bang for one of the hubs ...

[old-timer]

It would make sense - maybe consolidate to STN, plenty of room there

[fingal flyer]

Hardcase,
What chance they are looking for a JAR AOC.Cant see it myself the way Europe operates but if Unification ever broke out it would protect the European operation.If not the case it would add to the exposure they already have in europe.

[Flightmech]

Don't think FedEx are looking for a European AOC, if that was the case they would have done it a while back. FedEx don't currently register their airplanes anywhere else other than the US and Canada (a few 727s, now 757s registered with Morning Star) Think they'd just be looking at obtaining that part of the market.

[3pointlanding]

FedEx has a reputation of keeping their intentions close to the vest. It is no secret they are really enthrallled being #3 in the European market and if anything ever happened we won't know about it until the ink is dry.

[gtf]

It is no secret they are really enthrallled being #3
#1 DHL
#2 TNT
#3 UPS
#4 FedEx

FedEx + TNT = #2 and still a long way from #1
UPS + TNT = #2 but the battle for #1 is on

Guess who is FedEx's new best friend?

[3pointlanding]

My error if FedEx is #4. I forgot UPS.

[JW411]

I flew for TNT for almost 20 years. Hardly a week went by without a rumour floating round the crewroom about a take-over by DHL, UPS, FEDEX or Uncle Tom Cobley and All.

I await the result of the latest rumour with little interest.

[3pointlanding]

In todays Bloomberg report:
FedEx Seen as Possible TNT Suitor


By Natalie Doss - Feb 21, 2012 8:56 AM CT


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[URL="http://www.bloomberg.com/photo/fedex-seen-as-possible-tnt-suitor-/153307.html"]Enlarge image http://www.bloomberg.com/image/ioS37AF3mg48.jpg (http://www.bloomberg.com/news/2012-02-21/fedex-seen-as-possible-tnt-suitor-after-ups-s-6-4-billion-bid-falls-short.html)FedEx Seen as Possible TNT Suitor

http://www.bloomberg.com/image/iplrQdeRVi8g.jpg Adam Rountree/Bloomberg News.

A FedEx delivery truck is driven in New York.



A FedEx delivery truck is driven in New York. Photographer: Adam Rountree/Bloomberg News.


Enlarge image http://www.bloomberg.com/image/ikpVwuOBk68E.jpg (http://www.bloomberg.com/photo/fedex-seen-as-possible-tnt-suitor-as-first-ups-bid-falls-/153235.html)FedEx Seen as Possible TNT Suitor as First UPS Bid Falls

http://www.bloomberg.com/image/iv_KEzK5XyoE.jpg David Paul Morris/Bloomberg

A FedEx Corp. employee unloads packages from a truck in San Francisco, California, U.S.



A FedEx Corp. employee unloads packages from a truck in San Francisco, California, U.S. Photographer: David Paul Morris/Bloomberg



FedEx Corp. (FDX) (http://www.bloomberg.com/quote/FDX:US) may try to jump into the bidding for TNT Express NV (TNTE) (http://www.bloomberg.com/quote/TNTE:NA) after the board of Europe (http://topics.bloomberg.com/europe/)’s second- largest package-delivery company rejected a $6.43 billion offer from United Parcel Service Inc. (UPS) (http://www.bloomberg.com/quote/UPS:US), investors and analysts said.
“FedEx is the most obvious” potential TNT suitor besides UPS, said Katrina Dudley, a portfolio manager at Mutual Series, a Franklin Templeton Investments unit whose funds own TNT stock. “It is a once-in-a lifetime chance for one of the players to create what I see as a strong global parcel franchise.”
TNT (TNTE) (http://www.bloomberg.com/quote/TNTE:NA) turned down UPS’s initial offer of 9 euros a share while saying Feb. 17 that talks continue. That leaves an opening for FedEx, operator of the world’s biggest cargo airline, to swoop in to keep Hoofddorp, Netherlands-based TNT out of UPS’s hands, said Kevin Sterling (http://topics.bloomberg.com/kevin-sterling/), an analyst at BB&T Capital Markets.
The prize would be expansion in Europe, where Deutsche Post AG (DPW) (http://www.bloomberg.com/quote/DPW:GR)’s DHL leads in express deliveries, Sterling said in an interview. A bid by UPS, the largest package-delivery company, or Memphis (http://topics.bloomberg.com/memphis/), Tennessee-based FedEx has been the subject of speculation for years.
“FedEx would benefit more from buying TNT because they’re not as big in Europe,” said Sterling, who is based in Richmond, Virginia. “But UPS has made it very clear they want to continue to grow in Europe, that they like the opportunity in Europe, and they’ve been expanding their Cologne hub.”
TNT Surges

