By Laura Stevens and Natascha Divac 

FRANKFURT -- Public-sector strikes in Germany targeting airports are set to disrupt operations at United Parcel Service Inc. Wednesday, potentially stranding packages alongside passengers as hundreds of airport employees are expected to walk off the job in a wage dispute.

UPS's largest European air hub is at the Cologne Bonn Airport. A company spokesman said UPS has yet to determine what effect the strike might have on operations, but is taking action to mitigate delays.

"UPS understands that an anticipated public-sector strike in Cologne could impact its operations," the spokesman added in a statement. "We are relying upon our integrated network and will divert volume from air to road where appropriate."

Services union Verdi, which called the strike, is seeking a pay increase of 6% for more than two million public-sector employees. Security staff, ground staff and airport firemen are expected to participate at German airports, including Frankfurt, Munich and Cologne.

UPS's pilot union said Tuesday that its members wouldn't cross picket lines in Cologne. That would affect about 60 flights and involve nearly 80 crew members. The Independent Pilots Association is in its fifth year of contract negotiations with the delivery giant and has recently warned the two groups are nearing an impasse in federally mediated negotiations.

"Verdi, which represents the ground staff at the Cologne Bonn Airport, has asked the IPA to withhold our services as pilots during their 24-hour strike," said the Independent Pilots Association President, Captain Robert Travis. "We will honor their strike and not cross the Verdi picket lines."

Although the strike is for the public sector, it would hit private companies and airlines. Deutsche Lufthansa AG said Tuesday it would cancel nearly 900 flights Wednesday, affecting some 87,000 passengers.

Verdi representative Frauke Bendokat said airport employees perform a large share of the freight and package handling that UPS needs to operate. That includes loading and unloading, aircraft services and airport security, among other tasks.

"This won't be happening as of midnight," Ms. Bendokat said. She expects more than 100 staff to participate in the strike at the Cologne Bonn airport alone.

Analysts said that while the strike wouldn't be good news for UPS, it is unlikely to have any effect on second-quarter earnings and would be similar to a severe weather event disrupting operations for a day.

While the pilot union's participation means that international flights may be canceled, UPS contracts with a third party for many of its intra-European cargo flights, said David Vernon, a transport analyst with Sanford C. Bernstein & Co. UPS likely will take action to move shipments to other hubs or on to trucks to help prevent disruption, he said.

"You're probably going to see a little bit of loss of customer goodwill, " he said. It is unlikely customers will switch to DHL or FedEx due to a one-day delay, he said. Analysts cautioned, however, that repeated strikes by airport workers could cause a bigger headache for the company.

UPS finished a $200 million expansion of its Cologne Bonn hub about two years ago, giving it the capacity to sort 190,000 packages an hour, according to the company. It employed more than 2,500 people at that time, making UPS the biggest employer at that airport, it said.

On its website, UPS says that about 35 flights and more than 200 trucks and vans arrive at and depart from the airport each evening, connecting Europe with the Americas and Asia.

UPS's major rivals won't be hit hard by the strike. FedEx Corp.'s largest European air hub is in France. Deutsche Post AG's DHL has a major air hub in Leipzig, Germany, which isn't a target of Wednesday's strikes. A spokeswoman for DHL said it didn't expect to be affected.

Write to Laura Stevens at laura.stevens@wsj.com and Natascha Divac at natascha.divac@wsj.com

 

(END) Dow Jones Newswires

April 26, 2016 14:58 ET (18:58 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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