General Lee
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Report: UPS moves to cancel jet order
By CBS MarketWatch
SAN FRANCISCO (CBS.MW) -- UPS, hit by a shift in consumer sentiment toward less-expensive ground-delivery services, is negotiating with Airbus to cancel more than $1.6 billion in orders for A300-600 aircraft, according to a media report.
The Atlanta-based cargo shipper (UPS: news, chart, profile) recently told Airbus and engine supplier Pratt & Whitney that it no longer wanted at least 20 of 90 Airbus A300s it ordered in 1998 and 2001, the Wall Street Journal reported in Monday's online edition. The Journal cited unnamed people familiar with the situation.
Each plane carries a list price of more than $100 million, though big customers such as UPS typically buy multiple planes at lower, undisclosed prices, the Journal said.
Shares of UPS fell 93 cents in recent trading Monday to $69.70.
However, Airbus said there have been no changes. "We have no change in our order book with UPS. We have no cancellations," said Airbus spokesman David Benz. No contract terms were detailed.
UPS spokesman Norman Black said the company has taken 32 aircraft and will take eight of the A300s this year, with another 50 still on order, all as planned. He wouldn't talk about specifics of the deal with Airbus. "It is not something that we would ever discuss," he said.
The Journal reported that some of those airplanes have entered the early stages of production, so UPS was told it could cancel no more than 16 of them.
The Journal said one unnamed source reported that the UPS orders don't contain cancellation provisions, raising the possibility that UPS must shift its orders to other types of Airbus models or face stiff penalties.
The shift during the past couple of years to ground deliveries and away from air shipments is a growing problem for UPS and rival FedEx, (FDX: news, chart, profile) which compete fiercely for market share. Overnight air shipments are often far more lucrative, but the economic slump led some customers to send shipments by ground instead. Last year, UPS's ground deliveries rose 1.5 percent to 10.3 million shipments a day, the Journal reported.
Bye Bye--General Lee
By CBS MarketWatch
SAN FRANCISCO (CBS.MW) -- UPS, hit by a shift in consumer sentiment toward less-expensive ground-delivery services, is negotiating with Airbus to cancel more than $1.6 billion in orders for A300-600 aircraft, according to a media report.
The Atlanta-based cargo shipper (UPS: news, chart, profile) recently told Airbus and engine supplier Pratt & Whitney that it no longer wanted at least 20 of 90 Airbus A300s it ordered in 1998 and 2001, the Wall Street Journal reported in Monday's online edition. The Journal cited unnamed people familiar with the situation.
Each plane carries a list price of more than $100 million, though big customers such as UPS typically buy multiple planes at lower, undisclosed prices, the Journal said.
Shares of UPS fell 93 cents in recent trading Monday to $69.70.
However, Airbus said there have been no changes. "We have no change in our order book with UPS. We have no cancellations," said Airbus spokesman David Benz. No contract terms were detailed.
UPS spokesman Norman Black said the company has taken 32 aircraft and will take eight of the A300s this year, with another 50 still on order, all as planned. He wouldn't talk about specifics of the deal with Airbus. "It is not something that we would ever discuss," he said.
The Journal reported that some of those airplanes have entered the early stages of production, so UPS was told it could cancel no more than 16 of them.
The Journal said one unnamed source reported that the UPS orders don't contain cancellation provisions, raising the possibility that UPS must shift its orders to other types of Airbus models or face stiff penalties.
The shift during the past couple of years to ground deliveries and away from air shipments is a growing problem for UPS and rival FedEx, (FDX: news, chart, profile) which compete fiercely for market share. Overnight air shipments are often far more lucrative, but the economic slump led some customers to send shipments by ground instead. Last year, UPS's ground deliveries rose 1.5 percent to 10.3 million shipments a day, the Journal reported.
Bye Bye--General Lee
