ATLANTA – United Parcel Service Inc., the world's No. 1 package-delivery company, on Friday cut its third-quarter earnings estimates because of a sharp drop in shipping activity immediately after the Sept. 11 attacks on the World Trade Center and Pentagon.
Atlanta-based UPS said in a statement it now expects to earn 45 to 48 cents per share, down from earlier, reduced guidance of 52 to 55 cents per share. The company had already lowered earnings expectations in July.
Wall Street analysts had been looking for earnings of 48 to 57 cents per share, with a mean estimate of 52 cents per share, according to research firm Thomson Financial/First Call. A year earlier it earned 60 cents per share.
During the week of the attacks, volume declined more than 10 percent as shippers across the country reduced their activity, UPS said. Although it has rebounded, volume is not yet back to early-September levels, particularly in the air operations and internationally.
``The financial impact of this event on UPS in the third quarter will be approximately $130 million,'' UPS Chief Financial Officer Scott Davis said. ``This represents the additional costs we incurred to maintain service and lost revenue as a result of lower package volume since the attacks. The new guidance for earnings per share does not include the impact of funds available from the federal government through the Airline Stabilization Act.''
The Airline Stabilization Act was enacted last week and provided $15 billion in aid to U.S. air carriers to help prevent bankruptcies and minimize other financial hardships of the Sept. 11 attacks. All U.S. commercial air traffic was suspended for two days following the attacks, and since flights resumed volume is running at less than half of normal.
The attacks by hijacked airliners left nearly 7,000 people dead or missing as two planes destroyed the World Trade Center, one damaged the Pentagon and another crashed in western Pennsylvania.
Until the attacks, UPS said it had been on track to meet the earnings targets it announced on July 19, when it first lowered expectations as weakness in the economy depressed shipping volumes. At that time it had also warned that it would be difficult to match last year's fourth-quarter profit of 63 cents per share.
Analysts currently expect it to earn 56 cents per share in the fourth quarter, according to First Call.