Deutsche Post Announces Mass Layoffs at US Subsidiary

Deutsche Post is set to cull 9,500 jobs from its loss-making DHL express mail service in the US, the logistics giant announced Monday. That's on top of another 4,500 job cuts that had already been announced.

The move is part of Post's attempted restructuring of DHL which will also involve shutting down the domestic air and ground operations of the US subsidiary.

DHL, which competes with rivals UPS and FedEx, has been a perennial loss-maker for Deutsche Post since former Post chief Klaus Zumwinkel, who was recently charged with tax fraud, decided to push into the US market.

The Bonn-based company had already announced it would cut 4,500 jobs, a decision likely to affect drivers, shipping clerks and warehouse workers.

The streamlining of DHL would cost about $3.9 billion (three billion euros), Post said in a statement, adding that operating costs at DHL's express unit would drop from $5.4 billion to less than one billion dollars. The express unit employs around 18,000 people.

The group "will focus its express business in the US on its core international competencies and exit the domestic air and ground express service in the country by the end of January," the statement said.

"The international express offering in the US will be maintained on today's levels and the region will remain an integral part of DHL's global Express network," it added.

Deutsche Post, owned 31 percent by the German government, said it would likely see a net loss for 2008.

But the logistics giant said its nine-month core earnings had gained 1.3 percent to 1.6 billion euros, on sales that rose by 2.3 percent to 40.5 billion euros.

The price of shares in the group jumped by 8.82 percent to 10.18 euros in midday trading, while the DAX index of leading shares had gained 3.17 percent overall.