Continental To Lay Off 600 More Reservation Agents

Continental airlines announced today that it will lay off 600 more reservation agents this year. That's in addition to the 500 it laid off last year. Since January I have been documenting the fact that, at least anecdotally speaking, we're still seeing big companies laying people off. That's exactly the opposite of what we hoped we'd see in 2010 -- new hiring. Is this latest news more reason to worry?

The Wall Street Journal reports, after firing these 600 employees Continental will still have 2,000 reservation agents. For those who like percentages, the company is trimming back roughly 23% of its reservations staff. So it's a pretty deep cut.

The companies says it's doing this because so many people are taking advantage of online booking, instead of buying tickets over the phone. It's logical that there's truth in that. Of course, last year they eliminated 500 jobs, or 16%. So the question is: did the company vastly underestimate how many fewer people were booking over the phone last year when they made those cuts or has their phone-based reservations really dropped by a whopping 23% year-over-year (and 35% in two!)?

I think both those situations are pretty unlikely. In reality, the company may have felt the need for additional cost cutting in this tough economic environment and thought that a little extra hold time (~23%?) for those buying tickets by phone might be worth the cost savings of not employing those 600 people.

Under normal economic times, that probably wouldn't bother me so much. After all, these job losses appear to be more structural than cyclical. Yet, shouldn't all such cost cutting have already taken place over the past two years if we are to expect an employment recovery in 2010? That's clearly not what we're seeing here. In fact, Continental is cutting even more reservation agents in 2010 than it did in 2009.

And that's discouraging. At the very least, I would have hoped that the extremely high levels that unemployment reached towards the end of 2009 would have encompassed such cost savings already. But, instead, a growing number of large companies are indicating that the layoffs will continue into 2010. That implies that the correction may not yet be complete.