*NEWS*4 BIG COMPANIES CUT MORE JOBS/2004-09-10

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Alaska Airlines to Cut Nearly 900 Jobs

SEATTLE – Alaska Airlines is cutting nearly 900 jobs and will close its Oakland, Calif., maintenance facility as part of efforts to become more competitive against low-cost carriers and save up to $35 million annually.

The nation's ninth-largest carrier, which employs more than 11,000 employees, said last month that it was cutting up to 150 management positions. On Thursday, it announced plans to shed another 750 jobs.

The cuts mark airline's first major layoffs since the Sept. 11 terrorist attacks.

In an interview with The Associated Press, Alaska Airlines chief executive Bill Ayer said the moves were prompted by a number of factors in addition to increasing competitive threats from low-cost airlines, including high fuel prices and customer demand for cheap tickets.

"The environment itself is very, very harsh," he said.

Seattle-based Alaska has the fourth-highest costs of any U.S airline, and Ayer said those costs must come down if the company is to survive in the long term.

The cuts include 340 jobs at the Oakland maintenance base that closed Thursday. From now on, the company said all heavy maintenance work on aircraft will be done by Goodrich Aviation Technical Services in Everett, Wash., and AAR Aircraft Services in Oklahoma City.

The company also will close some facilities maintenance and ground support operations, resulting in another 60 job cuts. And it is cutting 273 jobs in Seattle and various cities in Alaska because it will begin using contractors to clean airplanes between flights in those cities.

Alaska said it plans to find ways for employees at Alaska Airlines and its sister airline, Horizon Air, to share more work, resulting in some of the Alaska Airlines cuts.

Horizon also will cut about 30 of its 3,400 jobs as part of that move.

Alaska Airlines will farm out some customer service work in the state of Alaska and close ticket offices in Juneau, Anchorage and Bellevue, Wash., among other changes.

Ayer said the company does not yet know how much the layoffs will cost, or when it might have to take a charge for the changes. He also couldn't say whether more layoffs might be ahead.

But in a memo to employees, Ayer wrote that the changes were necessary to prevent harsher woes in the future.

"The airline industry is full of examples of inaction, with an eventual devastating toll on huge numbers of employees," he wrote. "We must make changes now to avoid those types of drastic actions later."

Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group Inc. The airlines serve more than 80 cities in the United States, Canada and Mexico.

Alaska Air Group shares rose 18 cents to close at $23.71 Thursday on the New York Stock Exchange

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Delta Airlines to Cut Up to 7,000 Jobs

Will Drop Dallas-Fort Worth as a Hub

ATLANTA (Sept. 8) — Delta Air Lines is axing up to 7,000 jobs, cutting employee wages and shedding its Dallas hub as part of a sweeping turnaround plan aimed at helping the nation's third largest carrier cope with high fuel costs and competition from low-fare rivals.

But even with those changes – part of a $5 billion cost-saving program – CEO Gerald Grinstein warned on Wednesday Delta would seek bankruptcy court protection if Delta can't slow the pace of pilot retirements by the end of September.

Grinstein told reporters that he fears pilots could jump ship en masse because they are worried about their pensions and keenly aware of UAL Corp.'s threat to terminate the employee retirement plans at its United Airlines unit. Several hundred Delta pilots have retired early in recent months, and more have threatened to do so, he said.

''We have to know what we're dealing with before the end of the month,'' Grinstein said, after delivering a speech to 300 middle managers that was broadcast on the Internet.

The normal pilot retirement age at Delta is 60. Senior pilots with enough years of service can retire early at age 50, and roughly 2,000 are currently eligible, Grinstein said. If that many retired early, it would hurt Delta's ability to operate the international flights that many of its senior pilots handle, Grinstein said.

Pilots union spokesman Chris Renkel said pilots would be less likely to retire early if Atlanta-based Delta Air Lines Inc. would heed the union's request for the company to promise not to try to take away any employees' accrued benefits.

