Deutsche Post Ready to Cut Jobs, Costs in US

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BONN, Germany – Deutsche Post AG is poised to announce thousands of job cuts at its DHL Express operations in the United States, possibly as early as Monday, a person familiar with the decision told The Associated Press.

The person said on condition of anonymity Sunday that the Bonn-based express mail and logistics company was poised to announce that the cutbacks at its DHL operations in the United States would affect between 12,000 and 13,000 jobs. The person was not authorized to speak to the media.

The cuts are part of a wider plan to curtail operations in the U.S., including ground deliveries, and would likely affect drivers, shipping clerks and warehouse workers. The express unit employs some 18,000 workers.

The expected move will not signal Deutsche Post's exit from the U.S., where it faces strident competition from UPS Inc. and FedEx Corp.

The person told the AP that the company's U.S. logistics unit, which employs some 25,000 people, would not be affected and some staff at DHL would remain.

"We're not exiting the U.S. entirely," the person said.

Deutsche Post itself did not comment Sunday.

Deutsche Post said earlier this year that competition, rising fuel prices and other factors have put its U.S. DHL operations on track to lose 1.3 billion euros ($1.6 billion) by the end of the year.

In May, Deutsche Post's chief executive Frank Appel announced a radical restructuring of the U.S. operations, which have posted recurrent losses. At the time, Appel said the company's U.S. freight flights were to be taken over by rival UPS Inc.

On Friday, the U.S. unions that represent some DHL employees and pilots that currently provide air service for some of DHL's shipments said they had not been informed of any forthcoming changes. But DHL scheduled a conference call with reporters for Monday afternoon to discuss news that was to be announced earlier in the day and answer questions about DHL's U.S. Express business.

DHL spokesman Jonathan Baker declined to provide details Friday on what will be announced Monday. As to the talks with UPS, he said, "We are continuing to talk with UPS. The talks are constructive. We expect to finalize our negotiations by year-end."

A person familiar with UPS' talks with DHL said Friday that if DHL makes significant cuts to its ground operations in the U.S., it wouldn't necessarily affect UPS and DHL reaching a deal since the talks solely involve air delivery of packages, not ground delivery.

The person spoke on condition of anonymity because of the sensitive nature of the talks.

UPS and DHL proposed a collaboration in May in which UPS would carry some air packages for DHL. The deal, if completed, could last up to 10 years and infuse up to $1 billion in annual revenue for UPS.

UPS has said the contract will mostly involve the transport of DHL packages between airports in North America — not the pickup or delivery of DHL packages to customers. UPS has said the deal is similar to its existing agreement with the U.S. Postal Service.

Thousands of jobs could be lost at an air cargo facility in Wilmington, Ohio, if the agreement between DHL and UPS is consummated.

Deutsche Post slashed its earnings forecasts for both 2008 and 2009 late last month, saying it expects pretax profit to fall 8 percent in the third quarter "as the global economic environment deteriorated markedly."

Deutsche Post is scheduled to release its third-quarter results on Monday, followed by its nine-month figures on Tuesday, according to its Web site.

The source told AP that discussions with UPS on the business were ongoing, but because of the expected job cuts, the talks would find themselves conducted on a new basis. Deutsche Post, in the interim, is expected to move its remaining freight in the U.S. via road and highway transit, while it could close some of its operations in many cities altogether, the source said.

It was unknown how many jobs of contracting companies working with DHL in the U.S. could be affected.

The source said that some U.S. DHL employees would remain working with American companies' shipments to and from Europe and Asia.

Shares of Deutsche Post were up 5.7 percent to close at 9.36 euros ($11.90) on Friday in Frankfurt.


AP Business Writers George Frey in Frankfurt, Germany, Harry R. Weber in Atlanta and Samantha Bomkamp in New York contributed to this report.


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