Will struggling British Airways cut spending?

Troubled British Airways said Friday that it would slash capital expenditure by one fifth in the current financial year after posting another sharp drop in monthly passenger numbers.

"Market conditions continue to be very challenging with trading at levels well below last year," the struggling airline said in a trading update.

"In response to the challenging economic conditions British Airways has reviewed its business plan.

"Forecast capital expenditure has been reduced from 725 million pounds to 580 million pounds for 2009-2010 and is likely to remain at that level in 2010-2011."

The airline also announced it carried 2.93 million passengers last month, 4.9 percent fewer than in June 2008.

And BA repeated that it wanted to slash 3,700 jobs in the current financial year, which runs until March 2010. It has already axed 2,500 jobs worldwide over the past year.

BA also revealed that it would delay the delivery of its fleet of Airbus A380 superjumbos and announced more reductions to its summer 2009 and winter 2009-2010 flight schedules.

"The delivery schedule for the first six Airbus A380 aircraft has been extended by an average of five months with the first delivery still due in 2012," the carrier said.

"The schedule for the remaining six A380s has been extended by an average of two years with the final aircraft arriving in 2016."

In May, BA had reported an annual loss of 375 million pounds, blamed on plummeting demand for tickets as well as high fuel costs.

After diving into a financial loss, BA asked staff to work for free, while promising that chief executive Willie Walsh and finance director Keith Williams would forgo their July salaries.

Agencies

Will MySpace slash 30% of US staff?

US Internet social networking giant MySpace said Tuesday it would cut 500 jobs, nearly 30 per cent of its domestic staff, in a restructuring aimed at boosting efficiency.

MySpace, a unit of media magnate Rupert Murdoch's News Corporation, said it was cutting payrolls "as part of a plan to restructure itself into a more innovative, efficient, and entrepreneurial business."

The restructuring plan affects all US divisions of the company and the round of job cuts will lower the domestic workforce to 1,000 employees, it said in a statement.

"Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," said Owen Van Natta, MySpace chief executive.

"I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centered on our user and our product."

Van Natta, who was named MySpace CEO in April, was a chief revenue officer and vice president of operations for Facebook when he resigned from the rival company in early 2008.

Facebook's popularity has soared amid a surge in social networking in the United States.

Facebook was the top social networking site when ranked by total minutes for the month of April, showing a gain of 700 per cent from a year earlier, according to a recent study by Nielsen Online.

MySpace was in second place, with its total minutes declining from 7.3 billion in April 2008 to 5.0 billion in April 2009.

Agencies

Will Sony Ericsson layoff additional 2,000 jobs?

Sony Ericsson Mobile Communications Ltd, the mobile-phone venture of Sony Corp and Ericsson AB, said it will cut an additional 2,000 jobs to revive profit amid falling demand.

The measure will reduce costs by 400 million euros ($524 million) annually by mid-2010 and cost 200 million euros to implement, Sony Ericsson said in a statement. It follows a plan announced in July to slash 2,000 positions to save 300 million euros, which has been completed, and another unveiled in January to reduce costs by 180 million euros by the end of 2009.

Sony Ericsson reported its third straight quarterly loss today after it slipped to fourth place in global handset shipments at the end of last year. The London-based company has suffered as consumers snapped up touchscreen models from competitors such as Apple Inc with its iPhone.

“As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand” Chief Executive Officer Dick Komiyama said in the statement. “We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible.”

Third loss

The first-quarter net loss was 293 million euros, compared with a profit of 133 million euros a year earlier, the company said. Sales fell 36 per cent to 1.74 billion euros.

Analysts in an SME Direkt survey predicted a 293 million- euro net loss on sales of 1.68 billion euros, based on 28 estimates.

Sony Ericsson’s gross margin, or sales minus manufacturing costs, narrowed to 8.4 per cent in the quarter from 29.2 per cent a year earlier.