So far, Renkel said, Delta has refused to guarantee the future availability of lump-sum payments pilots can get if they retire early. ''It is unfortunate that our management has chosen a Webcast environment to deliver this ultimatum,'' Renkel said in a memo to pilots.

Neither the airline nor the union would say what the maximum lump-sum payment is. Delta pilots who retire can elect to receive 50 percent of their pension benefit in a lump sum and the other 50 percent as an annuity later, regulatory filings show.

Pension benefits paid to Delta pilots and other retirees rose almost 23 percent to $1.1 billion in 2003 from $888 million the year before, regulatory filings show. The increased pace of early pilot retirements would likely push that number even higher this year.

Before the retirement issue escalated, Delta had been warning investors for months that it may have to file for bankruptcy protection if it didn't get deep wage cuts from its pilots. Management said on July 30 it needed a minimum of $1 billion in concessions from pilots to survive. Pilots have offered up to $705 million.

Grinstein told reporters Wednesday that talks with the pilots are continuing, ''but time is running out'' to reach an agreement. He declined to be more specific. Delta also is trying to restructure its roughly $20 billion in debt, and Grinstein said private discussions with creditors are going well.

Despite the latest measures, Grinstein said ''bankruptcy is a real possibility.''

''We're working hard and fast to avoid it,'' Grinstein said. But he added, ''If the pilot early retirement issue is not resolved before the end of the month, or if all of the pieces don't come together in the near term, we will be required to restructure through the courts.''

On the New York Stock Exchange, Delta shares fell 44 cents, or 9.8 percent, to close Wednesday at $4.04.

In his speech to employees, Grinstein said that the airline will cut 6,000 to 7,000 jobs, or about 10 percent of its overall work force, over the next 18 months. More job cuts are likely in the future, he told reporters afterward.

Other elements of Delta's turnaround plan include:

– A 15 percent reduction in administrative overhead costs, including management cuts.

– A reduction in wages for all employees.

– Larger employee contributions for health insurance.

– Expansion of its low-fare subsidiary, Song, by adding 12 more aircraft initially.

– A redesign of the primary Atlanta hub operation to add flights while reducing congestion.

– Redesigned aircraft cabins to include more conformable seating and more in-flight entrainment options.

– A still-to-be-developed employee reward program.

In addition, Grinstein said Delta will no longer use the Dallas-Fort Worth airport as one of its four hubs as of 2005. Instead, Delta will expand its hubs in Cincinnati, Atlanta and Salt Lake City with redeployed aircraft from Dallas-Fort Worth.

About 2,000 of the jobs to be cut will come from Dallas-Fort Worth and significant management cuts are expected at the airline's Atlanta headquarters, Grinstein said.

Last week, rival American Airlines and its regional affiliate said they would add 70 flights from Dallas-Fort Worth airport by summer 2005. American Airlines, the largest U.S. carrier and a unit of AMR Corp., said it would increase frequency of flights from DFW to 31 other airports in the United States and Mexico.

Delta has lost more than $5 billion – $25 million alone in the last month because of the two hurricanes that hit Florida – and already reduced its work force by 16,000 in the last three years. The changes announced Wednesday are part of Delta's goal to save more than $5 billion by 2006.

As of June 30, Delta and its subsidiaries had 70,300 full-time employees and 842 total aircraft, regulatory filings show.

Joel Denney, an airline analyst for Piper Jaffray & Co. in Minneapolis, said the changes Grinstein announced are essential to Delta's survival.

''No one likes to take wage cuts,'' Denney said. ''No one likes to go through this type of reorganization. But, unfortunately, the industry has forced this where people have to now.''

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Goodyear Takes Charges, Slashes Jobs

NEW YORK (Sept. 10) – Goodyear Tire & Rubber Co. (GT.N) said on Friday it plans to take third-quarter charges for cost-cutting efforts in its engineered products and chemical divisions.

