DHL to cut 9,500 jobs in U.S.
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DHL to cut 9,500 jobs in U.S.
Hot off the wire. Key sentence for brown freight dogs is "Deutsche Post said talks with UPS on cooperation continue and should be concluded by the end of the year."
DHL to cut 9,500 jobs in U.S.
By Nick Carey and Maria Sheahan
CHICAGO/BONN (Reuters) – Deutsche Post AG will slash 9,500 jobs and halt U.S. domestic services at its DHL Express unit after failing for five years to gain share in a market dominated by United Parcel Service Inc and FedEx Corp.
The announcement on Monday from Deutsche Post sent its shares up nearly 7 percent, but also lifted the stock of UPS and FedEx -- which are both seen benefiting from DHL's departure from the U.S. market.
The U.S. job cuts, anticipated by many analysts, comes on top of 5,400 layoffs already this year, leaving between 3,000 and 4,000 U.S. employees.
"We think the unfolding U.S. recession dramatically extended DHL USA's timeframe for potential break-even and increased the financial pain that would have to be absorbed until then," UBS analyst Rick Paterson wrote in a note for clients.
"This was too much for Deutsche Post shareholders and, ultimately, the company itself."
As of January 30, DHL will continue providing international service in and out of the United States. This will take it back to where it stood before its acquisition of Airborne Inc in 2003, a purchase that cost it billions of euros in losses.
"It is no secret that we've had had an extremely difficult time over the last two years in the United States with losses over $1 billion every year," John Mullen, Chief Executive of DHL Express said on CNBC television, "and now of course we're entering unprecedented economic times both in the United States and globally."
"We had to make a prudent decision," Mullen added.
An additional $3.9 billion in restructuring costs -- $1.9 billion more than previously planned -- would likely lead to a full-year 2008 group net loss, Deutsche Post said.
"We believe DHL's withdrawal, which removes a player that has traditionally been a price discounter, from the domestic air and ground markets will both boost volumes and improve the pricing discussion for UPS and FedEx," Wachovia analyst Justin Yagerman wrote in a note for clients.
GRIM TIMES
Atlanta-based UPS, the world's largest package delivery company, and its Memphis-based rival FedEx are seen as bellwethers of U.S. economic activity.
Sluggish consumer spending and shrinking investments by businesses have hurt them and other shippers around the world. Last month UPS recorded a drop in third-quarter profit, as did European competitor TNT. Both cited weak demand.
Deutsche Post's announcement on Monday came as it reported that third-quarter adjusted earnings before interest and tax (EBIT) fell 8.5 percent to 429 million euros from 787 million a year earlier, slightly missing an average estimate of 433 million euros in a Reuters poll of analysts.
Last year Europe's biggest mail and express delivery company cut its profit outlook for 2008 and 2009, citing slowing global economic growth, which hit its U.S. unit hard.
Deutsche Post confirmed it saw full-year EBIT at about 2.4 billion euros, excluding one-time effects and its Deutsche Postbank unit. It did not give an outlook for 2009.
A spokeswoman for DHL's main air cargo carrier, ABX Air, said on Monday the company was assessing the impact of DHL's move, and would make an announcement later.
ABX Air, part of Air Transport Services Group Inc, said in August it would have to cut 6,000 or more jobs, about 75 percent of its total staff, if DHL went ahead with plans to use the planes of rival UPS to move its parcels.
Deutsche Post said talks with UPS on cooperation continue and should be concluded by the end of the year.
FedEx spokesman Maury Lane said the company welcomed "the opportunity to provide domestic U.S. Ground and Express services to all DHL customers as DHL exits these markets."
In a note to clients Edward Wolfe of Wolfe Research wrote that in "recent weeks we have seen FedEx and UPS' pricing firming with respects to DHL customers as it has become more clear DHL would be forced to close."
"Still we don't expect a material improvement in pricing until the economy improves," he added. "We would expect the DHL announcement will lead to pricing getting less worse in the near term."
In late morning trade on the New York Stock Exchange, UPS shares were up 3.9 percent to $53.92, while FedEx was up 2.7 percent to $66.35. Deutsche Post rose 6.9 percent to 10 euros.
(Additional reporting by Bill Rigby, Scott Malone, Nick Zieminski; Editing by Tim Dobbyn)
By Nick Carey and Maria Sheahan
CHICAGO/BONN (Reuters) – Deutsche Post AG will slash 9,500 jobs and halt U.S. domestic services at its DHL Express unit after failing for five years to gain share in a market dominated by United Parcel Service Inc and FedEx Corp.
