UPS to receive eight 767s in 2013

Washington DC
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UPS plans to receive its eight Boeing 767 freighter deliveries this year, said David Abney, chief operating officer of UPS International on a 31 January investor call.

UPS will place seven of the new aircraft on domestic routes and one will fly internationally, said Abney.

The 767s are the only aircraft that UPS has on order right now. The carrier operates 52 of the aircraft type, Flightglobal's Ascend Online database shows.

When asked by analysts about plans to re-fleet its Boeing 747 and MD-11 freighters in light of fuel price trends, UPS did not indicate any immediate plans to replace those aircraft types. This will allow UPS to generate cash flow without incurring capital expenditures from replacing aircraft, said chief executive Scott Davis.

"Part of the great cash flow forecast we'll see is, especially after this year, that our needs for new aircraft will moderate for a while and certainly will be a great story for cash flow," said Davis.

The Atlanta-based carrier has its sights set on keeping a close watch on capacity and utilisation in an environment where its customers are choosing lower-priority shipments in regions like Asia. UPS makes adjustments to its international route network about every eight weeks due to "fragile global economics", said Abney.

"We're managing the network very closely by bid period," said Abney.

UPS is utilising a flexible "hybrid" network that allows it to move freight forwarding shipments to its commercial aircraft when necessary, said Daniel Brutto, president of UPS International.

"That's very good because when the economy flexes either up or down, we can move more premium or more freight into our own network to make sure that that's fully utilised as well as optimising the use of commercial aircraft," he said.