Hawaiian Air lays off 98 workers
The firm still employs more staff than a year before its "painful day"
Hawaiian Airlines, citing a need to adapt to a changing industrial environment, laid off 98 nonunion employees yesterday and said an additional 38 unfilled nonunion positions would be eliminated.
The company said the decision to cut 2.7 percent of its 3,591-member work force came after more than six months of studying ways to realign the airline's business to better match the changing nature of consumer behavior. The layoffs were in operations, marketing and sales, and information technology.
REDUCING THE LOAD
Hawaiian Airlines restructured its company yesterday by laying off 2.7 percent of its work force.
Laid off: 98 nonunion employees, with an additional 38 nonunion positions not being filled
Areas affected: Operations, which includes airport services; marketing and sales; and information technology
Revised work force: 3,493 after the 98 layoffs
Year-earlier work force: 3,444
Cost savings: About $4 million a year beginning in 2008
But even after the cuts, the firm said, it employs more people now than it did a year ago.
Mark Dunkerley, president and chief executive of Hawaiian, stressed that cost savings were "not the primary driver" for the move even though the airline is facing intense competition in the interisland and mainland markets and is coping with continued financial losses.
"In an industry as dynamic as ours, a competitive company must constantly adapt to the changing business environment," Dunkerley said. "Among other things, this requires changing how we apportion our work force, so in some places we are adding and in other areas we are reducing."
Hawaiian, whose work force was reduced to 3,493, said 40 percent of the affected employees are outside the state, most of them on the mainland. Those losing their jobs are being offered a choice of severance packages and also will be able to apply for open jobs in other areas of the company.
Hawaiian Airlines called yesterday "a very painful day" for a carrier that prides itself on being the nation's top-ranked airline for service.
The remade airline, which emerged from bankruptcy in June 2005 as a more efficient and financially healthier carrier, continued down that path yesterday when it laid off 98 nonunion employees and announced that 38 unfilled nonunion positions would be eliminated.
But Mark Dunkerley, president and chief executive of Hawaiian, stressed that the airline -- even with the layoffs -- still has more employees than it did a year ago and is moving forward. The reduced job count will leave Hawaiian with 3,493 employees versus 3,444 in May 2006.
"The message we want to send out is that we are continuing to grow our business," Dunkerley said. "Our strategy has not changed one bit, and the realignment today is a step along a path toward developing our business toward becoming more effective in the way we serve our customers."
Dunkerley said that if Hawaiian had been focused on the short term, it would have laid off people uniformly across the board and not offered generous separation packages. He said the realignment project had been under way for more than six months, "and the need to do that has been with us for an even longer period than that."
"This (decision) predates the recent downturn in our financial performance," Dunkerley said. Hawaiian, which has faced increased competition in its mainland and interisland service, had a net loss of $11.9 million in the first quarter of this year and a net loss in 2006 of $40.5 million.
Dunkerley said there might not be any cost savings from the layoffs this year because of the severance payouts, but that beginning next year the company will realize about $4 million in savings per year. The airline said it will take a charge in its second-quarter earnings of $1.5 million to $2 million.
Caris & Co. analyst Jason Kremer called the work force reduction "a good move."
"Obviously, they've taken great measures (with severance packages) that the people are leaving on decent terms," Kremer said. "It's 100 people. It's not a big portion, but it's going to lead to some pretty good cost savings."
Eric Sampson, the new master executive council chairman of Hawaiian's unit of the Air Line Pilots Association, said he was unclear what effect the layoffs would have on the pilots' ongoing negotiations.
However, he said the pilots "would like to express our sympathy to our fellow employees who have suffered the sudden loss of employment today."
Dunkerley said the realignment affected almost every area of the company, but for different reasons. More than 20 percent of those laid off were in management, with the total layoffs representing less than 3 percent of the payroll.
In airport services, which is part of operations, "we've moved to take out an entire layer of management so that decision makers can be that much closer to customers," Dunkerley said.
He said that in human resources, a number of technological developments have allowed Hawaiian to automate services that previously were done manually. And in sales and marketing, he said, the company has shifted its emphasis of the management away from some of the traditional ways of buying tickets and into more e-commerce.
Kremer said he did not see the changes disrupting the airline's daily business in any way, and concurred with Hawaiian's contention that it was not a knee-jerk decision.
"It takes a while to put this together," he said. "Obviously, you're always looking for ways to save costs, especially when you have a new entrant (Mesa Air Group's go!) in the market causing disruptions. I'm sure it didn't hurt -- with the stuff going on -- in the decision-making process."