Northwest to trim staff by 8 percent to cut costs

CHICAGO Wed Jul 9, 2008 7:45pm BST

A Northwest Airlines jet taxis past a Delta Airlines jet at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia, April 15, 2008. REUTERS/Tami Chappell

A Northwest Airlines jet taxis past a Delta Airlines jet at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia, April 15, 2008.

Credit: Reuters/Tami Chappell

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CHICAGO (Reuters) - Northwest Airlines Corp NWA.N said on Wednesday it would cut its frontline and management staff by 8 percent as part of a sweeping capacity reduction aimed at offsetting the soaring cost of jet fuel.

Northwest, the latest carrier to announce job cuts, estimated the reduction and a variety of new fees would generate $250 million to $300 million annually.

The job cuts -- about 2,500 in all -- will affect all Northwest employee groups, the carrier said. Northwest has about 31,000 employees worldwide, according to its website.

"These reductions are the direct result of our extraordinary fuel costs and the necessary actions we must take to right-size our airline and eliminate unprofitable flying," Northwest Chief Executive Doug Steenland said in a statement.

The airline, which plans to merge with Delta Air Lines Inc (DAL.N), has said it would reduce its capacity systemwide by 8.5 percent to 9.5 percent in the fourth quarter.

The airline industry is rapidly downsizing as rising fuel bills undo the financial progress carriers have made through restructuring and fare increases in recent years.

Other top airlines -- including AMR Corp's AMR.N American Airlines, UAL Corp's UAUA.O United Airlines and Delta -- also have announced job cuts related to capacity reductions.

Northwest said it would attempt to achieve its staff reduction with voluntary early-out programs, leaves, work rule changes and attrition. Layoffs could follow if too few employees leave voluntarily.

The carrier also said it would attempt to boost revenue through new fees, such as a $15 charge to check a single bag. Other carriers have implemented that fee, which met with scorn from travelers.

Other measures include a higher ticket change fee and a service fee for tickets awards through the carrier's WorldPerks frequent flier program.

After Northwest and Delta made public their merger proposal in April, industry experts predicted more mergers would follow.

The most likely candidates, United Airlines and US Airways Group LCC.N, however, called off their talks without a deal.

The industry focus now is on strategic alliances and large-scale capacity cuts.

Northwest shares fell 79 cents to $6.68 at mid-afternoon on the New York Stock Exchange.

(Reporting by Kyle Peterson; Editing by Andre Grenon, Richard Chang)

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