Norfolk Southern to Cut 2,000 Jobs as Part of Streamlining Plan
Norfolk Southern Corp. reported Jan. 27 that fourth-quarter profit fell 29% from the same period a year ago and its yearly profit for 2015 was off by nearly as much — down 20% from a year earlier.
As part of the company's plan to turn things around and streamline its operations, first announced early last month, the railroad plans to cut 2,000 jobs by 2020, including 1,200 this year, through a combination of attrition and furloughs, Jim Squires, Norfolk Southern's chairman, president and CEO, told analysts in a conference call.
Those reductions are expected to generate $420 million in annual expense savings, a big chunk of projected overall productivity savings of more than $650 million a year within the next four years.
Savings of $130 million are projected in 2016.
Depending on what unfolds over the next few years, including the possibility of a recession, there could be additional reductions as well, Squires said.
"We're not going to sacrifice our service, but everything else is on the table, we'll cut wherever we need to cut, short of hurting service," he told analysts.
The railroad also plans to cut overtime by half from 2015 levels and to eliminate or downgrade 1,500 miles of secondary lines by 2020, including 1,000 miles this year.
Norfolk Southern's net income totaled $361 million, or $1.20 a share, for the quarter that ended Dec. 31, down from $511 million, or $1.64 a share, in the fourth quarter of 2014.
The consensus earnings estimate of 19 analysts surveyed by Thomson Financial Network was $1.24 a share.
It was the railroad's first earnings report since Canadian Pacific Railway announced two months ago that it wanted to merge with Norfolk Southern.
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|By Robert McCabe|
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