Feb 23, 2005
Crystal City, West Virginia (SatireNewsWire.com)
USAirways will reduce its workforce by an unprecedented 120 percent by the end of 2005, believed to be the first time a major corporation has laid off more employees than it actually has.
UAIR stock soared more than 12 points on the news.
The reduction decision, announced Wednesday, came after a year-long internal review of cost-cutting procedures, said UAIR CEO & President Bruce Lakefield. The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its 40,000 employees.
"From there," said Lakefield, "it didn't take a genius to figure out that if we cut 40 percent of our workforce, we'd save $2.4 billion, and if we cut 100 percent of our workforce, we'd save $6 billion. But then we thought, why stop there? Let's cut another 20 percent and save $7 billion.
"We believe in increasing shareholder value, and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line," he added.
UAIR plans to achieve the 100 percent internal reduction through layoffs, attrition and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 12,000 non-UAIR employees who presently work for other companies.
"We pretty much picked them out of a hat," said Lakefield.
Among firms UAIR has picked as "External Reduction Targets," or ERTs, are General Electric, Gate Gourmet, new home of labor friendly Dave, Air Wisconsin, and Quaker Oats. Lakefield's plan presents a "win-win" for the company and ERTs, said Lakefield, as any savings by ERTs would be passed on to UAIR, while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcements.
"We're also hoping that since, over the years, we've been really helpful to a lot of companies, especially after two bankruptcies, they'll do this for us kind of as a favor," said Lakefield.
Legally, pink slips sent out by UAIR would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate.
"This is ridiculous. I don't work for UAIR. They can't fire me," said Bob Baldanza, a gourmet chef with Gate Gourmet. "Reactions like that," replied Lakefield, "are not very sporting."
Inspiration for UAIR's plan came from previous cutback initiatives, said company officials. In January of 2003, for instance, the company announced it would trim 18,000 jobs over two years. However, just a year later, UAIR said it had already reached its quota. "We were quite surprised at the number of employees willing to leave UAIR in such a hurry, and we decided to build on that," Lakefield said.
Analysts credited Lakefield's short-term vision, noting that the announcement had the desired effect of immediately increasing UAIR's share value. However, the long-term ramifications could be detrimental. Said 7-11's chief airline analyst Stephen Wolf,
"It's a little early to tell, but by eliminating all its employees, UAIR may jeopardize its market position and could, at least theoretically, cease to exist."
Lakefield, however, urged patience: "To my knowledge, this has never been done before, so let's just wait and see what happens."
Retirement Systems of Alabama Chief Executive Officer David Bronner ecstatic over the idea said, "This will provide UAIR with the strongest tail wind yet! And will provide us with the further funding needed for the expansion of MDA and the Business Select project already underway!"
This is Rodger Dodger reporting from Crystal City, West Virginia @ SatireNewsWire.com
Crystal City, West Virginia (SatireNewsWire.com)
USAirways will reduce its workforce by an unprecedented 120 percent by the end of 2005, believed to be the first time a major corporation has laid off more employees than it actually has.
UAIR stock soared more than 12 points on the news.
The reduction decision, announced Wednesday, came after a year-long internal review of cost-cutting procedures, said UAIR CEO & President Bruce Lakefield. The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its 40,000 employees.
"From there," said Lakefield, "it didn't take a genius to figure out that if we cut 40 percent of our workforce, we'd save $2.4 billion, and if we cut 100 percent of our workforce, we'd save $6 billion. But then we thought, why stop there? Let's cut another 20 percent and save $7 billion.
"We believe in increasing shareholder value, and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line," he added.
UAIR plans to achieve the 100 percent internal reduction through layoffs, attrition and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 12,000 non-UAIR employees who presently work for other companies.
"We pretty much picked them out of a hat," said Lakefield.
Among firms UAIR has picked as "External Reduction Targets," or ERTs, are General Electric, Gate Gourmet, new home of labor friendly Dave, Air Wisconsin, and Quaker Oats. Lakefield's plan presents a "win-win" for the company and ERTs, said Lakefield, as any savings by ERTs would be passed on to UAIR, while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcements.
"We're also hoping that since, over the years, we've been really helpful to a lot of companies, especially after two bankruptcies, they'll do this for us kind of as a favor," said Lakefield.
Legally, pink slips sent out by UAIR would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate.
"This is ridiculous. I don't work for UAIR. They can't fire me," said Bob Baldanza, a gourmet chef with Gate Gourmet. "Reactions like that," replied Lakefield, "are not very sporting."
Inspiration for UAIR's plan came from previous cutback initiatives, said company officials. In January of 2003, for instance, the company announced it would trim 18,000 jobs over two years. However, just a year later, UAIR said it had already reached its quota. "We were quite surprised at the number of employees willing to leave UAIR in such a hurry, and we decided to build on that," Lakefield said.
Analysts credited Lakefield's short-term vision, noting that the announcement had the desired effect of immediately increasing UAIR's share value. However, the long-term ramifications could be detrimental. Said 7-11's chief airline analyst Stephen Wolf,
"It's a little early to tell, but by eliminating all its employees, UAIR may jeopardize its market position and could, at least theoretically, cease to exist."
Lakefield, however, urged patience: "To my knowledge, this has never been done before, so let's just wait and see what happens."
Retirement Systems of Alabama Chief Executive Officer David Bronner ecstatic over the idea said, "This will provide UAIR with the strongest tail wind yet! And will provide us with the further funding needed for the expansion of MDA and the Business Select project already underway!"
This is Rodger Dodger reporting from Crystal City, West Virginia @ SatireNewsWire.com
