Pilots are angry that UPS has turned to third-party cargo airlines to help make up for a shortage of aircraft capacity, needed to handle its growing e-commerce business.
United Parcel Service was already in trouble with Wall Street over a long-term investment plan to cope with soaring e-commerce. Now the company is clashing with its pilots union because of a short-term fix for the same challenge.
Aviators are angry that UPS has turned to third-party cargo airlines to help make up for a shortage of aircraft capacity. Accusing UPS of years of poor planning and insufficient investment, the Independent Pilots Association has complained to an industry arbitrator that the courier is violating its labor contract by outsourcing flying that should be done by its own pilots.
“On a daily basis, our pilots operate a system chronically short on aircraft and strained to the breaking point,” union spokesman Brian Gaudet said.
The dispute underscores the pressure on UPS to keep pace with the rise in online shopping, which is fueling record demand for its delivery services. The Atlanta-based courier has contracted with Western Global Airlines and 21 Air to provide and fly a total of seven aircraft, the union told its 2,700 members Feb. 22 in a memo seen by Bloomberg News.
Most Read Business Stories
- Dispute arises among U.S. pilots on Boeing 737 MAX system linked to Lion Air crash
- More stores closing on Thanksgiving as online shopping booms; here's what's open, closed in the Seattle area
- T-Mobile plans $160 million Bellevue campus renovation VIEW
- The 'rational' businesswoman picked to temper Tesla's mercurial Musk
- Boeing to hold global conference call with airlines that fly 737 MAX model that was involved in crash
UPS acknowledged it’s hiring outside contractors, declining to identify the companies. The courier said it was leasing planes to be flown by UPS crews and also having third parties fly their own planes on the company’s behalf.
Western Global, based in Estero, Florida, and Greensboro, North Carolina-based 21 Air didn’t reply to requests for comments.
The extra help is needed in “bridging the gap” before a major fleet expansion, UPS said in a statement. The company said it was in discussions with the union about the pilots’ complaints.
The capacity shortage came to the fore during the 2017 holiday season, when record demand briefly overwhelmed operations. That forced the company to increase overtime as it rushed to complete shipments on time.
On Feb. 1, UPS pledged to spend an extra $7 billion through 2020 on an aggressive expansion and modernization program that includes automating warehouses and buying additional Boeing 747 and 767 freighters.
The shares tumbled that day by the most in a year as investors questioned why it wasn’t raising prices more steeply to compensate for higher costs. UPS fell 12 percent this year through March 29, compared with the 3.8 percent drop for rival FedEx and a 2 percent decline for a Standard & Poor’s index of industrial companies.