UPDATE: UP to cut up to 750 jobs

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OMAHA, Neb. — Union Pacific will lay off 500 management employees and 250 administrative workers as it moves to further cut costs, the railroad said in a regulatory filing on Wednesday.

The layoffs — which amount to 8 percent of UP’s management and administrative employees — will save the railroad $110 million annually, according to the filing. Most of the management layoffs will occur in the railroad’s headquarters.

UP is aiming to achieve between $350 million and $400 million in cost and productivity savings this year, Chief Financial Officer Rob Knight said during the railroad’s second quarter earnings call. In the first six months of the year, UP had reached $200 million in savings.

UP reported strong financial results last month, including second-quarter records for earnings per share and operating ratio (61.8 percent). The railroad aims to reach an operating ratio of 60 or below by the end of 2019 and eventually reach an operating ratio of 55 percent.

UP did not immediately respond to a request for comment. But the Associated Press reported that CEO Lance Fritz told employees that the railroad could not rely on attrition and still meet its financial targets.

“Union Pacific for some time has leveraged employee attrition and technology to reduce general and administrative costs,” Fritz said. “Unfortunately, attrition alone will not keep pace with our need and ability to reduce these costs.”

UP said it would take a $90-million pretax charge in the third quarter related to the layoffs, which should be completed by Sept. 30. Included in that amount is $15 million in one-time severance costs.

The railroad employed 44,392 workers in July, according to figures filed with the Surface Transportation Board.

See the AP story online.

UPDATE: Information from the Surface Transportation Board, and the Securities and Exchange Commission. New lead sentence and write-through. Aug. 16, 2017, 11:48 a.m. Central time.

NEWSWIRETrains News Wire

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