Alcoa to slash over 15,000 jobs

By Steve James

NEW YORK (Reuters) - Alcoa Inc (AA.N) said on Tuesday it would slash more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminium production in the face of the global economic downturn.

The largest U.S. aluminium producer said it imposed a global salary and hiring freeze as it seeks to cope with what Chief Executive Officer Klaus Kleinfeld called "extraordinary times."

The cuts, the third in as many months, come less than a week before Alcoa is scheduled to report its fourth-quarter results. Alcoa said it would take almost $1 billion (670 million pounds) in charges in the quarter. Analysts expect the company to post a 1-cent per-share loss, according to Reuters Estimates,.

In after-hours trading following the news, Alcoa's shares were down nearly 4 percent at $11.64.

"Alcoa is going to get hit by some really big metal price declines and the only way to fix it is to reduce output," said analyst Charles Bradford, of Bradford Research/Soleil. "I think they need to do more. That's the only thing you can do to get the price going."

Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland, said the cuts could help Alcoa in the long run.

"As demand dropped off in the fourth quarter of 2008, steel companies were quick to cut production. I think the market will reward them for taking this capacity off line and cutting staff. It's smart in this environment."

Alcoa said targeted reductions, curtailments and plant closures and consolidations, mostly in the United States and Europe, including Russia, would reduce its headcount by more than 13,500 employees or 13 percent of the worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated.