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DFW International Airport Completes Reorganization
Airport Keeps Reduction In Force Small, Focuses On Future Business And Growth

DFW INTERNATIONAL AIRPORT, Texas (June 10, 2003) — DFW International Airport completed a reorganization today, aimed at rightsizing the organization while preparing for continued uncertain times in the airline industry.

The Airport announced the first major reduction in force in its history, eliminating 212 unfilled positions, 62 full-time positions, 20 temporary positions and restructuring several major departments to focus even more heavily on revenue management and business planning. The Airport was able to keep actual full time jobs reduced to 62 by proactively freezing unfilled positions over the past two years, allowing the Airport to eliminate these positions as part of this reorganization, as well as obtaining some reduction in force with the enhanced retirement program.

The reductions will have no impact on Airport safety, security or customer service. 

"Since September 11, 2001, we have told our employees they are our top priority, and they are," says Jeff Fegan, CEO of DFW. "We've taken every step since then to reduce costs and boost revenues without cutting jobs. Our strategy remains focused now on keeping job reductions to a minimum while moving forward with a tighter organization that will be more efficient and effective in a challenging and volatile environment."

In fact, the Airport made job reductions a final resort, providing almost $75 million in financial relief to the tenant airlines who operate at DFW through budget cuts and revenue offsets. Additionally, the Airport offered generous retirement packages to long-time employees in an effort to provide some financial incentive for those who were already eligible to retire. 

"We continue to work diligently to maintain our expenses in order to help ease the financial plight of our tenant airlines," says Fegan. "Of course, as we make these very difficult reductions in our workforce we will be as sensitive and accommodating to departing employees as we can."

DFW's workforce of 1,997 authorized positions was reduced by a total of 319, including 62 full-time job reductions and 212 unfilled positions eliminated. In addition 87 employees accepted an enhanced retirement package, and 45 of those jobs will not be filled. That reduces DFW's total workforce by 16 percent. Another 20 temporary positions that are not included in the full time workforce numbers were also eliminated. 

The 62 actual full time employees that are part of the reduction in force make up just 3.6 percent of DFW's current employment. 

In addition to the job reductions, employees will receive a smaller 2.5 percent merit increase in the next fiscal year, with the senior staff and executive team foregoing any increases in salary. The DFW Airport Board has asked the merit increase for all employees be reviewed in March 2004.

DFW did extensive research to assemble a separation package that is very competitive with the market. Employees whose positions are eliminated will receive a minimum of four weeks notification pay, to a maximum of four months, depending on length of service. Employees' medical and dental benefits will also be in effect during that period. After DFW's packages have expired, employees will be eligible to apply for unemployment benefits.

The Airport has also hired two outplacement firms to assist employees in their career transition and job preparation skills.

"What you will see over the coming weeks and months is an organization that is more tightly focused on enhancing revenues, reducing costs, seeking new lines of airport business, and more effectively and efficiently managing the 18,000 acres of assets that make up DFW Airport," says Kevin Cox, senior executive vice president of DFW.

“We take very seriously our role as the economic engine of North Texas, our role as a major employer, and our role as a stimulus for hundreds of thousands of related jobs and millions of dollars in related contracts,“ Cox adds, “We also recognize our responsibility to respond appropriately to the financial challenges facing us due to the economic situation of the aviation industry and will continue to look for ways to make our organization even more efficient and competitive." 

Located halfway between the cities of Dallas and Fort Worth, Texas, DFW International Airport is the world's third busiest, offering nearly 2,000 flights per day and serving 54 million passengers a year. DFW International Airport provides non-stop service to 132 domestic and 30 international destinations worldwide.

Editor's Notes: Attached to this press release is a question-and-answer document for your use that further details DFW's reorganization and future plans. This release, and past news releases issued by DFW International Airport, are available online at www.dfwairport.com in the “MediaSite” section.