UPS’s unsuccessful offer was disclosed by TNT on Feb. 17, after Dutch trading ended. Investors signaled yesterday that they expect bidding to go higher, sending TNT surging (http://www.bloomberg.com/quote/TNTE:NA) 60 percent to 10.18 euros, 13 percent more than the offer price. The stock fell 2.5 percent today to 9.93 euros at 3:38 p.m. in Amsterdam.
“We fully expect another bid for TNT to come this week,” Jason Seidl (http://topics.bloomberg.com/jason-seidl/), a New York-based analyst with Dahlman Rose & Co., wrote in a note to clients. He has a “hold” recommendation on UPS and a “buy” on FedEx.
UPS, based in Atlanta, fell 0.2 percent to $76.64 at 9:54 a.m. in New York, and FedEx (FDEX) (http://www.bloomberg.com/quote/FDEX:US) slid 0.7 percent to $92.28.
“I don’t think this deal is over,” said David Campbell (http://topics.bloomberg.com/david-campbell/), an analyst at Thompson Davis & Co. in Richmond, Virginia. “I have a hunch TNT would come up with something to sustain the price and the talks” with UPS.
A person familiar with the TNT-UPS negotiations said the Dutch company is focused on UPS because FedEx has shown little interest so far in a bid. While UPS has confirmed being in talks, FedEx isn’t discussing TNT.
“As a matter of policy, we do not comment regarding corporate development matters,” Jess Bunn (http://topics.bloomberg.com/jess-bunn/), a spokesman, said yesterday in an e-mail, reiterating FedEx’s response when TNT disclosed the overture from UPS.
2011 Spinoff

TNT was spun off in May from the Dutch postal operator, which is now named PostNL (PNL) (http://www.bloomberg.com/quote/PNL:NA) and retains 29.9 percent of the company, according to data compiled by Bloomberg.
The company’s profit margin has been cut by more than half 2006, when, as the package-delivery unit of its former parent, earnings before interest and taxes was 9.6 percent of revenue. In 2010, adjusted Ebit represented 4.5 percent of revenue.
FedEx “could come in and offer 11 or 12 euros to make UPS sweat a little,” said Sterling, who like Campbell recommends buying UPS and FedEx stock. “Both of them would like to get it, and it’s a matter of who walks away first. UPS threw its cards on the table first and now we know that the floor is 9 euros.”
Acquisition History

Overseas purchases have helped FedEx’s global expansion. The company bought the Flying Tigers (http://about.fedex.designcdt.com/our_company/company_information/fedex_history/fedex_timeline#1980-1989) freight airline in 1989 to gain routes to 21 Asian countries, and spent $400 million in 2007 to take over a joint venture with China’s Tianjin Datian W. Group Co.
In late 2010, FedEx agreed to buy AFL Pvt. Ltd. and affiliate Unifreight India Pvt. Ltd., followed by MultiPack, a domestic express-delivery company in Mexico (http://topics.bloomberg.com/mexico/).
Dudley, the Mutual Series portfolio manager, said FedEx would be under pressure to come up with a counter to UPS’s offer for TNT or risk missing out on a purchase that would give it a competitive advantage overseas against the bigger U.S. company.
“If I were the CEO of another global parcel operator, I would be having people sharpen their pencils and look at the value of adding this asset to my franchise,” Dudley, who is based in Short Hills (http://topics.bloomberg.com/short-hills/), New Jersey (http://topics.bloomberg.com/new-jersey/), said in an interview. “And also I would be considering the potential loss of positioning if I didn’t have the asset in my franchise.”
To contact the reporter on this story: Natalie Doss in New York (http://topics.bloomberg.com/new-york/) at [email protected]
To contact the editors responsible for this story: Ed Dufner at [email protected]; Chad Thomas at [email protected]

[Trash 'n' Navs]

I'd be surprised if FDX could afford to offer.... their margins are about half of UPS and UPS is cash rich. I bet there's a lot of sweating in MEM either way...

