TWA Plans Layoffs and Salary Cuts : Management Roster to Be Trimmed 15% as 1,000 to Lose Jobs
Trans World Airlines plans to cut its management roster by 15% and its non-union work force by just under 5%, laying off more than 1,000 people, President Richard D. Pearson said Monday.
Pearson said TWA also plans pay cuts of between 10% and 12% for those managers and non-union workers who are not laid off.
Pearson did not say when the cutbacks would take effect, but TWA spokeswoman Sally McElwreath in New York said, “I have heard by the end of the year.”
The layoffs, which are expected to save TWA $100 million annually, would result in the elimination of about 585 management personnel and between 450 and 500 non-union workers. The non-union personnel include ticket and reservations agents, secretaries and clerical workers.
28,000 Workers Worldwide
TWA has 3,900 managers and between 9,000 and 10,000 non-union employees among its 28,000 workers worldwide.
TWA’s union work force includes its pilots, mechanics and flight attendants. The pilots and mechanics previously accepted wage concessions to help New York financier Carl C. Icahn in his fight to gain control of TWA, which he did in August.
Speaking at a breakfast meeting of the Chamber of Commerce of Greater Kansas City, Pearson said the reduction in management jobs would be from “top to bottom. We’ll go from the top down and reduce it to the point where (the airline) will be effective.”
Pearson, who was named TWA’s president last month, said the airline’s ground operations and marketing and sales units were expected to be hit the hardest by the management cuts.
The TWA president also said the airline had offered early retirement benefits to non-management workers.
TWA spokeswoman McElwreath said that no single geographic area was targeted for the job cuts and that it was too early to say what impact the cost-cutting plan would have on the airline’s Los Angeles or West Coast personnel.
In another potential cost-savings move, Pearson said, TWA probably will decide this spring whether to move its corporate headquarters from New York to either Kansas City, where its maintenance base and administrative center is located, or St. Louis, where the airline maintains its major domestic hub, or connecting center for flights.
TWA’s lease for its New York headquarters does not expire until 1989, but Pearson said the airline was considering moving in 1987.
In acquiring control of the airline, Icahn agreed to give the airline’s unionized pilots and machinists part ownership in TWA in exchange for an estimated $200 million in labor cost reductions.
Icahn, who has since reached an agreement with TWA to acquire the rest of the airline’s stock, has said the concessions were necessary if TWA was to remain profitable.
In 1984, TWA earned $29.9 million on revenue of $3.66 billion. But in the first half of this year, the company lost $56.2 million on revenue of $1.81 billion.
