DHL Airways

Air Line Pilot, September 2000, page 15
By Chris Dodd, Staff Writer

"Some companies are more global than others," Global Finance wrote in October 1998, when it included DHL Worldwide Express in its list of the top 100 companies with the greatest global reach.

Capt. Dan Brannan, the DHL Airways pilots' MEC chairman and an ALPA executive vice-president, agrees.

DHL is unique among the world's cargo carriers, he points out, because of its ownership and global operations.

Founded in 1969 as a door-to-door express service shuttling bills of lading between San Francisco and Honolulu, DHL (the name is derived from the surnames of its three founders) now earns roughly $5 billion in global sales annually and has nearly 60,000 employees worldwide.

The carrier's organization is a prime example of the complex arrangements that are knitting together the global cargo industry.

DHL is composed of two separate operating companies: DHL Worldwide Express, Inc. (the parent company of DHL Airways), which operates a domestic network that serves all locations in the United States, and DHL International Ltd. and its agents and affiliate companies, which serve all locations outside the United States. The majority of the company's flying is handled by the pilots of Airways and those of European Air Transport (EAT), a Brussels-based operation of roughly 350 nonunion pilots. In 1993, the Airways' pilots began providing trans-Atlantic service via DC-8s into the company's "superhub" in Brussels.

In recent months, the DHL picture has been made more interesting by news that the company is pursuing a further global restructuring into a unified company, DHL International Courier Express (D.I.C.E.), Capt. Brannan notes.

Deutsche Post (the German postal service) and Lufthansa Airlines each own 25 percent plus one share of DHL International's stock. They've consolidated those shares into a company called Airlogic GmbH, which some believe will have a major voice in running the newly restructured company. Deutsche Post has indicated it will make an initial public offering of a portion of the stock next year.

DHL Worldwide Express is interested in spinning DHL Airways off as a separate entity, but has to assure the Department of Transportation that the spinoff conforms to U.S. statutes regarding limitations on foreign ownership. (Foreign investors currently may not own more than 25 percent of the voting stock in a U.S. carrier, or greater than 49 percent equity.)

D.I.C.E. will reportedly hold a portion of the voting stock and a portion of equity in the U.S. operation. A yet-unnamed third-party investor would hold another portion, and the employees would hold the remaining piece, Capt. Brannan says.

DHL's stateside operations have grown tremendously in the past 5 years. The pilots' seniority list has nearly doubled to almost 500 pilots during that period, Capt. Brannan notes, and the company is building a new fully automated hub in Cincinnati.

The DHL pilots will have a scope agreement to provide all of the "lift" for the U.S. operations and hope to expand their flying internationally as well, especially because Deutsch Post has acquired a major freight forwarder, AEI, in recent months.

The picture is interesting internationally, "because we have at least two other pilot groups out there who would be part of this equation"--the EAT pilots and Lufthansa International, which has a cargo division that would be interested in the flying. "So you have at least three pilot groups in the mix, and there may be more."

Capt. Brannan notes that he met with Lufthansa pilot representatives during an International Federation of Air Line Pilots Associations meeting in Tokyo to discuss the company's future and the pilots' part in it. The meetings were "productive and informative" and were part of ALPA's efforts to establish "cooperative relationships with these pilot groups with the goal of working together to benefit everyone."

The DHL pilots are fortunate to enjoy a very cordial relationship with management, Capt. Brannan notes. Unlike some of the extreme conditions that their fellow pilots in the cargo industry face, DHL's pilots, in the decade since they joined the Association, have managed to work through many of the scheduling and quality-of-life issues that they initially brought to the table. Their second ALPA contract, which becomes amendable in 2003, was a "quantum leap" from where they started when they joined ALPA, Capt. Brannan is proud to point out.

What's more impressive is that it was the first complete ALPA contract to be achieved through interest-based bargaining. And in fact, National Mediation Board member Magdalena Jacobsen, who saw the company and pilots through the IBB process, "has pointed to our contract as a textbook example of how well the process can work," Capt. Brannan concludes.