The announcement on Monday from Deutsche Post sent its shares up nearly 7 percent, but also lifted the stock of UPS and FedEx -- which are both seen benefiting from DHL's departure from the U.S. market.
The U.S. job cuts, anticipated by many analysts, comes on top of 5,400 layoffs already this year, leaving between 3,000 and 4,000 U.S. employees.
"We think the unfolding U.S. recession dramatically extended DHL USA's timeframe for potential break-even and increased the financial pain that would have to be absorbed until then," UBS analyst Rick Paterson wrote in a note for clients.
"This was too much for Deutsche Post shareholders and, ultimately, the company itself."
As of January 30, DHL will continue providing international service in and out of the United States. This will take it back to where it stood before its acquisition of Airborne Inc in 2003, a purchase that cost it billions of euros in losses.
"It is no secret that we've had had an extremely difficult time over the last two years in the United States with losses over $1 billion every year," John Mullen, Chief Executive of DHL Express said on CNBC television, "and now of course we're entering unprecedented economic times both in the United States and globally."
"We had to make a prudent decision," Mullen added.
An additional $3.9 billion in restructuring costs -- $1.9 billion more than previously planned -- would likely lead to a full-year 2008 group net loss, Deutsche Post said.
"We believe DHL's withdrawal, which removes a player that has traditionally been a price discounter, from the domestic air and ground markets will both boost volumes and improve the pricing discussion for UPS and FedEx," Wachovia analyst Justin Yagerman wrote in a note for clients.
GRIM TIMES
Atlanta-based UPS, the world's largest package delivery company, and its Memphis-based rival FedEx are seen as bellwethers of U.S. economic activity.
Sluggish consumer spending and shrinking investments by businesses have hurt them and other shippers around the world. Last month UPS recorded a drop in third-quarter profit, as did European competitor TNT. Both cited weak demand.
Deutsche Post's announcement on Monday came as it reported that third-quarter adjusted earnings before interest and tax (EBIT) fell 8.5 percent to 429 million euros from 787 million a year earlier, slightly missing an average estimate of 433 million euros in a Reuters poll of analysts.
Last year Europe's biggest mail and express delivery company cut its profit outlook for 2008 and 2009, citing slowing global economic growth, which hit its U.S. unit hard.
Deutsche Post confirmed it saw full-year EBIT at about 2.4 billion euros, excluding one-time effects and its Deutsche Postbank unit. It did not give an outlook for 2009.
A spokeswoman for DHL's main air cargo carrier, ABX Air, said on Monday the company was assessing the impact of DHL's move, and would make an announcement later.
ABX Air, part of Air Transport Services Group Inc, said in August it would have to cut 6,000 or more jobs, about 75 percent of its total staff, if DHL went ahead with plans to use the planes of rival UPS to move its parcels.
Deutsche Post said talks with UPS on cooperation continue and should be concluded by the end of the year.
FedEx spokesman Maury Lane said the company welcomed "the opportunity to provide domestic U.S. Ground and Express services to all DHL customers as DHL exits these markets."
In a note to clients Edward Wolfe of Wolfe Research wrote that in "recent weeks we have seen FedEx and UPS' pricing firming with respects to DHL customers as it has become more clear DHL would be forced to close."
"Still we don't expect a material improvement in pricing until the economy improves," he added. "We would expect the DHL announcement will lead to pricing getting less worse in the near term."
In late morning trade on the New York Stock Exchange, UPS shares were up 3.9 percent to $53.92, while FedEx was up 2.7 percent to $66.35. Deutsche Post rose 6.9 percent to 10 euros.
(Additional reporting by Bill Rigby, Scott Malone, Nick Zieminski; Editing by Tim Dobbyn)
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At one time, DHL was the largest such aircarrier in the world.
Long ago, they considered domestic service, and my contacts with Adrian Delsey (the D in DHL...this was quite a long time ago) he mentioned that they had second thoughts, and promptly backed away.
Turns out...he was dead right.
In many parts of the world, DHL is top notch in every respect.
Clearly, one company cannot be all things to all folks.
Especially, in the USA.
The very best of luck to all DHL folks, wherever they are.
Long ago, they considered domestic service, and my contacts with Adrian Delsey (the D in DHL...this was quite a long time ago) he mentioned that they had second thoughts, and promptly backed away.
Turns out...he was dead right.
