More than 5% of the staff at JetBlue’s Long Island City, New York headquarters (“LSC”) are out of a job following a major shake up of the organizational structure. Reports suggest that 79 positions were eliminated on Friday with half taking a severance package and half being terminated outright. Other reports suggest that additional open positions will be unfilled, furthering the impact of the cuts to near 200 total; the company has not confirmed these numbers. The company had approximately 1,200 workers in the LSC office previously of the more than 17,500 it employs.
The moves are part of what CEO Robin Hayes describes as “the need for quicker decision making, more role clarity, team empowerment, and better prioritization and resourcing of our most important projects.” Hayes sent a letter this afternoon (full copy below) to most back-office departments across the company describing the changes, their reasoning and the expected outcome. While agility drives the changes from one side cost-cutting drives it from the other.
The changes mark a “meaningful step toward our corporate structural cost goal” according to the company. Some $90 million in annual savings is targeted from the “corporate” operations by 2020. This will, undoubtedly, be a significant topic during the company’s quarterly earnings call with analysts slated for next Tuesday morning.
Hayes acknowledged the cost challenges in the memo as well, citing a commitment to the owners (i.e. Wall Street) to reduce the pace of cost growth. With fuel prices spiking and fares ticking higher passenger growth numbers are expected to slacken furthering the need to address back office costs now.
We made a promise to ourselves and Owners to stop growing costs faster than the airline to protect our future. It’s easier to do that from the position of financial strength that we are in today rather than when economic conditions are difficult. Through our recent opt-out program and by eliminating certain vacant roles, we were able to reduce the number of involuntary departures necessary from a cost perspective.
The organizational changes are arguably as significant as the job cuts in terms of transforming the operation. Some meetings will be limited or removed to free up time for performing higher value work, for example. Hayes charged each of the EVPs at the company with identifying additional work that can be cut to prioritize the more important tasks.
Hayes’s memo to employees can be read below.