Restructuring charges for the first two cost-cutting programmes will stay within the 300 million-euro sum set aside in July to pay for the measures, the company said.

The venture shipped 14.5 million phones, a 35 per cent drop from a year earlier. The company estimated its market share fell two percentage poi
nts to 6 per cent from the fourth quarter. The average selling price of its handsets fell to 120 euros from 121 euros in the fourth quarter as well as the year-earlier period.

Sony Ericsson predicts global industry handset unit sales will shrink at least 10 per cent this year from the 1.19 billion sold in 2008. Nokia Oyj, the world’s largest mobile-phone maker, yesterday reiterated its forecast of about a 10 per cent drop in the global handset market.

Nokia reiterated its margin targets for the year after announcing job cut programmes that will cover about 3,000 employees. The Espoo, Finland-based company’s first-quarter net income declined 90 per cent to 122 million euros.

Agencies

Tatas to slash 5,000 jobs at Corus, Jaguar

Indian conglomerate Tatas are expected to cut as many as 5,000 jobs at their steel and auto subsidiaries in the UK -- Corus and Jaguar Land Rover -- in the coming weeks. About 3,500 jobs are anticipated to go at Corus this week itself, while Jaguar Land Rover is expected to see another 1,500 layoffs in the coming weeks, The Sunday Times has reported.

"Britain's largest steelmaker, Corus is poised to cut up to 3,500 jobs this week in one of the biggest blows yet to the faltering manufacturing sector. "Further large-scale job losses are expected within weeks, with Jaguar Land Rover understood to be considering another 1,500 layoffs," the newspaper said.

Tata group firm Tata Steel had purchased Anglo-Dutch steel maker Corus for about 6.7 billion pounds (12 billion dollars approx.) in 2007.

Another group entity Tata Motors snapped up luxury car maker Jaguar Land Rover last year for more than two billion dollars from American auto major Ford. Meanwhile, the report noted that job cuts at Corus are likely to "overshadow this week's announcement by Lord Mandelson, the business secretary, of aid for the car industry".

The UK government is expected to come up with assistance to boost the country's car industry, which is hit by the economic downturn. "It is understood the planned job cuts (at Corus) will come across the company's 23,000-strong British workforce, and are not expected to lead to the closure of any large sites," the report said.

Quoting one industry insider, the Sunday Times said, "This is not about site closure. This is about making Corus in the UK competitive".

Agencies

Due to drop in profits, Ericsson to cut 5,000 jobs

Wireless equipment maker LM Ericsson on Wednesday said profits dropped 31 per cent in the fourth quarter, citing restructuring charges and weaker handset sales, and said it would slash 5,000 jobs.

Ericsson said net profit fell to 3.9 billion kronor ($465 million) from 5.6 billion a year earlier.

It reported ``a dramatic drop'' in the contribution from its handset unit, Sony Ericsson. The joint venture with Japan's Sony last week said it had swung to a fourth-quarter loss of euro187 million ($243 million).

For the full year 2008, it posted a profit of 11.3 billion kronor, nearly half the 21.8 billion kronor reported for 2007.

Boosted by a weakening krona, Ericsson's sales in the fourth quarter rose 23 per cent to 67 billion kronor, from 54.5 billion kronor a year earlier.

The share soared nearly 11 per cent to 62 kronor in Stockholm stock market opening.

The world's leading maker of mobile broadband infrastructure said it released the fourth-quarter results a week ahead of schedule because it believed they exceeded market expectations.

In a statement, Chief Executive Carl-Henric Svanberg described his company's performance in 2008 as ``solid,'' pointing out the sales and the operating margins, excluding Sony Ericsson. He warned however that the financial downturn makes it ``difficult to more precisely predict to what extent consumer telecom spending will be affected, and how operators will act.''

The company said it needs to widen its savings program as the global financial crisis continues to pressure the industry, tough competition and the technical development. That would mean cutting 5,000 jobs, or more than 6 per cent of its 79,000-strong work force, Ericsson said.

