UPS makes unsolicited bid on TNT Express

[Acid-drop]

Nothing is easy. It seems TNT had long term agreement with the walloon gov. Now what ?
I wonder if it would make sense to split long haul and euro flights ... that would be easy, it's already pretty split now.
Don't forget also the "euro carex" project, using the high speed train link between those 2 airports. But yes, i know, we are very far from having this in place in the real world. Some people are working on it though, and this could be the business case that was missing until now.
http://www.eurocarex.com/

[Acid-drop]

hehe exactly Bralo20, same idea in the same time

[Acid-drop]

very interesting article that talk about a four year integration
http://postandparcel.info/46498/news/co ... tegration/

[Flanker]

Another EAT/Leipzig story.
We'll try to preserve all the staff at Liège... fool someone else.

Köln/Bonn as a typical low-cost airport but equipped as a world class airport has a lot more to offer than Liège Bierset. Keeping the 2 separate hubs open would costs much more money without bringing any apparent benefits, given that Koln has no capacity problems.

Employment-wise, Germany is shallowly cheaper with regards to income tax and (to a larger extent) social security contributions. Overall, it could be a 5-10% advantage, but over hundreds of millions...

Whatever agreements TNT have with the Walloon government, it takes just another crisis excuse to walk away nowadays.
What do they teach you at MBA colleges nowadays? Certainly not how to do magic or how to become a smarter business person, rather the ins and outs and tricks on how to take (steal) as much as you can from other people's wallets.

[Acid-drop]

I agree with you except on the fact that cologne has a lot more to offer.
UPS agrees that Liège is too good to be dropped.
The 2 airports are actually very very close, in term of tonnage, world ranking, road access, high speed train access, night opening hours, available space to grow, ... there are both perfect.
Of course UPS will use the hub in Cologne, but i'd not be surprised if they keep Liège for some night flights.
Cologne has 1 prob : you say it isn't busy, but it may be. With one track, it can very busy at night with a flight every 3 min.

When it comes to the human cost, it's hard to compare. But you can't compare Belgium vs Germany. You need to compare the region of Liège with the region of Cologne. Liège isn't brussels, the salaries are lower, quite a lot of unemployment so there is a lot of available workforce, and the subsidies are high. Hard to tell now what will be the end result.

But let's face it. Liège will suffer. Now or later.
(on the latest news, they say TNT represent 40% of the tonnage. This isn't a ryanair scenario, we're still lucky)

[Acid-drop]

The walloon gov will analyse the possibility of asking subsidies back in case TNT is leaving partially or totally Liège. 30 millions have been given as subsidies for investments from the begining (1999 I believe).

This is clearly a bad message. Unions known they should prepare for crash now.
30 millions is nothing though. Unemployment fees for 3/4000 peoples and lack of various taxes cost 30 millions every 6 months ! so in the end, we (as belgian) all lose.

[liege-bierset]

I am maybe naive but it seems that most of the people are jumping straight to the conclusion.
Does, only one of us, has enough inside informations to be so sure of of what will happen at TNT' LGG Hulb . Could be scary but could be bright as well.
TNT Airways is probably the touchiest point but many crew members are not Belgian nationals. And UPS will need more pilots and they have their chance as well.
I agree with Flanker, one gospel: create additional value for shareholders. Also that People are most important assets. Bull**** , they call us H.R. Human resources ("resources as water ,oil, utilities... )

[Jeremiah]

Perhaps a little bit off-topic but the governement "en affaire courantes" of the german Land of NRW wants to instore a ban on night flights for passenger planes in cologne:

http://www.handelsblatt.com/politik/deu ... 39952.html

Good sign for Liège?

[Acid-drop]

The walloon gov is currently in discussion with UPS about the possible synergy between the 2 airports, and one option is the euro carex project : http://www.lalibre.be/economie/actualit ... d-ups.html

[Flanker]

UPS will sell TNT Airways, it's one of the conditions imposed BY THE EU (due to foreign ownership laws regarding airlines) for the TNT Express buy-out. They will however try to maintain the continuity of TNT Airways to avoid a social disaster.