[3pointlanding]

You better check your facts there buddy. Purple's revenues are much larger thatn UPS's and a good portion is kept overseas. FedEx owns cargo companies in Mexico, China, Japan, India, New Zealand, and I believe Australia. According to cargo world FedEx carries almost double UPS's air cargo volume. Make no mistake, if FedEx doesn't go after TNT it is because they don't want to, not because they can't afford it.

[Trash 'n' Navs]

3 point, revenue ≠ profit and nor does volume.

Issue isn't who's got the biggest train set, issue is how much you make per box. Making $5 per box shipped means you got to ship double the volume to just generate the same total profits of your competitor who's earning $10/box.

According to FDX Annual Report 2010, revenues of $34.7b generated a net income of $2.0b & margin of 5.8%.

According to the UPS Annual Report 2010, revenues of $49.5b generated a net income of $3.5b & margin of 7.1%.

Don't know the split of what's carried by air v. truck but as UPS is primarily a trucking network whilst FDX an air network, we can trade stats all day as to who's got the biggest.

Point is, UPS generate more profits than FDX and have a higher profit margin. They're in a much stronger financial position to play for TNT.

Then again, nothing more motivating than a competitor trying to lock you out of the EU market.

[Flightmech]

Whoever buys them it will probably end up with more US pilots flying EU routes:E (I might as well turn this thread to this subject now before someone else does later)

[zondaracer]

Yeah, what would most likely happen to TNT pilots if a UPS takeover occurred?

[totolariko]

That is exactly what I was wondering!

As previously stated, chances are high that they will try to keep routes and current contracts but what about Belgian (or Austrian) registered aircraft's and European crews?

[wind check]

That is exactly what I was wondering!

As previously stated, chances are high that they will try to keep routes and current contracts but what about Belgian (or Austrian) registered aircraft's and European crews?

Hmmm you'd better look for a green card ASAP dude. They won't let you fly on November I am affraid. :ouch:

[JW411]

In 1986 I was employed as an FAA Check Airman and DC-10 captain based in JFK for a Part 121 carrier.

One night, my boss decided to sell the DC-10s.

I was told to go home and wait for a DC-8 course.

In the meantime, I had an interview with Fedex. The job offer was for the F/E's panel on their DC-10 and, at their rate of progress, it was going to take me at least 15 years to get back into the left seat. At the age of 45, I was too old for that idea.

Now, I am absolutely not complaining about that for such was their company seniority system.

If I was a TNT pilot right now and one of UPS or Fedex were to take over, I would be very worried about my future.

My advice would be to get the Belgian unions to insist upon an EASA AOC.

There are not many US pilots who are willing to convert to an EASA license.

In my 20 years with TNT, we only had one American captain who managed to leap through all of the hoops. (If you are still there John, maybe this is your moment of glory)!

[Moneyjunkie]

Hmm forgive me for asking....

But as I understand it from a freind, UPS sub contracts different European companies because they are simply not allowed to carry freight On domestic
Basis in Europe with US Crew/N reg A/C, Due to European regulations... If this is true... how Will This change Their Rights just because they buy TNT?? So Would they not still need the EU Crews and what not in order to fly IN Europe... ??

Or did I missunderstand something ?

[fingal flyer]

mj
They do use starair from Denmark for several routes that involve domestic sectors but last time I looked their VLC day stop came and went daily from/to BCN before the international sector to CGN on an N reg 767.May have changed not been there in a while.

[the_matrix]

Hi Jok, hope you're fine!

