Originally created 11/14/97

UPS reports major losses

ATLANTA -- From a $340 million profit to a $10 million net loss.

That's the bottom line United Parcel Service reported Thursday for the quarter that included the nationwide Teamsters strike.

It was the first quarterly loss for the privately held package delivery company since 1992, when a first-quarter loss was attributed to accounting changes involving retiree medical benefits.

The $10 million loss for the July-September quarter compares with net income of $340 million for the same period in 1996.

UPS officials said the company continues to feel the effects of the 15-day strike in August, but said recent operating results and cost-containment measures are reasons for optimism.

"Our managers, drivers and all of our people are working very hard to rebuild our service and restore the confidence of our customers," said Jim Kelly, UPS chairman and chief executive officer.

The strike, which ended with a new five-year contract for the company's 185,000 Teamsters, was the first nationwide work stoppage in UPS' 90-year history. It dropped the company's daily volume to less than 10 percent of normal.

UPS said its third-quarter revenues were down $775 million, from $5.59 billion in 1996 to $4.81 billion this year.

"This could have been avoided," said Rand Wilson, a spokesman at Teamsters headquarters in Washington. "It seems if they had paid attention to what Teamsters members were saying across the country, the strike wouldn't have been necessary."

The Teamsters struck for more full-time jobs and pay and benefits increases.

UPS spokesman Norman Black said it's difficult to fully assess the strike's impact because the company is in its peak holiday period. About 15,000 workers didn't return after the strike and the company has been replacing them and expanding its workforce for the season, he said.

"The company is bouncing back," Mr. Black said. "We fully expect to regain the business we lost."

For the nine months ended Sept. 30, UPS reported net income of $558 million on revenues of $16.32 billion, compared with net income of $900 million on $16.43 billion in revenues for the same period in 1996.

Kelly said the company, in addition to rebuilding service, is optimistic about continued growth in international business and in its logistics subsidiary.

"We are well positioned to compete successfully and grow our business in the coming year," he said. "We have a sound, strategic direction that was not significantly altered by the events this past summer."

UPS, which has faced heightened competition from Federal Express and other rivals since the strike began, has contract negotiations ahead early next year with its pilots union. The Atlanta-based company employs more than 338,000 people worldwide and delivered 3.15 billion packages and documents in 1996.

Kelly also announced Thursday that the UPS board expanded to 14 members with the appointment of Ann Livermore, a vice president of Hewlett-Packard Co., who becomes its first female director.


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