Well wow, a perfect example of reality serving the law rather than the law serving the reality.
TNT Airways by itself, without a major package delivery contract is useless and the EU is doing UPS a big favor.

What are these politicians smoking?

http://online.wsj.com/article/BT-CO-201 ... eHeadlines

Not necessarily how I would express it but from another forum, more realistic views concerning the flight deck jobs:

"Browntailwhale" is totally correct, it has nothing to do with what is said in the bar or the gentleman act played out in front of the current TNT crewmembers, of course we are all professional and polite. If it came to a ballot of the IPA, 99% would vote for action to force UPS to close TNT airways, and it's the ballot box that counts. Think of all the upgrades that will result from the closure of TNT airways and we work on a seniority list,right!!

Reality is that UPS management knows it and has to close TNT airways, they don't want any labor strife it is very bad for business. Closure of TNT airways is easy, it is true that European Pilots are the most divided bunch of pussies on the planet. If it were Australia it would be a different matter.

Now I will tell the TNT airways guys the way it will playout:
Everybody will be very nice to you, you will start to feel like part of the family, management couldn't be nicer, you'll think it's a pleasure to work for these guys.

Then, in a month or two you'll wake up switch on the TV, it'll be Bloomberg Europe, and in small writing running across the streamer at the bottom of the screen it will be written "UPS announces the closure of TNT airways". The same day you will receive a package, it will be an offer of severence, and they will offer about 50% more than the legal minimum that they have to pay under Belgium law on condition you sign and return a paper stating that you will take no further legal or political action against UPS. This paper will have to be returned within 48 hours otherwise the offer is no longer on the table. Of course there is now no time to have any collective bargaining, and those wives fearing losing that money are insisting on having this paper signed and returned.Within a week they will have you all signed up to a cheap termination of your jobs, with no right to legal action or political protest. Sorry guys but this is the way business is done in the US.

Your jobs are gone anyway that is just a fact, what ever lies you hear or whatever niceties come your way, bottom line is you will not be Pilots in the new UPS.

What you can do is work fast to organise a streamlined collective bargaining unit, get yourselves the most cunning and clever legal firm you can find in Europe and take every last penny that UPS will eventually be prepared to give for your severance, and believe me, they want to avoid trouble and will pay a lot.

Lobby your politicians.....Thats key, thats what they don't want....

and another one.

Integrating the TNT system into the UPS system will undoubtably be an extremely complicated logistical, financial, and legal maze. The complexity associated with standing 3rd and 5th freedom rights, coupled with the depressed EC economic engine could lead to LESS UPS flying for all anyone knows (politically, how easy of a sell would it be for an EU politician to change the rules, eliminating intra-European N-number flying by IPA crews??)

The track record for pilots surviving a UPS acquisition is poor. Our purchase of Challenge Air Cargo was (from the line UPS pilots perspective) messy at best. We only bought the that company for their landing rights in South and Central America. The pilots were non-union, and their leased aircraft returned. UPS didn't even offer any of their pilots job interview preference. I was embarrassed.

This acquisition of TNT by UPS will affect many thousands of employees, families, sub-contractors, etc. Some may come out ahead, but a lot may not. Only time will tell. But UPS Corporate has determined this to be the best course to expand our branded service in not only Europe, but also Asia, South America, and India. It is the biggest piece of the worldwide logistics puzzle we've purchased, and hopefully will mean more jobs for more people as our international system becomes more interconnected.

For any pilot to brashly exclaim glee over possible expanded international flying at this point, is simply throwing out flame bait, an opinion based upon a vacuum of facts. If I had made such a statement in haste, I would whole-heartedly apologize to everyone on this forum. This type of attitude does not represent a line UPS/IPA pilot.

This completes my once per year posting on this forum…..

To the Belgiques (some, not all) who winged about the ex Air Foyle pilots preserving their terms when the operation transfered to TNTA, and then nearly all of whom were eventually cajoled out, one way or the other - well the boot is on the other foot now, isn't it!