[edie]

UPS acquisition may question the status of TNT Airways - Transport Intelligence - logistics research, analysis, solutions, services, trends, third party logistics. (http://www.transportintelligence.com/briefs/ups-acquisition-may-question-the-status-of-tnt-airways/2282/)

UPS acquisition may question the status of TNT Airways
24/Feb/2012

The acquisition of TNT by UPS has thrown up what could evolve into a highly ironic situation. TNT has a wholly owned airline, TNT Airways SA, which is based at its European hub in Liege and which exists to provide TNT Express with an air freight network connecting all its locations throughout the world.

However, a change of ownership could have serious implications for the airline. TNT Airways SA is incorporated in Belgium and qualifies as a Belgian and EU carrier. This brings a number of privileges that include the company's use of Liege Airport, routings and reciprocal landing rights and trade arrangements.

As TNT itself sets out in its IPO prospectus published in 2011, changes in the company's shareholder base, such that the majority of the Ordinary Shares are held by non-EU shareholders, may result in TNT Airways no longer being able to benefit from its privileges. The airline may not be able to use certain airports, including its base at Liege. TNT admits that this could affect its revenues and profitability.

The situation calls to mind a very similar problem faced by DHL in the US. Due to airline ownership legislation, it was forced to sell a controlling stake in DHL Airways to a US corporation in 2003. However UPS and FedEx both challenged the ownership status saying that as the majority of work undertaken by the airline was for its largest customer, DHL, it was de facto, owned by a foreign enterprise. This argument was eventually thrown out by the US judicial system and the Department of Transportation.
Should the acquisition of TNT by UPS go ahead, TNT Airways may well be spun off to conform to EU legislation. However, there may be a case that the same issue exists over 'control' and 'ownership'. If DHL's management have long memories, they may well wish to test this issue in court.

[Intruder]

Dunno what the legalities of UPS ownership of a European airline are, but I suspect any such acquisition would be retained as a separate carrier and certificate. Why would UPS choose to incur the likely MUCH higher costs of their mainline pilots by merging another carrier into that one? Also AFAIK, UPS has a history of acquiring airlines with airplanes only, and not any crews...

[edie]

Open skies deal leaves US rules intact - FT.com (http://www.ft.com/intl/cms/s/0/a1b7088c-383a-11df-8420-00144feabdc0.html#axzz1nLdMnTNt)

US laws that restrict foreigners from owning more than 25 per cent of voting stock in US airlines have long prompted concern in the EU.

The EU itself allows just less than 50 per cent foreign ownership of its airlines.

[76-er]

Netherlands-based logistics magazine Nieuwsblad Transport just reported last week TNT is planning to cut a large portion of its fleet: (sorry, in Dutch only)

Nieuwsblad Transport > TNT halveert intercontinentale vrachtvloot (http://www.nieuwsbladtransport.nl/Modaliteiten/Luchtvracht/ArticleLuchtvracht/tabid/142/ArticleID/23999/ArticleName/TNThalveertintercontinentalevrachtvloot/Default.aspx)

In short: about half of the 747/777 fleet will have to go, also part of the ageing shorthaul fleet will be parked.

[KBPsen]

I could see half of the 747's go or perhaps all of them. It depends on what the contract with Emirates is. But TNT can probably get rid of all the 747's and still cover the Emirates contract with the remaining 777's if they can't get out of it.

If UPS takes over I can't see them wanting to keep TNT Airways. A dozen or so 146's and 737's ain't much capacity and it's just down the road from Cologne.

[Moneyjunkie]

Haha polax.... Good one. Very intelligent... Step On your fellow aviators... May your ass be itching for a Month and your arms to short to reach it...

[despegue]

At least the Europeans (well, Ok, the Russians) can still put persons into space:E

yankees, go home:mad:

[grounded27]

Would there not be much to gain by buying TNT simply to dissolve it? I am sure FedEx would be happy to take their 777's off their hands. Sorry TNT employees, looks like the big boys in the global market wish to terminate your airline.

[totolariko]

Sorry TNT employees, looks like the big boys in the global market wish to terminate your airline.

From what I know, nothing has been signed so far.

And even though UPS buying TNT would not sound very good for the airline, pay some respect for these guys (that are doing the same job as yours)...

