Headcount shrinkage accelerates -- The layoff news is growing. Mergers won't save
jobs despite what you hear from the CEOs. The idea behind a merger is to save money - so once merged the first order of business is cutting. To believe anything else is naive.
But there is another side to this - people are leaving the industry at the slightest excuse. Delta offered buy-outs to 3,000 people in the hope that 2,000 would accept. Guess what? All 3,000 took the deal. So now Delta says some may be hired back. To think that the person running this buy out was not shown the door is amazing. What nobody talks about is what such deals do within the company. The fear of being unemployed in this economy; the endless discussion in the offices, the time wasted and the meetings. By the way, its not just in the airline business. GM reported that a quarter of its union workers had accepted buyout offers.
There can be no doubt that Delta's staff productivity took a dive during this and, from what we hear, is still lower now. It's not like these people were just sitting around. Earlier layoffs had forced many people to do more than one person's work. Imagine what it will look like next year.
Meanwhile in Houston, Continental employees got this note yesterday:
Dear Co-worker:
We've always said that you deserve open, honest and direct communication.
This letter and the attached employee bulletin and Q&A are part of that
commitment.
The airline industry is in a crisis. Its business model doesn't work with
the current price of fuel and the existing level of capacity in the
marketplace. We need to make changes in response.
While there have been several successful fare increases, those increases
haven't been sufficient to cover the rising cost of fuel. As fares increase,
fewer customers will fly. As fewer customers fly, we will need to reduce our
capacity to match the reduced demand. As we reduce our capacity, we will need
fewer employees to operate the airline. Although these changes will be
painful, we must adapt to the reality of today's market to successfully
navigate these difficult times.
The attached employee bulletin and Q&A outline some of the steps we are
taking to address this industry crisis. The situation for all airlines is
serious, and the actions we are announcing today are necessary to secure our
future. We regret the loss of jobs caused by this crisis, and we will do our
best to minimize furloughs and involuntary terminations.
These actions will help Continental survive this crisis. You have our
ongoing commitment to keep you informed as the industry evolves and adapts to
these unprecedented challenges. It is important that we all keep our focus on
working together during these difficult times.
Co-worker Impact
As a result of the capacity reductions, Continental will need fewer
co-workers worldwide to support the reduced flight schedule. About 3,000
positions, including management positions, will be eliminated through
voluntary and involuntary separations, with the majority expected to be through voluntary programmes.
Network Changes
Starting in September, at the conclusion of the peak summer season,
Continental will reduce its flights, with fourth quarter domestic mainline
departures to be down 16 percent year-over-year. This will result in a
reduction of domestic mainline capacity (available seat miles, or ASMs) by 11
percent in the fourth quarter, compared to the same period last year.
By the end of next week, Continental will provide details on specific
flights and destinations that are subject to reduction or elimination. For
additional information on departures and capacity for 2008 and 2009.
Continental says it plans to cut 3,000 jobs, reduce domestic departures by 16% beginning in September and cut the size of its fleet.
In other news --
Qantas gets excited - A380 gets ready for delivery
The end of growth - WestJet load factor stumbles
The 717 lives!
BAE corruption update - another subpoena
Its really bad - our simple model shows everyone is in the red-deep red
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