UPS and Postal Service in Deal to Deliver Mail

United Parcel Service Inc. (UPS) and the U.S. Postal Service have agreed to a deal to be announced on Wednesday that will put mail on the package-delivery company's planes, a UPS spokeswoman said.

Citing people familiar with the matter, The Wall Street Journal said terms of the arrangement call for UPS to begin flying mail for the Postal Service this Saturday.

The agreement was announced at 11:30 a.m. in Washington, said UPS spokeswoman Laurie Mallis, who was unable to provide further details.

The deal is expected to generate revenue of more than $100 million a year for UPS, a fraction of the company's annual revenue but an expansion of its business relationship with the post office, the Journal said.

If UPS is successful, it could be in a strong position to compete for some or all of the postal business now handled by FedEx Corp. (FDX) when that $1.3 billion annual contract comes up for renewal in 2007, the newspaper said.