[Trojan1981]

I love how everyone gets an email stating the intention to aquire and advising not to discuss; then I look on Pprune and the thread is already in full swing! :ok:

[despegue]

TNT Airways is Biggest Airline nowadays, more or less on par with SN... and the best Airline to work for in Belgium. A closure would be again a total drama for the Belgian pilot community, and something that the Belgian government will NOT tolerate. A take-over in EU land is not without protection against simple liquidation. UPS can not simply close TNT airways. It needs to abide by Belgian legislation, US legislation has nothing to do with it as the airline is based in Belgium /EU.

[Caravelle III]

Despegue.

Not only the pilot's but all employees of TNT Airways should be very worried.
Not only could UPS dismantle the airline, quick or slow, but there is the problem of non EU/Belgian ownership. Intra EU and long haul traffic rights need EU/Belgian ownership of 51%.
How did Swiss and KLM solve this problem?

[grounded27]

pay some respect for these guys (that are doing the same job as yours)...

I was paying my respects...

[F111UPS767]

Web site indicates 3 777, 4 747-400

2 of the -400's are leased from Emirates and the 3 777's are leased from Guggenheim Aviation (so I've read on another forum)

[B-HKD]

B777:

OO-TSA/B are both leased from Guggenheim Aviation Partners (In TNT Airways colors)

N778SA leased from Southern Air Inc. (In TNT Airways colors)

B744

OO-THA leased from Guggenheim Aviation Partners (In TNT Airways colors)

OO-THB leased from Guggenheim Aviation Partners (In TNT Airways colors)

Both operate for TNT airways.

OO-THC leased from Guggenheim Aviation Partners (sub-leased to Emirates)

OO-THD leased from Guggenheim Aviation Partners (sub-leased to Emirates)

Both usually operate for Emirates as they are in EK Sky Cargo colors, but it is common to see -THA/B jump in when needed.

[Acid-drop]

TNT Airways is Biggest Airline nowadays, more or less on par with SN... and the best Airline to work for in Belgium. A closure would be again a total drama for the Belgian pilot community, and something that the Belgian government will NOT tolerate. A take-over in EU land is not without protection against simple liquidation. UPS can not simply close TNT airways. It needs to abide by Belgian legislation, US legislation has nothing to do with it as the airline is based in Belgium /EU.

I hope you are right, but belgian federal gov will not fight for a regional interest and the regional gov is known to have very limited lobbying impact and technical knowledge.
What may save you is that there is not only the pilot community but 2200 workers on the ground.

Go light a candle, any help can count.

[edie]

UPS, TNT Express Said to Near Agreement - Bloomberg (http://www.bloomberg.com/news/2012-03-08/ups-tnt-express-are-said-to-near-merger-agreement-after-initial-rejection.html?cmpid=yhoo)

Print Back to story
UPS, TNT Express Said to Near Agreement After Initial Rejection
By Matthew Campbell - Mar 8, 2012

United Parcel Service Inc. (UPS) is nearing an agreement to acquire TNT Express NV (TNTE) after Europe’s second-largest express-delivery service rejected its initial 4.9 billion euro ($6.5 billion) offer, according to people familiar with the discussions.

The two sides are close to a deal on both price and conditions attached to the offer that may lead to job cuts and require divestitures to win antitrust approval, the people said, declining to be identified as the talks are private. An announcement may come as soon as next week, one of the people said.

TNT, based in Amsterdam, is the smallest of the four major global delivery services companies, making it a longtime subject of merger speculation. Adding its European footprint to that of UPS would give the U.S. company a stronger foothold in the region and an advantage over its rival FedEx Corp.. (FDX)

While talks are ongoing, the companies may still fail to reach an agreement, the people said.

Spokesmen for UPS and TNT declined to comment on the negotiations.

TNT said on Feb. 17 that it had rejected a takeover bid from UPS, which offered 9 euros for each TNT share. The shares currently trade at about 9.3 euros.

Under Dutch law, UPS has to clarify its intentions to the market by March 16, within four weeks of its first proposal being announced.

To contact the reporter on this story: Matthew Campbell in London at [email protected]

To contact the editor responsible for this story: Jacqueline Simmons at [email protected]

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