UPS has been working with its union, the Independent Pilots Association, for the past year to identify ways to cut operating costs to avoid any pilot furloughs.
Last June, the IPA identified significant savings through voluntary programs such as pilots taking short- and long-term leaves of absence; military leaves; job sharing; reduction in flight pay guarantees; early retirement, and sick bank contributions.
UPS subsequently agreed it would not furlough any pilots in 2009.
The two parties have been co-operating since then to identify additional cost-cutting initiatives that would eliminate the threat of layoffs entirely. However, subsequent discussions have failed to identify sufficient operating savings.
If the furloughs go forward, they would be phased, with the first 170 pilots receiving notices in 2010. The initial group would be furloughed in May.
The pilot furloughs, if required, would be one of many steps that UPS has taken over the past two years to match its resources to economic conditions. UPS has engaged in a company-wide, $1.4 billion cost-cutting effort that included a freeze on management salaries in 2009; suspension of the match for 401(k) plans; trimming capital expenditures, and retiring older aircraft.
Most recently, UPS announced in January that it was streamlining its entire domestic US small package structure, eliminating 1,800 management and administrative positions across the country.
