crossposted to Uniongal
Continental cuts workforce and more due to fuel costs
DALLAS -- Continental Airlines said Thursday it is cutting 3,000 jobs and reducing capacity by 11 percent, citing record fuel costs that have pushed the industry into its worst crisis since 2001. It also said its two top executives will forgo pay for the rest of the year.However, Continental seems to have a conscience:
The job cuts represent about 6.5 percent of the company's work force of 45,000.
The company also said Chairman and Chief Executive Lawrence Kellner and President Jeff Smisek will not take salaries or incentive pay for the rest of the year.Did you catch that, from September until the end of the year, Kellner and Smisek will forego pay. And how much is that exactly? The Post claims:
Last year, Kellner got a salary of $712,500 and total compensation that the company valued at nearly $6 million, down 9.3 percent from the year before, according to an Associated Press analysis of a company filing with the Securities and Exchange Commission.So this salary issue made me start thinking about Dick E Dauch at American Axle and his entitlement mentality. Not long back, over at Freep (Detroit Free Press), there were all these anti-union folks pointing out that Dauch’s more than $10 mill was fair compensation for him starting the company and making it profitable. That even if they weren’t profitable (they were last year at over $37 mill profits), he still deserved a high salary of over $1mill. I wonder how many of these same people are cheering Kellner’s and Smisek’s decisions to forego pay during the current fuel crisis.
However, about one-third of Kellner's compensation was in stock and option grants that are now worth far less than they were when granted in February 2007 because of the slump in the company's stock. In a filing Wednesday, the company said 2008 salaries would be $296,875 for Kellner and $240,000 for Smisek.
But before anyone gets their panties in to a bunch and quotes me anything about how Americans get paid too much and CEO’s earn their keep or that labor is a commodity and blather on about the market, let me point out this gem from the Post:
The company said that several fare increases have not been enough to offset the rising cost of fuel. Continental estimates it will spend $2.3 billion more this year than last _ a difference of $50,000 per employee. Fuel has surpassed labor as Continental's biggest expense.My dad’s shop is having a similar problem. The cost of running the presses and hammers is high and he’s trying to get the company to add a fuel surcharge to orders but he hasn’t been successful at this yet. Since my dad gets a profit sharing incentive through work as his bonus, it’s important to him that the company make money and he’s sitting back and watching as his 1 to 2% bonus becomes fuel for running a hammer for a couple of days. Kind of sucks, doesn’t it?
I’m hopeful that Continental will be able to work things out without layoffs, perhaps through buyouts or retirement or attrition, because I really don’t want to see anyone have to figure out how to make it in this economy without a job and no prospect for new employment.