TNT Airways is rather small operation. So I see two scenarios based on a fact that 51% should be traceable to EU/EEC individuals: a) UPS will keep TNT Airways (could be rebranded as UPS Europe) through some artificial ownership structure and possibly even grow it at expense of Star Air, although I wouldn't bet this will remain Belgian AOC and LGG base, or b) they will shut TNT Airways and grow Star Air.

Best case, TNT Air becomes an EU contractor for UPS; worst case they dry up on the vine and go out of busines

http://www.pprune.org/freight-dogs/4802 ... tnt-4.html


A high speed train cargo link is a logistical nightmare to manage and it would cost way too much.
I would call it totally unrealistic and not achievable. And you know how open-minded I tend to be on special idea's.
Those trains have to be built, and a train doesn't run on water. We're not even talking bout the logistics of loading/unloading and having to sort everything twice, limitations such as dangerous goods and oversize. Why do all that if they can manage everything out of one single airport?
Sorry, it doesn't make any business sense, even if the Walloon government would cover all the salaries on the LGG side. It's not like those packages are thrown into the hull loosely and randomly, it takes manpower to build/unbuild pallets and fill containers and sort everything in-between.
An express package company needs speed and efficiency.

[LJ]

At least the Belgium government will be pleased that UPS decided not to move its European HQ to Hoofddorp.

UPS will sell TNT Airways, it's one of the conditions imposed BY THE EU (due to foreign ownership laws regarding airlines) for the TNT Express buy-out. They will however try to maintain the continuity of TNT Airways to avoid a social disaster.

Please elaborate on possible EU issues and why UPS has to sell TNT Airways (moreover as nobody will buy the company). UPS isn't a big player in the cargo market nor is it big in the European parcel business (at least not compared to DHL). There is plenty of competition left. Moreover UPS doesn't seem to have issues flying CGN-HKG, so why would they have issues now?

[Flanker]

Please elaborate on possible EU issues and why UPS has to sell TNT Airways (moreover as nobody will buy the company).

The rule is that non-EU ownership of EU airlines is restricted to 49% of the share capital.
Most countries have this kind of foreign ownership limitations, it's an old rule coming from the days of the cold war as governments decided that any national airline's aircraft could be used as standby lift capability, in a war or national emergency scenario. Majority foreign ownership may cause problems in such scenario's, such as conflict of interest or even as a weapon inside the boarders. In the half century that this rule exists, it's never been put to practice in a major capacity, but it has prevented the likes of Bin Laden from owning an airline in the U.S. or Europe.
It's also there to prevent cabotage, which is essentially a foreign airline operating domestic routes.

UPS being American, it can't own or indirectly control more than 49% in TNT Airways.

If they offer it to me for 1 euro, I would buy it, but not before checking their books.
I doubt that anyone would be interested, there's not much in there apart from the AOC, the structure and the qualified personnel. The only guy who could be interested is ... Beontop

[epsilon]

UPS to sell TNT airways: http://standaard.be/artikel/detail.aspx ... 120324_024

[crlhub]

http://www.lalibre.be/toutelinfo/belga/ ... toine.html

[liege-bierset]

TNT: la convention a été prolongée jusqu'en 2036, indique André Antoine

So what !
As we say in French: Il faut être deux pour dancer le tango !

[liege-bierset]

Unions seem to be happy.
http://80.92.83.134/infos-flash/263-gen ... t-rassures

[Acid-drop]

This 2036 news is a joke. It's like in football, they lengthen the contract only to have bigger compensation when you break it. But it's better than nothing.

The union can be happy ... for the short term. It seems they can relax for the next 12 months, but then ... mistery.

[sn26567]

The European Commission has opened an investigation into UPS's acquisition of TNT Express on competition grounds. The proposed merger would reduce the number of big players in the European express parcels market from four (DHL, UPS, TNT, FedEx) to three. The Commission fears that in some markets the competition will be reduced to an unacceptable level, which could be detrimental to the consumer. The Commission will issue conclusions before 28 November 2012.

