UPS Strikes Deal With Pilots Union For Contract Extension
Zacks Investment Research | Feb 10, 2020 10:34PM ET
United Parcel Service, Inc. (NYSE:UPS) reached a tentative agreement with the Independent Pilot’s Association (IPA), representing its 2,959 flight crew members, for a two-year contract extension. The tentative deal approved by the five-pilot IPA Executive Board includes retirement enhancements and yearly pay hikes.
The contract will be reviewed by UPS pilots through Mar 10, following which the ratification process will begin. The three-week ratification vote will end on Mar 31.
UPS’ current contract with the IPA will become amenable on Sep 1, 2021. In the event of ratification of the tentative deal, the new contract will be amenable on Sep 1, 2023.
Price Performance
Sluggish air freight market due to lackluster demand from China as a result of the Sino-U.S. trade tensions, weighed significantly on UPS’ performance. With rapid growth in e-commerce, the company is spending heavily on capital investments to meet the surge in demand. For instance, it made capital investments of $6.5 billion in 2019. The amount is expected to further escalate to $6.7 billion in 2020 as UPS intends to invest in additional automated sorting hubs for expanding its retail client base. The higher capital expenses are anticipated to dent current-year earnings per share by roughly 33 cents. Due to these headwinds, shares of UPS have declined 6.8% in a year’s time.
Zacks Rank & Key Picks
UPS carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Original post
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