United Continental Holdings Inc. will cut about 600 front-office jobs through voluntary and involuntary cuts, the company said Thursday as it announced disappointing financial losses for 2012.
The world's largest airline did not detail where cutbacks will take place, but Chicago is likely to be most affected considering the corporate headquarters and network operations center are in downtown Chicago and that Chicago O'Hare airport is one of the airline's largest hubs.
The job cuts were announced Thursday morning during a conference call about the airline's profits. United officials said they were disappointed in the airline company's 2012 performance and pledged to improve in 2013, both in financial performance and the airline's operational reliability.
They said they intend to win back corporate customers who defected to other airlines last year when the airline experienced periods of poor on-time performance and high cancellations rates. The operational problems, which have abated since the fall, stemmed from numerous computer-related glitches after the airline merged United and Continental customer reservation systems onto a common platform last March.
United CEO Jeff Smisek called 2012 "the toughest year of our merger integration," but that the airline was "back on track."
"Despite our integration pains, we accomplished an enormous amount and we are now in a position to go forward as a single carrier and compete effectively on a global scale," he said. "Our operations are running smoothly. Our many product improvements are rolling out and our customer satisfaction scores are climbing."
Smisek also said the airline maintains its confidence in the Boeing 787 Dreamliner, which was grounded in the U.S. and elsewhere after numerous glitches, including a serious fire hazard with its lithium ion batteries.
He said he had confidence in the airplane and "Boeing's ability to fix the issues just as they have done on every other new aircraft model they've produced."
Smisek said he has no indication on when the Federal Aviation Administration will allow the planes to fly again, including Dreamliner on a route between Chicago and Houston. Boeing is also based in Chicago.
United, the only U.S. carrier currently operating 787 planes, has six Dreamliners. Smisek said the company expects to take delivery of two additional 787s in the second half of this year.
EARNINGS
United Continental said it lost $723 million in 2012, or $2.18 per share. Excluding special charges of $1.3 billion, mostly related to merging United and Continental, the company earned $589 million, or $1.59 per share, meeting Wall Street analyst expectations.
In the fourth quarter, United lost $620 million, or $1.87 per share, compared with a loss of $138 million, or 42 cents per share, in the same quarter a year earlier.
It took charges of $430 million in the quarter, with much of that tied to paying off pension debt and costs for systems integration and training and severance. Excluding items, United said the 2012 quarterly loss was 58 cents a share, compared with a 61 cent loss expected by analysts on average, according to Thomson Reuters I/B/E/S.
Revenue fell 2.5 percent to $8.7 billion.
Superstorm Sandy, which barreled through the U.S. Northeast in late October, reduced revenue by about $140 million and profit by about $85 million in the fourth quarter. The storm caused shutdowns at major New York area airports, including New Jersey's Newark Liberty International where United operates a major hub.
CUSTOMER SERVICE
Customer service will be a larger focus for the airline, Smisek said during the conference call.
That focus includes a comprehensive customer service training program for airport agents, contact center agents and flight attendants, he said. It will also roll out a program called "It's Our Job," a companywide approach to customer service "that clearly explains our customer service standards and expectation for front line coworkers," Smisek said.
It will also include an expanded recognition program to reward employees for outstanding service, collecting more customer-satisfaction data and roll out of a new set of tools for airport agents, he said.
JOB CUTS
As far as the job cuts, they will not affect unionized workers, such as pilots, flight attendants and airport ground workers, a spokeswoman said. The airline in December reduced the officer ranks by several positions, representing 7 percent of managers with titles of vice president and higher. It will reduce management and administrative staff by 6 percent through voluntary and involuntary cuts and not filling empty positions.
Those cuts will begin in early February, Smisek said in a letter to employees Thursday morning.
gkarp@tribune.com
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