U.S.

UTC To Shed 5,000 Jobs

October 16, 2001 / 5:32 PM EDT / AP

United Technologies Corp., which includes jet engine builder Pratt & Whitney, said Tuesday it plans to cut some 5,000 jobs, or about 3.2 percent of its work force, because of the impact that the Sept. 11 terror attacks are having on the aerospace industry.

The conglomerate, which also includes Carrier air conditioners and Otis elevators, disclosed its plans even as it reported a rise in third-quarter profit to $565 million, or $1.12 per share, in line with the expectations of analysts surveyed by Thomson Financial/First Call.

Earnings in the same quarter last year were $496 million, or 98 cents per share.

Revenue rose 7 percent to $6.9 billion, up from $6.5 billion in the same quarter last year.

But the effects of the terrorist attacks on the airline industry have rippled through UTC, which announced Sept. 17 that its fourth-quarter earnings would be undercut by as much as $250 million.

That would translate into per-share earnings 30 cents lower than analysts' consensus estimates before the attacks on the World Trade Center and Pentagon.

UTC Chairman George David told analysts Tuesday that UTC expects the attacks to cause a temporary interruption in earnings growth.

"It took a a gigantic national tragedy to move a great company off a solid and steady track," David said.

The company currently employs about 154,000 people. UTC spokesman Paul Jackson said about half of the layoffs would come from the Pratt & Whitney division. Some 1,500 cuts are expected in the Hamilton Sundstrand division, another aerospace supplier.

The rest will be scattered throughout the company, except in helicopter builder Sikorsky. Jackson said the helicopter business has been much less affected by the economic slump that was already under way when the terrorists struck.

The geographic details have not been completed, but Jackson said about half of the total number of cuts would come in UTC's home base of Connecticut, mostly in aerospace facilities.

David said the company currently foresees full-year earnings per share of $3.80, including restructuring charges and the economic effects of the attacks.

Since the attacks, airlines have cut capacity by 20 percent, laid off more than 90,000 employees and affirmed the likelihood of multibillion-dollar losses well into 2002.

Pratt & Whitney opened contract talks with the Machinists union on Monday. The often-tense negotiations are especially strained this year because of the economic downturn.

Earlier this month, the union called for cuts in executive bonuses rather than layoffs.

For the first three quarters of this year, UTC earned $1.6 billion, or $3.34 per share, up about 15 percent from profits of $1.4 billion, or $2.71 per share, in the same period last year.

Revenues for the first three quarters of this year totaled $20.9 billion, up 6 percent from sales of $19.8 billion in the previous year's period.