In many parts of the world, DHL is top notch in every respect.
Clearly, one company cannot be all things to all folks.
Especially, in the USA.
The very best of luck to all DHL folks, wherever they are.
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I think DHL pilots in the usa are all working for Astar under a ACMI contract.
Was the way I understood it anyway.
Doubt ALPA will be any help here, but then again, they never are except collecting the dues.
Many jobs gone for this one.
Hope they get employed soon.
Companies on climb to 350 looking for current and qualified Airbus 300 types.
DHL Holdings (USA), Inc.: Private Company Information - BusinessWeek
Air Line Pilots Association International Files Lawsuit Against DHL Holdings (USA), Inc
07/29/2008
The Air Line Pilots Association International (ALPA) announced that it has filed a lawsuit against DHL Holdings (USA) Inc. on behalf of ASTAR Air Cargo Inc. pilots. In a suit filed in the Court of Common Pleas in Clinton, Ohio, ALPA alleges that DHL breached its contract with ASTAR pilots. It also accuses DHL of fraudulent inducement. DHL is in negotiations with United Parcel Service Inc. to take over its North American air service from ASTAR Air Cargo, which was formerly DHL Airways. ALPA alleges DHL is in violation of certain job security assurances under ASTAR pilot's labor agreement. The pilots also claim that DHL fraudulently induced the pilots union to drop lawsuits against the parcel company by promising job security assurances while the pilots argue the company was in discussions about switching service to UPS. The pilots union has asked the court to enjoin DHL from switching service to UPS. ALPA also asks for compensatory damages and attorney's fees.
DHL Holdings (USA) Inc. Names Tony Shortell as Senior Vice President for Global Customer Solutions
05/28/2008
DHL Holdings (USA) Inc. named Tony Shortell as senior vice president for global customer solutions for the Singapore-based Asia-Pacific region. A 15-year company veteran, Shortell had been a regional senior vice president at DHL Global Forwarding for Asia-Pacific.
Deutsche Post Denies Talks To Sell DHL’s US Unit
01/30/2008
Deutsche Post AG has said that it is not planning to sell DHL Holdings (USA), Inc. to FedEx Corporation, contrary to market reports. Financial Times Deutschland earlier reported that Deutsche Post World Net was in talks with FedEx about the possibility of a buyout or a partnership.
Was the way I understood it anyway.
Doubt ALPA will be any help here, but then again, they never are except collecting the dues.
Many jobs gone for this one.
Hope they get employed soon.
Companies on climb to 350 looking for current and qualified Airbus 300 types.
DHL Holdings (USA), Inc.: Private Company Information - BusinessWeek
Air Line Pilots Association International Files Lawsuit Against DHL Holdings (USA), Inc
07/29/2008
The Air Line Pilots Association International (ALPA) announced that it has filed a lawsuit against DHL Holdings (USA) Inc. on behalf of ASTAR Air Cargo Inc. pilots. In a suit filed in the Court of Common Pleas in Clinton, Ohio, ALPA alleges that DHL breached its contract with ASTAR pilots. It also accuses DHL of fraudulent inducement. DHL is in negotiations with United Parcel Service Inc. to take over its North American air service from ASTAR Air Cargo, which was formerly DHL Airways. ALPA alleges DHL is in violation of certain job security assurances under ASTAR pilot's labor agreement. The pilots also claim that DHL fraudulently induced the pilots union to drop lawsuits against the parcel company by promising job security assurances while the pilots argue the company was in discussions about switching service to UPS. The pilots union has asked the court to enjoin DHL from switching service to UPS. ALPA also asks for compensatory damages and attorney's fees.
DHL Holdings (USA) Inc. Names Tony Shortell as Senior Vice President for Global Customer Solutions
05/28/2008
DHL Holdings (USA) Inc. named Tony Shortell as senior vice president for global customer solutions for the Singapore-based Asia-Pacific region. A 15-year company veteran, Shortell had been a regional senior vice president at DHL Global Forwarding for Asia-Pacific.
Deutsche Post Denies Talks To Sell DHL’s US Unit
01/30/2008
Deutsche Post AG has said that it is not planning to sell DHL Holdings (USA), Inc. to FedEx Corporation, contrary to market reports. Financial Times Deutschland earlier reported that Deutsche Post World Net was in talks with FedEx about the possibility of a buyout or a partnership.
Last edited by Earl; 10th Nov 2008 at 20:07.
