Under the agreement, UPS initially will provide airlift of First Class and Priority Mail volume each week to and from 98 cities.

The contract, which includes an option for one two-year extension, expands an existing relationship between UPS and the USPS under which the company provides airlift for mail transportation between 16 cities. The contract will take effect on July 1.

"We are excited about expanding our relationship with the USPS," said Mike Eskew, chairman and CEO of UPS. "This contract can help support the Postal Service's service commitment to its mail customers while creating new growth opportunities for our company."

UPS said it will utilize existing capacity to handle the new postal volume, further optimizing its vast U.S. air network. With more than 575 aircraft either owned or chartered, UPS is among the world's largest airlines and has capacity during the day to meet postal requirements. Given its strong financial base, advanced technology and well-developed tracking capability and the blanket reach of its air network, UPS is well positioned to support postal operations.

Jack Potter, USPS Postmaster General and Chief Executive Officer, said the relationship with UPS supports the Postal Service's mission of providing superior service to the nation's mailers. "Through partnerships with private companies like UPS, the U.S. Postal Service continues to focus on our customers by providing them with the highest levels of service. We look forward to furthering our relationship with UPS."

UPS is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at www.UPS.com.