Jan. 25--United Continental Holdings will eliminate about 600 front-office positions, the company said Thursday in announcing disappointing results for 2012.
The world's largest airline did not identify where cutbacks will take place, but Chicago is likely to be most affected considering the corporate headquarters and network operations center are downtown and because O'Hare International Airport is one of the airline's largest hubs. The eliminated positions will come from voluntary and involuntary personnel cuts as well as letting vacant positions go unfilled, a spokeswoman said.
The job cuts were announced during a conference call in which United officials pledged in 2013 to improve financially and boost reliability of the airline's operations.
Executives said they intend to win back corporate customers who defected to other airlines last year after periods of poor on-time performance and high cancellation rates. The operational problems, which have abated since the fall, stemmed from numerous computer-type glitches after the airline merged the 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 doesn't know when the Federal Aviation Administration will allow the planes to fly again, including a temporary Dreamliner route between Chicago and Houston. Boeing also is based in Chicago.
United, the only U.S. carrier currently operating 787s, has six of them. Smisek said the company expects to take delivery of two additional Dreamliners in the second half of this year.
United Continental said it had a net loss of $723 million in 2012, or $2.18 per share. Excluding special charges of $1.3 billion, mostly related to merging United and Continental airlines, the company earned $589 million, or $1.59 per share, meeting Wall Street analyst expectations.
In the fourth quarter, United had a net loss of $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 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 co-workers."
It will also include an expanded recognition program to reward employees for outstanding service, collecting more customer-satisfaction data and a rollout of a new set of tools for airport agents, he said.
The job cuts will not affect unionized workers, such as pilots, flight attendants and airport ground workers, a spokeswoman said. The airline in December reduced 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. It would not detail how many job eliminations would come via voluntary and involuntary personnel cuts and attrition.
Those cuts will begin in early February, Smisek said in a letter to employees Thursday morning.
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