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DHL operations:
Astar will be completely shut down (727 + A300-B4, DC-8)
ABX has other ACMI business outside of DHL so they will survive but they will be hit severly after losing their DC9 fleet (40 aircraft if I recall) (DC-9 + 767-200).
ABX is the only carrier under DHL that has a marketable fleet in the current economy ie the 767's. Some of their aircraft will require cargo door mods, But I suspect all the 767's will survive the transition out of DHL domestic operations.
DBW
Astar will be completely shut down (727 + A300-B4, DC-8)
ABX has other ACMI business outside of DHL so they will survive but they will be hit severly after losing their DC9 fleet (40 aircraft if I recall) (DC-9 + 767-200).
ABX is the only carrier under DHL that has a marketable fleet in the current economy ie the 767's. Some of their aircraft will require cargo door mods, But I suspect all the 767's will survive the transition out of DHL domestic operations.
DBW
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How about TNT in the USA
I know this might be a bit off topic, but how does TNT arrange airfreight to/inside the US. Are they using the networks of the big ones (Fedex ans UPS) , do they have there own network, or do they have ACMI agreements like DHL had with Astar and ABX?
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>>ABX is the only carrier under DHL that has a marketable fleet in the current economy ie the 767's. Some of their aircraft will require cargo door mods, But I suspect all the 767's will survive the transition out of DHL domestic operations.<<
I'm not wishing ill on my ABX bretheren, but even by Hete's own admission in the best case scenario they'll have about 170 pilots left post DHL, and that is [U]if[U] the 1224 is willing to agree to massive givebacks. Given that Hete is holding the severance money DHL gave for the crews as a condition of them signing a new agreement, I highly doubt that "all" of the B767's will survive the transition.
I'm not wishing ill on my ABX bretheren, but even by Hete's own admission in the best case scenario they'll have about 170 pilots left post DHL, and that is [U]if[U] the 1224 is willing to agree to massive givebacks. Given that Hete is holding the severance money DHL gave for the crews as a condition of them signing a new agreement, I highly doubt that "all" of the B767's will survive the transition.
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I am wondering which had a bigger effect on the loss of these 9,500 jobs ; was it ...
A) ...Protectionist US Law preventing US Airlines from being ( majority ) foreign owned , including cabotage or ,
B) ...Incompetence on behalf of Deutche Post World Net in executing the proper business plan , or ,
C) ...both A and B or ,
D) ... something else.
A) ...Protectionist US Law preventing US Airlines from being ( majority ) foreign owned , including cabotage or ,
B) ...Incompetence on behalf of Deutche Post World Net in executing the proper business plan , or ,
C) ...both A and B or ,
D) ... something else.
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6, just my .02....
I'd have to go with B. The losses incurred inside the US market are due to the ground delivery system, and the pricing models used since the integration. You can't charge less than it costs to move a box from point A to point B for 5 years without expecting to lose your @ss!
We hear a lot about the "antique fleet" over here from Mullen and gang, but the fact of the matter is that they were/are in control of both companies due to their respective ACMI agreements. Any decisions on refleet/no refleet, send this a/c here, send this one there, we need this many pilots, this many mechanics, etc. all had to be approved by DHL prior to any being done. Further, AAC was [I][U]never at anytime[I][U] told that there was an issue with either costs, fleet size, or antiquity. Of course, we did "buy a clue" after Appel announced that their salvation laid with their primary competitor. Much to everyone's surprise.
I'd have to go with B. The losses incurred inside the US market are due to the ground delivery system, and the pricing models used since the integration. You can't charge less than it costs to move a box from point A to point B for 5 years without expecting to lose your @ss!
We hear a lot about the "antique fleet" over here from Mullen and gang, but the fact of the matter is that they were/are in control of both companies due to their respective ACMI agreements. Any decisions on refleet/no refleet, send this a/c here, send this one there, we need this many pilots, this many mechanics, etc. all had to be approved by DHL prior to any being done. Further, AAC was [I][U]never at anytime[I][U] told that there was an issue with either costs, fleet size, or antiquity. Of course, we did "buy a clue" after Appel announced that their salvation laid with their primary competitor. Much to everyone's surprise.
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http://www.pprune.org/freight-dogs/2...irlines-8.html
Seen this posted on another thread, sounds like a good company.
Hope this helps the DHL guys, good luck.
Seen this posted on another thread, sounds like a good company.
Hope this helps the DHL guys, good luck.
Last edited by Earl; 12th Nov 2008 at 05:53.
