A federal mediator ordered an indefinite recess in supervised talks between United Parcel Service and its 2,500 pilots after the two sides failed to resolve a 32 month contract dispute during a round of talks in Washington, UPS said on Thursday.
UPS said the recess will give both sides time to reevaluate their positions on issues such as pay, pensions and health care before they return to the negotiating table.
The pilots union, however, said it planned to request that the National Mediation Board release it from the talks, a move that would escalate the dispute. Under a federal law governing labor relations in the transportation industry, neither UPS nor its pilots can unilaterally withdraw from mediation or take actions that could disrupt service.
If the mediation board declares an impasse and either side rejects binding arbitration, a 30 day "cooling off" period would kick in before a strike or lock-out could ground UPS's fleet of planes. Even then, the Bush administration could extend the imposed truce to prevent a crippling disruption to trade.
As the halt in talks was announced, the Independent Pilots Association released a statement saying it planned to ask pilots for a final strike authorization and to vote on UPS's best offer.
UPS spokesman Norman Black dismissed a call by the pilots union for the company to give the pilots its "last, best and final" contract offer by the end of the month, saying the two sides still had room to negotiate.
"There has been no best and final offer, and it would be wrong and improper for the union to in any way suggest that the latest offer on the table is the last, best and final, and thus subject to a vote," he said.
Tom Nicholson, president of the Independent Pilots Association, said talks were in a logjam.
"If UPS cannot, or will not, give us its last, best and final offer for our pilots to vote on," he said in a statement, "the IPA will pull together its highlights of UPS's final offers on the five open articles and send that out to our pilots for a vote."
UPS says its pilots are among the best paid in the industry, with an average annual salary of USD$175,000. Black has said the company has offered to give the pilots a raise, though it has not said by how much. Brian Gaudet, a pilots union spokesman, said the pilots earn closer to an average of USD$168,000 and are seeking a raise in line with market rates.
UPS and its pilots have been in negotiations since October 2002. In June 2004, the two sides requested federal mediation, and the first session was held last August. UPS operates the ninth-largest airline in the world.
Separately, UPS reaffirmed its financial targets for the second quarter and the year, hours after rival FedEx said that high fuel prices would push full-year earnings below Wall Street estimates.
"As the second quarter comes to a close, UPS continues to see momentum across each of its business segments," Chief Executive Mike Eskew said in a statement. "We also continue to expect earnings for the year to increase 16 percent to 20 percent as compared to the adjusted USD$2.90 reported for 2004."
UPS said it continued to expect second-quarter earnings in a range of 82 cents to 87 cents a share.
