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BNSF to lay off 1,400
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May 23, 1999: 9:03 a.m. ET
Railroad sees quarterly revenues slipping below year-ago levels
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NEW YORK (CNNfn) - Burlington Northern Santa Fe Corp. announced at the weekend it is eliminating 1,400 positions in an effort to lower costs in its railway operations.
"We regret having to eliminate positions in our workforce, but we believe it is essential to assure our long-term competitiveness," said Robert D. Krebs, chairman and chief executive officer. Burlingotn Northern, the second largest railroad in the United States, is based in Ft. Worth, Texas.
About 1,000 hourly-worker positions will be eliminated, the railroad said in a statement issued Friday. In addition, 400 salaried positions, about 7 percent of BNSF's salaried workforce, also will be cut. The company indicated the layoffs will take effect by the end of the second quarter.
The railroad said its quarterly revenues are slipping below year ago levels.
"As a result, we anticipate that quarterly earnings will be below the $0.58 cents per diluted share reported for the second quarter of 1998," Krebs said in the company's statement. "In addition, we estimate that the severance costs associated with the planned reductions will be between 6 and 8 cents per share. For the most part, these costs will be offset by a reversal of 1995 merger-related severance reserves."
Before the announcement, analysts estimated quarterly earnings for the rail carrier at roughly 61 cents per share.
BNSF was created when the Burlington Northern Railroad merged with the Atchison, Topeka & Santa Fe Railway four years ago.
In addition to the layoffs, BNSF announced it will reduce 1999 capital expenditures by $100 million. The company said this and other spending reductions will allow it to increase cash allocated to its share repurchase program. Between April 1 and May 20, BNSF repurchased 3.4 million shares of its stock for $118.7 million.
BNSF (BNI) owns one of the largest railroad networks in North America, with 34,000 route miles covering 28 states and two Canadian provinces. It currently employs about 44,500 people. Its stock closed down 1-3/16 Friday at 33-3/4.
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