UPS Pilots Union Calls for Strike Vote--Update

By Laura Stevens

The union representing United Parcel Service Inc. pilots called on Wednesday for a strike vote as the two parties enter their fifth year of contract negotiations and the delivery giant's all-important holiday peak season approaches.

A "yes" vote by the delivery company's 2,500 pilots, which the Independent Pilots Association expects to announce on Oct. 23, would give the union's executive board the authority to request a release from federally mediated negotiations with UPS which, if granted, would allow the pilots to strike.

A strike doesn't look likely at this point, however. Supply chain and shipping industry consultants say they believe this is a bargaining ploy to push UPS to come further toward meeting the pilots' demands on sticking points that include health care and retirement benefits.

Even so, the suggestion of a possibility of a strike leading into the holiday season could cause enough concern among shippers to prompt them to hedge their bets and look at other options. Rivals such as FedEx Corp., regional delivery companies and other delivery firms are sure to capitalize on those concerns and use the strike threat as leverage to gain new customers.

"We're about to hit peak season, and this is coming out right as everyone is doing their peak season planning, when air volume picks up tremendously," said John Haber, chief executive of supply-chain consultant Spend Management Experts. "They're using serious negotiating leverage from a timing standpoint to put some serious pressure on UPS to make some concessions."

A strike would be the least desirable outcome for the union, said Capt. Robert Travis, president of the Independent Pilots Association, in a release. "But after four years of contract talks with UPS, we've reached a point where UPS needs to hear loud and clear from our membership that they are willing to do whatever it takes to secure an industry leading contract," he added.

UPS uses planes to fly deliveries around the world and domestically, with space typically reserved for higher-revenue packages that need to get somewhere fast. Any disruption to UPS's operations--particularly during the holiday season--would ripple throughout the network. UPS last faced a strike in 1997, when its Teamsters employees walked off the job for a little more than two weeks, costing the company an estimated $600 million.

A UPS spokesman played down he strike vote, calling it "a routine show of solidarity in airline negotiations that is legally irrelevant to the actual proceedings."

He added that UPS has successfully negotiated four contracts with its union throughout its 27-year history of running an airline, and plans to reach a new agreement as quickly as possible that meets both its employees' and the company's needs.

Contract talks between UPS and its pilots typically last several years, and in the last two rounds of negotiations the union also called for a strike vote but then talks resolved successfully. An approved strike vote typically moves talks to the next level, a spokesman for the Independent Pilots Association said.

FedEx pilots, represented by the Air Line Pilots Association International, reached a new tentative contract agreement with their employer in late August after starting negotiations in 2011. More than 4,000 FedEx pilots must still approve the agreement.

Airlines and railroads fall under the U.S. Railway Labor Act, which makes it more difficult to strike. Under that law, contracts don't expire, and federal mediation is mandated if the two sides can't come to an agreement. UPS and its pilots union entered federal mediation in early 2014.

That is similar to the last round of negotiations, which were resolved after two years of federal mediation, said David Vernon, an analyst with Sanford C. Bernstein & Co.

"You should expect to hear that the sky is falling with respect to this negotiation several times before it is concluded as both the union and management will be working for the best deal possible and threats of strike are part of that process," Mr. Vernon added.

Write to Laura Stevens at laura.stevens@wsj.com

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(END) Dow Jones Newswires

September 09, 2015 16:24 ET (20:24 GMT)

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