RZD Will Cut 53,700 Jobs in 2009

Russian Railways said Thursday that it expected a loss of 49.7 billion rubles ($1.48 billion) this year, compared with a profit of 13.4 billion rubles in 2008, and that it planned to shed 53,700 jobs. The state railway monopoly had a loss of 26.8 billion rubles in the first quarter as falling economic activity took a toll on its freight volumes. Russian Railways, or RZD, forecasts a loss of 14.2 billion rubles in the second quarter, a company spokeswoman told The Moscow Times. In February, RZD chief executive Vladimir Yakunin said the company would "finish this year, at best, with zero profit, and in the worst scenario we will get losses." In an interview with Bloomberg published earlier this week, Yakunin said Russia was "only at the beginning" of the economic crisis. The company reaffirmed that it hoped to limit its falling cargo volume to 19 percent this year, even after it transported 27 percent less cargo in the first quarter, year on year. The drop in cargo turnover has been decreasing, with a 15.8 percent fall in March compared with a year earlier. In February, it fell 26 percent and in January 32 percent. "For now, our forecast seems justified," senior vice president Fyodor Andreyev told reporters Thursday, Interfax reported. "We're being hit hardest by the situation in the metals and construction sectors." The Economic Development Ministry forecasts a 2.2 percent contraction of gross domestic product this year after a liquidity crisis hit the company's banks and property developers last fall and plummeting commodities prices made large swaths of Russia's metals and mining industry unprofitable. The company said many of the new job reductions would affect people retiring, joining the military or taking maternity leave. A hiring freeze was imposed in November, and the following month, RZD said it would lay off roughly 10,000 office workers out of its 1.3 million total staff. The company said Thursday that it employs about 1.2 million people, down from the 1.3 million figure listed on its web site. Unemployment has been a major concern for the government, which has retuned its anti-crisis measures to focus on social support. Speaking at the same news conference, Ilya Ryashchin, RZD's planning and budget chief, said 450,000 people had been switched to shorter work shifts and that 247,600 had been required to take unpaid vacations. The company said in November that it planned to issue 100 billion rubles worth of state-backed infrastructure bonds, and it has been cutting back on investment, including on new wagons and rail. Last month, Barclays loaned RZD $500 million for financing, and VTB Group increased its credit line to the company to 80 billion rubles in February. On Tuesday, Moody's Investors Service cut RZD's debt rating to match Russia's sovereign rating, saying it was "no longer appropriate" because of an "increasing correlation of the financial profiles of the Russian government" and state issuers.