Burlington Northern To Cut 500 Top Jobs Railroad Says Downsizing Not Related To Santa Fe Deal
Burlington Northern Inc. will eliminate 500 management jobs through firings and attrition and take a $100 million charge in the third quarter, Chairman and Chief Executive Gerald Grinstein said.
The job cuts, to be completed by June 1996, will save about $50 million by next year and come after a broad study of the Fort Worth, Texas-based railroad’s staffing, Grinstein told analysts at a meeting in New York. Burlington Northern’s Spokane division has about 700 employees.
The railroad’s action isn’t related to its $4 billion acquisition of Santa Fe Pacific Corp., which won final government approval last Thursday, he said. The new company will be the largest railroad in the U.S. with 33,000 miles of track in every state west of the Mississippi River, or more than a quarter of the nation’s total.
After the railroads are combined, the new company will have about 45,000 employees. The acquisition is expected to result in the loss of 2,750 jobs, or 6 percent, and represents $560 million a year in additional operating income.
Grinstein said the cuts announced today are in addition to 300 jobs cut earlier this year.
A study of the railroad’s workforce found that hundreds of jobs could be eliminated through computerization and the consolidation of different posts, he said.
Burlington launched a voluntary retirement plan on June 14 that will continue through July 29 to help the company reach the goal of cutting 500 non-union jobs. Salaried employees who are at least 50 years old and have 10 or more years with the company are eligible for the packages, which include lump-sum payments, insurance and pension benefits.
More than 200 workers have applied so far, Grinstein said. The company will start firing employees in mid-August based on the number of people who take the buyouts.
Burlington expects a total of 300 jobs to be eliminated by the end of the third quarter, with the remainder to be abolished by next June. The cuts will result in an operating savings of $12 million by the end of the fourth quarter and a total of $50 million by the end of the program.
Shares of Burlington Northern were unchanged at $67.75.
Separately, Standard & Poor’s Corp. cut its ratings for Burlington Northern and removed it and Santa Fe from its CreditWatch list after more than six months.
S&P lowered the senior secured and corporate credit ratings of Burlington to ‘BBB’ from ‘BBB+’ and equipment trust certificate rating to ‘A’ from ‘A+.’