The company, one of the world's largest tire producers, will record a charge of between $23.5 million and $27.5 million from cost-cutting in its engineered products group, including a reduction of 240 jobs. It will also take a charge of between $5.5 million and $6 million from cutting 100 jobs in its chemical business by the end of the year.

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EDS Wants to Slice Off 15,000 to 20,000 More Jobs

 

DALLAS (Sept. 10) – Looking to slash $3 billion from its expenses, Electronic Data Systems Corp. may jettison as many as 20,000 jobs in coming years, chief executive Michael H. Jordan told investors who have turned bearish on the beleaguered technology giant's prospects.

"The next two years, there is going to be a lot of change in EDS," Jordan said Thursday at an analyst conference in New York. "We said we're going to take 20 percent out of our cost structure, which is $3 billion, out. That's the way you do it."

EDS, which operates computer systems for other companies but has struggled with money-losing contracts, a turndown in corporate technology spending and a credit agency downgrade of its debt to junk status.

Last month, a computer system EDS hosted suffered a data glitch, grounding hundreds of flights by AMR Corp.'s American Airlines and US Airways Group Inc. – a high-profile embarrassment for a company that has endured several over the past two years.

EDS has already made most of the 5,200 job cuts it announced last year, and has about 120,000 employees remaining, including about 55,000 in the United States, a spokesman said.

Jordan commented about job cuts only briefly in response to a question, and offered few details.

Jeff Baum, a spokesman for Plano, Texas-based EDS, called Jordan's figures an estimate.

"There isn't a hard and fast plan," Baum said in an interview. "That's an estimate, and it ultimately depends on how well we transform the business. It could end up being less than that. We might add people in other places as we bring new business on."

Baum said it was impossible to tell where cuts might be made. He said, however, that the company was likely to grow faster outside the United States than at home.

Jordan has said the company is trying to improve productivity to reduce the cost it charges for its services, making its offers more competitive with rivals such as IBM Corp.

"We need to take $3 billion out of our cost structure. We're a people company, and there is certainly a people component to that," he said.

During the New York conference, EDS officials sought to bolster the company's standing with investors who have sent EDS shares down 20 percent this year. Jordan said the company was making progress at reorganizing its sales force and had improved employee morale.

"The organization was pretty despondent a couple years ago. The company had gone through a lot of dislocation," Jordan said. "And while there is plenty of dislocation to go as we go through as we reengineer the company, I think they've now come to accept the fact that we do have strategy, I think they do believe in the leadership."

Bob Djurdjevic, an analyst with Annex Research, said EDS already has lower operating expenses as a ratio of sales than its five leading rivals and that more layoffs would damage its sales and service groups.

Jordan "has already been cutting into the bone even before these cuts," Djurdjevic said. "Even before this, morale was bad. Now it will be worse because people's jobs will be in jeopardy."

Rod Bourgeois, an analyst who upgraded EDS stock last month, said in an otherwise upbeat note to investors Thursday that EDS' business mix is "generally unattractive." He said EDS faces more competition in its core business of technology services, which isn't growing as fast as in past years.

In the past two months, Moody's Investors Service downgraded EDS debt to junk status. The company slashed its dividend to shore up its balance sheet.

EDS recently held off a challenge by Lockheed Martin Corp. to retain a $750 million contract with the U.S. housing agency, and announced improved terms of a big contract with the Navy that has already cost EDS about $1.8 billion because it was a tougher job than the company had expected.

EDS terminated another money-losing contract with Dow Chemical Co., which was snapped up days later by IBM. Revenue is barely growing over last year, and EDS avoided a loss in the April-June quarter only by selling a large software division.

Jordan, who is also chairman, was hired to run EDS in March 2003 to replace Richard Brown. The company is still under investigation by the Securities and Exchange Commission for practices during Brown's tenure.

* Post was edited: 2004-09-10 12:29:00

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June 22, 2013 at 10:18 AM