Flying Tiger Will Cut Pay, Reduce Work Force 4.8%

Flying Tiger Line, the nation’s oldest and largest air freight concern, today announced administrative and executive cost-cutting moves, including a 4.8% work force reduction, pay cuts of 5% to 15%, fewer paid holidays and elimination of company cars.

Only professionals in the company’s data-processing unit were exempt from the cuts because of keen competition among firms to attract such workers.

The cuts, which take effect Thursday, follow agreements with the company’s unions to grant wage and fringe benefit concessions that would save the company more than $57 million a year.

“The reduction of costs of every kind is a critical first step toward restoring the company’s viability,” said Flying Tiger Chairman and Chief Executive Stephen Wolf. “When these difficult actions are behind us, the airline will concentrate on debt restructuring and longer-term market positioning.”

Flying Tiger has 2,600 administrative, office and executive workers out of its total worldwide work force of 6,100.

The company declined to say how much it will save as a result of the latest round of cost cuts.

Salary reductions will range from 5% for lower-paid workers to 15% for the highest paid, including Wolf, the company said.

Since Wolf joined the company in August, his salary hasn’t been disclosed. But it will be made public in proxy materials to be released early next year.

Vacations will be reduced by 20%, with a ceiling of four weeks placed on vacations. Paid holidays will be reduced to nine per year instead of 10.

A total of 124 jobs will be eliminated, including about 8% of the management work force.

With the exception of a few company-owned vehicles maintained at international locations, company cars will be eliminated for everyone.

In exchange for the cuts, profit sharing and stock ownership programs will be extended to all general and administrative employees.

The profit sharing plan will distribute 15% of all profits after the first $10 million to participants of the plan.

Employees will receive warrants to buy 10% of the airline’s stock at $1 per share at the end of three years. Virtually all the airline’s stock is now held by its parent company, Tiger International, and is not traded publicly.

In recent years, Flying Tiger has been hampered by frequently shifting business strategies, alternately stressing domestic and Asian service and freight and small-package delivery.

In the past 3 1/2 years, it posted operating losses of $71.9 million as it tried to overcome stiff competition from lower-cost carriers.