As part of its long-term efforts to diversify its business beyond its U.S. Postal Service contracts, Alpine Air Express' (APNX) operating subsidiary Alpine Air won a contract from United Parcel Service (UPS) that it expects to amount to seven percent of its business. At the same time, it gained renewed U.S. Postal Service (USPS) contracts for the states of Montana and South Dakota, worth a total of $25 million.

"Although the company is currently flying these routes, this new contract allows Alpine to re-price these operations adjusting for current fuel prices, exact mail volume and other inflationary pressures that we have experienced in the past two years," said President Gene Mallette. "These contracts will allow our company to have an extremely solid base of revenue and projected long-term profitability. [We] expect this foundation to enable our previously announced acquisition strategy to move vigorously ahead."

The carrier begins its UPS operations on July 17 on routes between Seattle, Kennewick and Walla Walla, Wash. It was able to free up aircraft from its Hawaiian operations after it renewed some of its postal routes there, according to spokesperson Michael Dancy. The carrier gained the Hawaiian routes three years ago. However, after investing millions in developing the infrastructure needed for the island services, the amount of mail was significantly below expectations. That, coupled with increasing fuel prices, forced it to rebid some, but not all, of the Hawaiian routes. The aircraft serving those dropped services were freed up for the UPS contract. Dancy indicated that the new Hawaiian rates take into account fuel volatility.

The postal contracts have an initial three-year term with three additional one-year extension options.

The UPS contract diversifies the airline's portfolio but also affords UPS more flexibility, especially with late operating aircraft. Previously, it served these routes with regional passenger carriers who often could not wait for late-arriving aircraft. Dancy indicated the airline could even provide extra flights if volume necessitates it.

Alpine flies throughout the western and southwestern U.S., using Beech 99s and 1900s. The award comes after attempts to sell the carrier failed and moves to recapitalize, in an effort to raise up to $5 million in new investment. (RAN, December 5, 2005).