UPS offers pilot buyout as demand falters

Signage is seen on a United Parcel Service (UPS) vehicle at a facility in Brooklyn, New York City

LOS ANGELES (Reuters) -United Parcel Service on Thursday said it has offered early retirement to some pilots as the world's biggest package delivery firm grapples with a weak air freight market and rising labor costs.

Atlanta-based UPS said it hopes 167 pilots will accept its voluntary separation offer, which includes cash and healthcare benefits. The company now employs about 3,400 pilots.

"We regularly assess our operations and make adjustments to better serve our customers," UPS said in a statement.

UPS hasn't reduced pilot employment since 2010, when it says it furloughed 111 pilots.

On Aug. 8, the company cut its full-year revenue and profitability targets citing softening package volume, higher labor costs and business losses resulting from its tumultuous but now completed contract talks covering some 340,000 workers represented by the International Brotherhood of Teamsters.

UPS pilots are represented by the Independent Pilots Association, whose spokesperson confirmed the buyout offer had been proffered.

Meanwhile, pilots at UPS rival FedEx have rejected a tentative contract deal reached by their union for pay and job security reasons. As FedEx merges its Express and Ground operating units in a push to cut costs and boost efficiency, some of the company's pilots worry that their jobs could be eliminated or outsourced.

(Reporting by Lisa Baertlein in Los Angeles; editing by Jonathan Oatis and Josie Kao)