United to furlough 899 office workers
By Lynne Marek
Bloomberg News
CHICAGO — UAL Corp.'s United Airlines said yesterday it will close five U.S. reservations offices and lay off 899 employees because of a "soft" U.S. economy as well as fewer flights and lower sales since the Sept. 11 attacks.
Four of the offices to be closed effective Feb. 28 are in California and the fifth is in Illinois, the Chicago-based airline said in a statement. Some of the workers may be eligible for reassignment to other offices of the second-largest carrier, the company said.
United since Sept. 11 has reduced flight and seat capacity about 23 percent. The airline yesterday said it has laid off 19,000 of the 100,000 workers it had before the attacks and the resulting drop in air travel. UAL, which led U.S. carriers' third-quarter losses with $1.16 billion, has sought to trim other costs and plans to release a recovery plan later this month.
"It sounds to me as though United is cutting back deeper and longer than other carriers," said Goldman Sachs analyst Glenn Engel, who has a "hold" rating on the company.
United needs to reduce costs because its productivity lags behind the rest of the industry, said Engel, who doesn't own airline stocks. Still, the cost-cutting efforts might hurt the airline because United is shrinking more than rivals and giving up market share, he said.
UAL is expected to report a loss of $36.53 a share for 2001 and to lose $23.47 a share this year, the average estimates of analysts surveyed by Thomson Financial/First Call.
United didn't plan to close the reservations centers when it said in September that it would reduce its work force by 20,000 employees, spokesman Joe Hopkins said. Still, the airline doesn't expect the layoffs of the reservation agents to mean cutting more than its initial plan of 20,000 workers, he said.
United has major flight bases in San Francisco and Los Angeles and is one of the biggest airlines serving the West Coast.
"During November and December the reservations offices were busy handling lengthy calls from customers on security issues and reaccommodating passengers on new flights," said Joseph Laughlin, vice president of reservations said in the release. "That work is largely completed, and the current lower level of reservation telephone activity prompts today's announcement."
AMR Corp.'s American Airlines, the largest carrier, and Northwest Airlines Corp., the fourth biggest in the United States, last month recalled some reservations agents laid off after the attacks because of longer customer calls and, in American's case, more calls.
Fort Worth, Texas-based American, which also has a major base in Chicago, recalled 800 agents and St. Paul, Minn.-based Northwest recalled 300.
