Here tis- not a drastic announcement per se, as most of the personnel reductions were thru unfilled positions and attrition.
IDENTIFIES ADDITIONAL $200 MILLION IN
ANNUAL COST SAVINGS
today announced that it has identified approximately $200 million of additional annual pre-tax cost savings in order to further reduce the gap between revenue and expenses. These initiatives are the carrier’s latest attempt to reduce its losses, without asking for wage and benefit concessions from its employee workgroups. Coupled with the carrier’s previously announced revenue generation and cost savings initiatives, the total contribution of these efforts is expected to result in approximately $1.1 billion in pre-tax run-rate benefits.
“These are difficult times for all of us,” Gordon said. “We continue to struggle to identify additional ways to lower our costs as continued losses jeopardize our survival. Our employees are focused on ensuring our long-term viability. However, unless the revenue environment improves dramatically, we will need to reduce wages and benefits to compensate for the continued losses.”
The cost savings items are expected to provide approximately $125 million of pre-tax benefits in 2005 and, when fully implemented by 2007, a run-rate annual pre-tax benefit of approximately $200 million.
These cost savings include a reduction of approximately 425 positions through staff reductions, attrition and the elimination of unfilled positions. A majority of these reductions involve management and clerical positions, and, together with earlier reductions in force, will result in a 24 percent reduction in the carrier’s management and clerical workforce since September 11, 2001. By comparison, over the same time period, most other work groups at CO have been affected to a lesser extent since Sept. 11, 2001: flight operations personnel have been reduced 14 percent, inflight personnel have been reduced 15 percent, mechanics have been reduced five percent, airport agents have been reduced 15 percent, and reservation agents have been reduced 26 percent.
Most of the staff reductions announced today will occur immediately, and do not include the 253 previously announced reservations position reductions.
The company will provide a package of separation benefits for affected employees. Additionally, the company will arrange job fairs and make other efforts to help affected employees transition to new positions outside the company.
In addition to staff reductions, CO
is continuing to negotiate savings from numerous suppliers, demonstrating that its best business partners are willing to continue to work with the company and support it in these difficult times. The company is also continuing to pursue other savings initiatives, including a variety of fuel savings, facilities cost reductions, reductions in distribution costs, and technology-enabled productivity enhancements.
This press release contains forward-looking statements that are not limited to historical facts, but reflect the company's current beliefs, expectations or intentions regarding future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. For examples of such risks and uncertainties, please see the risk factors set forth in the company's 2003 10-K and its other securities filings, which identify important matters such as terrorist attacks, domestic and international economic conditions, the significant cost of aircraft fuel, labor costs, competition and industry conditions including the demand for air travel, airline pricing environment and industry capacity decisions, and regulatory matters. In addition to the foregoing risks, there can be no assurance that the company will be able to achieve the targeted pre-tax contributions from the new cost-reducing initiatives, or the previously announced revenue-generating and cost-reducing initiatives, discussed in this press release, which will depend, among other matters, on customer acceptance, competitor actions, negotiations with third parties, identification of additional opportunities and other matters outside the company's control. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release.