TWA to Trim 1,000 Jobs in Turnaround Effort
Trans World Airlines Inc., which is struggling to return to profitability after last year’s crash of Flight 800, said it will cut 1,000 jobs by December because newer jets being added to its fleet will reduce its maintenance needs.
As “new aircraft with fewer scheduled maintenance requirements come to constitute a larger and larger portion of our fleet, we are required to adjust our staffing to more closely reflect industry standards,” said William Compton, TWA’s executive vice president of operations.
The job cuts will reduce TWA’s work force to just under 23,000 employees, the St. Louis-based airline said.
“It’s a positive and quite needed step,” said Brian Harris, an airline analyst at Lehman Bros. “They are overstaffed in most of their job categories.”
Job cuts and fleet improvements are only two steps in TWA’s turnaround efforts. To survive in the long term, TWA must bolster its cash reserves, attract more high-paying business customers, and stem the bleeding of profit, analysts said.
After two trips to Bankruptcy Court in the 1990s, TWA seemed to regroup last year and posted a second-quarter profit of $25.3 million. Then Flight 800 exploded off the coast of Long Island, N.Y., last July. The airline lost $285 million in 1996 and $72 million in the first quarter of 1997.
TWA’s second-quarter earnings are expected to be released today, and Wall Street expects it to post a loss of 23 cents a share, compared with a profit of 45 cents a share a year earlier, according to First Call, which tracks analysts’ expectations.
A TWA spokesman said the airline was not aware of any one-time charges or severance costs related to the layoffs.
TWA’s stock rose 44 cents to close at $6.63 on the American Stock Exchange.
The job cuts are an inevitable part of upgrading the fleet, as newer planes require less maintenance work and fewer workers, analysts said.
TWA plans to take delivery of about 52 new and recent-vintage used aircraft worth more than $2 billion over the next two years.
The St. Louis-based carrier said the average age of its fleet will shrink to 16.7 years by the end of the year, down from the current average of about 17.8 years, but higher than the industry average of 11.9 years.
TWA, the seventh-largest U.S. airline, declined to comment on whether additional staff changes will be made after December.
The layoffs include 250 posts at its overhaul base in Kansas City, Mo., and 625 in maintenance, airport operations and reservations.
Most maintenance job cuts will be made through furloughs, although some will be made through attrition, while most of the airport operations and all of the reservations sales staff cuts will be made through attrition, TWA said.
Management, non-contract and contract employees will be affected, the airline said.