[liege-bierset]

Info or intox ?

http://www.bloomberg.com/news/2012-07-2 ... -sale.html

[sn26567]

The European Commission has opened an investigation into UPS's acquisition of TNT Express on competition grounds. The proposed merger would reduce the number of big players in the European express parcels market from four (DHL, UPS, TNT, FedEx) to three. The Commission fears that in some markets the competition will be reduced to an unacceptable level, which could be detrimental to the consumer. The Commission will issue conclusions before 28 November 2012.

Here is the full text of the European Commission decision to investigate:

Mergers: Commission opens in-depth investigation into proposed acquisition of TNT Express by UPS

The European Commission has opened an in-depth investigation under the EU Merger Regulation into the proposed acquisition of TNT Express of the Netherlands by the American company United Parcel Service (UPS), both major players in the small package delivery sector. The Commission's preliminary investigation indicated potential competition concerns in the markets for small parcel delivery services, in particular international express services, in numerous Member States, where the parties would have very high combined market shares. The opening of an in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until 28 November 2012, to take a decision on whether the proposed transaction would significantly impede effective competition in the European Economic Area (EEA).

Commission Vice President in charge of competition policy Joaquín Almunia said: “The small package delivery sector is of strategic importance for various other industries in Europe. The proposed acquisition could in particular reduce competition for the provision of the fastest express delivery services, to the detriment of direct customers and ultimately of European consumers. The Commission needs to make sure that customers continue to have access to these services at competitive conditions."

UPS and TNT Express are two out of the only four so-called "integrators" currently operating in Europe. Integrators are companies that control a comprehensive air and road small package delivery network throughout Europe and beyond and are capable of offering the broadest portfolio of such services. The other integrators present in Europe are DHL, which is owned by Deutsche Post, and FedEx, a US-based company.

The Commission’s initial investigation has shown that small package delivery services form a highly differentiated market which can be divided into several segments, depending notably on the committed delivery timeframe associated to the services. It appears that other integrators would be the only significant competitive constraint on the merged entity for most express services, especially for the fastest time-commitment deliveries. As the proposed transaction would reduce the number of integrators competing in the EEA from four to three, the competitive constraint on the merged entity would be significantly reduced. This would lead in many Member States to a highly concentrated market for domestic and, even more so, international express delivery services.

The Commission will now investigate the proposed merger in-depth to determine whether these initial concerns are confirmed or not.

The transaction was notified to the Commission on 15 June 2012.

Companies and products

UPS is a US-based global provider of specialised transport and logistics services. It is active in small package delivery services, air cargo, freight forwarding and contract logistics.

TNT Express is based in the Netherlands and is active in the global logistics sector, where it provides small package delivery services, air and ground freight, freight forwarding and contract logistics.

Both UPS and TNT Express are major players in the provision of small package delivery and qualify as "integrators", that is small package delivery companies that own an extensive air and ground small package delivery network throughout Europe and beyond.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The Commission clears the vast majority of mergers after a one-month review, but if it has competition concerns it must open an in-depth investigation (Phase II review). The opening of a full probe does not prejudge its outcome.

The Commission is currently conducting five other phase II merger investigations. The first one is about the proposed acquisition of Goodrich by United Technology in the aviation equipment sector (see IP/12/308), with a deadline for a final decision on 31 August. The second one is about the proposed acquisition of the recorded music business of EMI by Universal Music Group (see IP/12/311), with a deadline for a final decision on 6 September. A third investigation concerns the proposed creation of a joint venture in the UK between Vodafone, Telefónica and Everything Everywhere in the field of mobile commerce (see IP/12/367). The deadline here is 19 September. The fourth on-going phase II investigation examines the proposed acquisition of Inoxum, the stainless steel division of ThyssenKrupp of Germany by the Finnish stainless steel company Outokumpu (see IP/12/495). The Commission has until 24 October to reach a final decision. The last phase II relates to the proposed take-over of Orange Austria by Hutchison 3G in the market for mobile telephony services in Austria (see IP/12/726), with a deadline until 6 November 2012.

More information on the case will be available at:

http://ec.europa.eu/competition/elojade ... e=2_M_6570