Nov. 10 (Bloomberg) -- Deutsche Post AG's DHL Express overnight-delivery unit will abandon efforts to compete with United Parcel Service Inc. and FedEx Corp. in the U.S., firing 14,900 workers and closing three-fourths of its outlets.

Deutsche Post's spending on the U.S. will total 7.5 billion euros ($9.6 billion) by the end of 2009, including DHL's losses, reorganization costs and the expense of buying Airborne Inc. ground-delivery unit 5 years ago, Chief Executive Officer Frank Appel told reporters today at the company's Bonn headquarters.

DHL's retreat enables UPS and FedEx to further expand their combined 80 percent share of the U.S. market. Deutsche Post, Europe's biggest postal service, said it's poised to report a net loss for 2008 because of the U.S. withdrawal, the first full-year deficit since its stock began trading in 2000.

``FedEx and UPS have literally spent decades developing a quite formidable position in the U.S. with extremely reliable networks,'' said Dan Ortwerth, an analyst at Edward Jones & Co. in St. Louis, who recommends buying shares of both companies. ``DHL underestimated this challenge from the start'' and was ``flailing even in boom times.''

Deutsche Post rose 65 cents, or 6.9 percent, to 10 euros in Frankfurt trading. That pared the stock's decline this year to 57 percent. UPS rose $1.68, or 3.2 percent, to $53.60 at 4:15 p.m. in New York Stock Exchange composite trading, and FedEx gained $1.71, or 2.6 percent, to $66.29.

9,500 Fewer Jobs

DHL Express will eliminate 9,500 jobs in the U.S. in addition to 5,400 positions cut since the start of the year. The combined figure is about 3.1 percent of Deutsche Post's average global workforce of 477,394 employees in the first half of 2008.

Several thousand jobs will be cut at DHL's hub in Wilmington, Ohio, and more than 1,000 jobs will be eliminated in both Pennsylvania and California, DHL Express CEO John Mullen told reporters today on a conference call.

The unit will drop domestic truck operations and reiterated plans to hand over air shipments within the U.S. to Atlanta-based UPS under a tentative agreement announced in May. DHL Express's remaining U.S. business will focus on international deliveries, and will have 4,000 employees and 103 outlets.

DHL Express's U.S. volume will shrink to about 100,000 packages a day, from 1.2 million now. UPS, FedEx and other package-delivery companies are often considered a bellwether for the economy because they deliver items ranging from auto parts and consumer goods to mortgage and banking documents.

`Need for Action'

Deutsche Post bought Brussels- and Redwood City, California- based DHL in 2002, adding a global express-delivery service to its network and later expanding the brand to include cargo. The company hasn't made a profit from U.S. express operations since buying Seattle-based Airborne's ground-delivery unit in 2003.

Reorganization costs over two years will total $3.9 billion, most of which will be booked in 2008, Deutsche Post said. DHL's U.S. cargo, freight-forwarding and bulk-mail businesses are successful and won't be affected by the express-unit cutbacks, the company said.

An economic decline in the U.S. ``generated considerable need for action,'' Appel said. He wouldn't specify the net loss he's predicting for this year.

Deutsche Post stuck to a forecast announced Oct. 27 of 2008 earnings before interest and taxes, excluding one-time gains or costs, of about 2.4 billion euros.

`Impossible for Us'

``The market wanted the company to get its performance and profitability under control a long time ago,'' Axel Funhoff, a Brussels-based analyst at ING Groep NV, said in a report, adding that he's reviewing a ``hold'' recommendation on Deutsche Post stock. ``They will be in better shape'' after the U.S. express withdrawal.

DHL Express ranks fourth in U.S. express deliveries with 5 percent of the market, according to SJ Consulting Group in Sewickley, Pennsylvania. UPS leads with 51 percent, followed by Memphis, Tennessee-based FedEx with 31 percent and the United States Postal Service at 13 percent.

``The reality of the lack of scale, the productivity that they have, the market reach and the brand awareness make it impossible for us to make it economically viable,'' Mullen said on the call.

DHL Express unveiled plans in May to limit losses in the U.S. by closing express-delivery sorting centers and shifting air deliveries to UPS. A slowing U.S. economy led Deutsche Post to cut its 2008 outlook from earnings before interest and taxes, or Ebit, from 2.9 billion euros, excluding one-time items.

UPS Switch

DHL remains in talks on the UPS proposal and, ``while the scope of these discussions will now reflect our change in strategic direction, we are working toward contract completion by year end,'' Jonathan Baker, a DHL spokesman in Plantation, Florida, said today in an e-mail.

Third-quarter net income more than doubled to 805 million euros from 350 million euros, Deutsche Post said today. Sales increased 4.1 percent to 13.8 billion euros. Ebit in 2009 will probably rise, the company said, without specifying a number. DHL Express's U.S. unit will report a full-year loss of $1.5 billion.

DHL's U.S. turnaround was hampered by delivery delays at a package-sorting hub in Ohio that opened in 2005. Deutsche Post scrapped a 2009 break-even target for the U.S. division last year and wrote down the unit's value by 594 million euros in the fourth quarter. Appel declined to talk today about the Wilmington base until an agreement with UPS is reached.

UPS's takeover of DHL's U.S. routes may cost 10,000 jobs at Air Transport Services Group Inc.'s ABX unit and Astar Air Cargo Inc., which handle the flights, Air Line Pilots Association President John Prater said in U.S. congressional testimony Sept. 9. UPS countered at the hearing that its cooperation with DHL would preserve 40,000 jobs industrywide.

To contact the reporter on this story: Andreas Cremer in Bonn via acremer@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

Last Updated: November 10, 2008 16:17 EST