The Stockholm-based company said it expected restructuring charges of 6 billion-7 billion kronor, yielding annual savings of around 10 billion kronor by the second half of the year.

In a webcast news conference with analysts and journalists, Svanberg said ``we're doing this of course because of the uncertainty in the market.''

For 2009, he said it will be a priority for the company to stay close to its customers to understand their behavior and needs, adding his company is also preparing for tougher times to be able to defend its margins and extend its leadership.

Agencies

Barclays likely to layoff 2,100 jobs

Financial services major Barclays is to layoff 2,100 in investment banking and money management, as part of its cost cutting measures.

"Barclays is cutting about 2,100 jobs worldwide in investment banking and money management as it slashes costs to cope with the fall-out from the credit crisis", The Financial Times said.

According to FT, the company is cutting 1,300 people from Barclays Capital, the debt-focused investment banking business, 500 from the Barclays Wealth private banking arm, and 330 in asset management business Barclays Global Investors. Overall, the cuts amount to 7 per cent of the three divisions' staff, it added.

Noting that Barclays declined to reveal where the job cuts would come, the newspaper said that the axe is expected to fall heavily in London and New York.

However, the bank would continue to hire in areas such as equities, the report published online said.

Last year, Barclays had acquired the US operations of bankrupt Lehman Brothers.

Financial Times reported that at Barclays Wealth, cuts are expected in London, Glasgow and the Channel Islands. Quoting Unite, which represents staff at Barclays Wealth's division, the daily said, "We cannot continue with this situation of daily job cuts without any justification or explanation of the broader strategy for the bank."

"The bank, which built the units aggressively over the past five years to account for almost half of revenue, said it wanted to be 'appropriately sized', given the current market conditions," it added.

The move is likely to spark fears of further cost-cutting in Barclays' retail and corporate banking division, which includes its bank branch network, the report noted.

Agencies

Bank of America to slash 30,000 to 35,000 jobs

Bank of America said it expects to cut 30,000 to 35,000 jobs over the next three years, as it faces a deteriorating economic environment and tries to absorb Merrill Lynch.

The final number could be even higher, analysts say. Charlotte, North Carolina-based Bank of America said it hasn’t yet completed its analysis for eliminating positions, and won’t until early next year. The company and Merrill have about 308,000 employees in total, and the cuts will affect workers from both companies and all types of businesses.

Bank of America is considered one of the country’s healthier banks, and its decision to slash so many jobs illustrates the breadth of the layoffs hitting the United States. The nation lost more than half a million jobs in November alone, and economists expect many more to come. Bank of America’s action is a particularly hard blow for Charlotte, which is also home to the beleaguered Wachovia Corp, a once strong bank that is now being acquired by Wells Fargo & Co. In what amounts to a fire sale. Just three months ago, when the Merrill Lynch deal was announced, Charlotte was dubbed Wall Street South; now, the banking center is being hit as hard as Wall Street and other towns across America, where people go to work in the morning unsure if they will still have a job that night. The announcement of job cuts at Bank of America was hardly unexpected, considering the merger and the wave of job losses seen in the banking industry and in other sectors over the past few months. Bank of America and Merrill Lynch have already eliminated thousands of investment banking jobs over the past year, as have other banks, in an effort to lower costs as they face increasing defaults in mortgages, credit card debt and other loans.

HSBC lays off 193 staffers in India

Foreign lender HSBC has decided to slash 193 jobs in its Indian consumer assets business segment after reviewing its portfolio in the backdrop of the prevailing economic conditions, the bank said. The bank is restructuring its consumer assets business division in the country and has made "every efforts to redeploy the staff," HSBC said. "Some 620 people have been redeployed in suitable positions in the bank and other group entities in India. The leavers have been placed in the bank's priority returners scheme which will give them first preference for suitable jobs that come up in the next year," it said.

Source: Agencies