For the latest news, real-time flight information, parking availability or further details regarding the many services provided at DFW International Airport, log on to www.dfwairport.com. To arrange interviews contact DFW Public Affairs at 972 574 NEWS (6397) or Ken Capps, APR, Vice President Public Affairs, kcapps@dfwairport.com 

1. What is the strategy behind DFW's reorganization?

The goals of DFW's new organization are straightforward: · improve business structure · enhance functional synergies · increase organizational efficiencies · reduce duplication and functional overlap · reduce costs · revitalize the organization

What you will see over the coming weeks and months is an organization that is more tightly focused on enhancing revenues, maintaining costs, seeking new lines of airport business, and more effectively and efficiently managing the 18,000 acres of assets that make up DFW Airport. 

It is estimated that businesses in North Texas employ more than 200,000 men and women whose jobs can be directly or indirectly linked to DFW.

The Airport also contributes more than $11 billion to the North Texas economy -- that’s more than one million dollars per hour.

There is no question DFW will survive, and indeed thrive, in the years ahead. This reorganization is designed to also position DFW to succeed in the future. 

2. How many employees will be included in the reduction of force? 

DFW currently has 1997 authorized positions. As part of the reorganization, 212 unfilled positions will be eliminated, 87 employees opted for the Airport's enhanced retirement package and 45 of those positions will not be filled. In addition, 62 full time positions were eliminated.

That total of 319 positions represents approximately 16 percent of the Airport's workforce.

Those 212 positions that were frozen for the past three years as part of budget cutting reduced the Airport's necessity to eliminate more jobs.

The 62 full time positions eliminated represent just 3.6% of DFW's current workforce.

Another 20 temporary positions that are not part of the overall workforce numbers are also eliminated.

3. How were employees selected? Did the Airport have a set goal for the reductions?

The Airport did not have a target for job reductions. The Airport has been reviewing and examining its overall business structure for the past six months, and each department was asked to take a close look at each of its functions to make sure they are as effective and efficient as possible. After extensive review, the executive management team approved each department’s plan. Positions were eliminated in line with the reorganization's goals of increasing efficiencies, reducing duplication, overlap and costs and enhancing business structure and synergies. 

4. DFW has survived 9/11, a soft economy, and a possible American Airlines bankruptcy, why reorganize now?

The Airport's reorganization is not driven by one event in the economy or the industry. Rather, it is DFW's proactive business approach to running the Airport as competitively as possible, keeping costs low for tenant airlines, while keeping safety, security and customer service levels very high for passengers.

Since 9/11, the Airport has tightened its belt and adjusted its budget repeatedly to keep costs low for airlines. In fact, the Airport has cut the financial obligations of tenant airlines by nearly $75M through budget cuts and revenue offsets over the past three fiscal years.

As a residual airport, DFW is a zero sum proposition: when all revenue and expenses are accounted for at the end of the fiscal year and if revenues exceed expenses, then the airlines get a credit on their cost for operating at DFW. If there is a shortfall where expenses exceed revenues, the airlines are responsible for picking up the financial shortfall. No one believes sending the airlines an additional bill is good business during these unprecedented times.

As a result, many have cited the Airport’s management and Board as among the best in the country. DFW is recognized for keeping a close eye on the budget while assuring a positive environment for its workforce and a strong economic environment for all that use DFW.

Reorganization is positive for DFW's business and future. Job reductions have been a final resort after exhausting all other avenues. 

5. Recently, DFW sold more than one billion in bonds for the new terminal and SkyLink people mover, and the sale was a monumental success. Does this reorganization signal otherwise?

The $2.6B Capital Development Program (CDP) is a five-year Airport improvement and construction project that is on schedule and on budget to open in early 2005. The CDP is viewed as one of the critical projects in the future and growth of DFW.

It is also important to understand airlines will not pick up most debt service due to capitalized interest until 2005. This provides some immediate financial relief to the airlines as they adjust to the current environment.

In fact, in very turbulent and uncertain times in the industry, DFW maintained its very favorable bond ratings and was credited by the bond rating agencies as being a solidly run operation that keeps cost low and maintains a favorable business environment for its airlines.

