ATLANTA -- In a memo to employees, Worldspan said it recorded $105
million in profit through the third quarter but is inviting its
2,000 employees in the U.S. to apply for a voluntary severance
program in the face of "very serious business challenges."
The memo, issued by Worldspan chief executive Paul Blackney and
obtained by Travel Weekly, outlines the voluntary program and the
rationale behind it.
In confirming the contents of the memo, a Worldspan spokeswoman
said the company believes a voluntary severance program "is a fair
way to achieve a cost savings."
Worldspan, owned by Delta, Northwest and American, does not
release profit or revenue numbers to the public, and the Worldspan
spokeswoman would not comment on the $105 million in profit that
the memo cites.
Worldspan employees have until Dec. 6 to apply; the spokeswoman
said the company hasn't determined how many voluntary resignations
it seeks.
No "companywide layoff" is planned, she added. However,
Blackney's memo stated that "it is possible that certain areas will
experience targeted downsizing as operational needs change."
The spokeswoman acknowledged that 100 employees left the company
through a similar program in March and an additional 100 were laid
off.
"Our need to further reduce head count may seem at odds with our
recent profit announcement of $105 million through third-quarter
2002," Blackney's memo said.
The Worldspan CEO tied the need to offer the severance program
to the slow economy, "extreme pressure" on the airlines and changes
in travel distribution.
"The resources and skills needed to serve our online customers
are often not the same as those needed by our traditional travel
agencies," Blackney said. "Almost everything from marketing and
support to programming and pricing requires a new approach."
At a recent technology conference, Blackney said Worldspan
should no longer be considered a "simple GDS company" but a
"GDS-plus enterprise, a travel technology resource that delivers
and distributes sophisticated technology to multiple channels."
One of the reasons for the shift in emphasis is that Worldspan
projects that traditional travel agencies "will represent about 55%
of the booking mix five years from now," Blackney said.
Worldspan, which has some 3,000 employees worldwide, is not
alone in its downsizing efforts.
Sabre recently revealed it will eliminate 350 to 490 positions
of its 7,000 positions before the end of the year.
Cendant, which terminated some 570 Galileo employees through the
third quarter in connection with its acquisition of the GDS
company, said it will lay off another 310 Galileo employees in the
fourth quarter.