Moving to expand the capacity of its Asian air network to accommodate strong growth in Asia, UPS package delivery company and a global purveyor of supply chain services announced a firm order for 10 A380 super-jumbo freighter aircraft made by Airbus.

"With UPS's phenomenal growth in Asia and greater access to China gained through the US-China aviation agreement, the A380 will permit us to serve the greatest number of Asian markets in the most efficient manner," said Ken Torok, president of UPS Asia Pacific. "Our expansion plans in Asia have increased the need for larger aircraft and the super jumbo supports that growth."

Part of UPS's plan includes the completed expansion of the UPS intra-Asia hub in Clark, the inauguration of non-stop UPS flights between Guangzhou and the U.S. in April of this year, and the building of an air hub in Shanghai in 2007.

"The A-380 will allow UPS to operate non-stop flights connecting major Asian cities to our hubs in the US and Europe, providing greater payloads and reducing transit-time by eliminating a fuel-stop," added Torok.

In February, the US Department of Transportation tentatively authorized UPS UPS to expand its air operations to and from China.

The DOT Show Cause Order grants UPS three additional frequencies to serve China. UPS currently flies from the United States to China 12 times per week and will be expanding that number to 18 early this year.

The tentative decision announced in February grants UPS two new frequencies to Shanghai and one new frequency to Guangzhou, effective next year. The new frequencies will allow UPS to better serve customers by offering full seven-day-a-week service to Guangzhou and increasing capacity to Shanghai on the two busiest days of the week, Thursday and Saturday.

The frequencies also mark an important step as UPS progresses toward establishing a regional air hub in Shanghai. "The new flights will allow UPS to greatly enhance service to the benefit of customers globally," said UPS Chairman and CEO Mike Eskew. "This provides an extraordinary opportunity for strengthening commercial supply chains that support growing international trade between the United States and China and throughout the world.

"The express market in China has developed to the point that our customers have asked for service seven days a week connecting China to the world," added Ken Torok, president, UPS Asia-Pacific. "This award will permit us to meet those customer demands in one of the world's fastest growing markets."

UPS successfully entered the China market in 1988 in partnership with China's Sinotrans and then began direct air service in 2001. It has experienced double-digit growth in the US-China market during each of the last three years. In 2004, UPS announced an agreement with Sinotrans to take direct control of UPS's international express operations in China's largest and most important cities by the end of 2005.

Freighters

Deliveries of UPS's A380s are scheduled to begin in 2009 and run through 2012. The order also gives UPS the option to purchase 10 more of the planes. The purchase price of the aircraft was not disclosed. UPS has not yet made an engine selection for the A380.

Under the agreement regarding A300 aircraft, UPS is reducing its previous order for 90 planes to 53. To date, 40 A300s have been delivered and the remaining 13 will be delivered by July 2006.

In the third quarter of 2004, UPS's Asia export volume increased 29% and export volume out of China grew over 125% compared to the prior year. In December 2004, the company reached an agreement to take direct control of its international express operations in 23 locations within China, covering over 200 cities that represent more than 80% of China's GDP.