As a result of the Airport's solid ratings and a favorable bond market, DFW will see more than one billion dollars in interest savings over the life of the bonds, and save tenant airlines $36M every year for the next 35 years. In addition, it is estimated that 77,000 jobs will be created over the next 15 years due to current DFW's investment in its infrastructure.

In short, the changes today will only help position the Airport for success in the future as the new international terminal and SkyLink come on line.

6. Will DFW's Department of Public Safety be affected, and will there be an impact on airport security? Will other areas of airport safety or customer service also be affected?

Airport safety, security and customer service remains the top priorities for DFW. All of these priorities were factored into the reorganization process. DFW's passengers, tenants and employees can rest assured that the Airport will continue to excel in these critical areas. 

7. What types of separation packages and other services will be offered to employees? 

DFW did extensive research to assemble a generous package that is very competitive with market practices at or above the market average for similar public entities. Employees whose positions are eliminated will receive a minimum of four weeks notification pay, to a maximum of four months, depending on length of service. Employees' medical and dental benefits will also be in effect during that period, and they will receive DFW's longevity pay accrued to the date of their notification. After DFW's packages have expired, employees will be eligible to apply for unemployment benefits.

DFW has also retained outplacement services to assist employees in their career transition and job preparation skills.

While the reduction in force is regrettable, in view of job actions taken by others in our industry, the cuts are minor. However, we recognize this will be a difficult period for all concerned, and the Airport is committed to assuring the dignity and respect of those leaving the organization and providing them assistance in moving forward in their careers.

8. What about employees who were offered an enhanced retirement package? How many accepted? What if they did not accept and are part of the reorganization, what are their options?

To date, 87 have accepted the enhanced retirement offer. Those who did not accept the offer and are part of the reduction of force can either accept the separation package or the previously offered enhanced retirement package, whichever is the most beneficial to the employee. 

9. What are the dollar savings to DFW as a result of the retirements and reductions in force?

Estimated savings from those retiring: in FY03, ending September 30, 2002 are $1.07M and $3.1M in FY04. In addition, the Airport will see an estimated $5 million in savings from the reduction in force in FY 04.

10. Will DFW be seeking additional reductions in the coming months and next fiscal year?

DFW will continue to closely monitor all aspects of the airline and airport industries and revise its budgets and forecasts accordingly to respond to rapidly changing business conditions

The Airport is conservatively estimating a slight uptick in operations and passengers for FY04: Operations up 2.6% (to 796,000 take-offs and landings) and passengers up 3.8% (to 54.6M passengers).

Although DFW has no current intentions to seek additional reductions, DFW will continue to look at all aspects of its business in the coming year.

11. Does the reorganization require DFW Airport Board approval?

The reorganization does not require board approval. However, all members of the DFW Airport Board are aware of the plan and are supportive of the Airport's efforts to streamline operations and keep costs low for tenant airlines.

12. Will airport employees who are part of the reduction be eligible for rehire as the aviation industry picks up steam?

Former DFW employees will certainly have the opportunity to apply for any new positions within the organization if their skill set meets the job requirements.

13. Will these cuts be within management as well?

The organization has been streamlined, including management positions. In addition, DFW has opted to cut its annual merit raise from 5% to all eligible employees to 2.5%, with senior and executive staff (VPs and above) receiving no merit increase in FY04.

14. Does this reorganization mean no new jobs will be added in FY04?

No. As DFW's new organization continues to evolve with greater efficiency, some existing positions will be filled, and new jobs added in FY 04. Two examples of new jobs at DFW in the coming year: new bus drivers for new inter-terminal bussing to better serve passengers, and new financial analysts in (the Finance department) to better track and forecast revenues and expenses. DFW is also still actively pursuing the hiring of a new Chief Financial Officer.

15. Where does DFW go from here?

DFW's proactive business approach to running the world's third busiest airport has brought North Texas billions of dollars in economic development as we approach our 30th anniversary. The Airport will continue to seek out new business, maintain its competitive edge in the airport industry and create more jobs and opportunity for the community and its own workforce.

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