BP Amoco payoffs average pounds 80,000 per head

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The Independent Online
PAY-OFFS FOR BP Amoco employees axed since the $98bn (360bn) merger of the two oil companies was completed are averaging pounds 80,000 a head, making it one of the most generous redundancy schemes on record.

Since January 6,000 jobs have gone, and the head count will be reduced by a further 4,000 by the end of the year. The redundancy payments are equal to two years' salary, and resulted in BP Amoco taking total charges of $944m in the first quarter.

Total restructuring costs are forecast to reach $1.5bn. But Sir John Browne, the chief executive of BP Amoco, indicated yesterday that still more job cuts are in the pipeline.

Unveiling a 47 per cent decline in first-quarter profits to $677m, Sir John said that "further restructuring opportunities" were likely to emerge.

Details of the additional cost cuts, which analysts believe could raise savings from the BP Amoco merger from $2bn to nearer $3bn, will be outlined in July. Sir John also said that asset disposals were now expected to raise $2bn compared with the $1bn originally forecast.

On top of the cost savings from the Amoco merger, BP Amoco also expects its takeover of Atlantic Richfield to yield $1bn of savings.

The payoffs agreed so far have largely gone to former employees of Amoco, whose Houston head office has been cut back sharply. UK job losses have been limited.

In a bid to secure regulatory approval for the Atlantic Richfield takeover from the authorities in Alaska, BP Amoco has offered to raise investment in its Alaskan oilfields by 25 per cent to $5bn over the next five years, develop gas reserves in the area and recruit more Alaskan workers.

BP Amoco is due to issue a prospectus in the summer and seek shareholder approval for the takeover in early September, meaning that the deal should be completed before the end of the year.

Profits before special charges came in at $761m, representing a 41 per cent decline year-on-year. Although this was not as good a performance as Shell, which held the drop in first-quarter profits to 26 per cent, it was at the top end of analysts' expectations.

Sir John said BP Amoco would achieve a cash-neutral position this year even if oil prices fell back to $11 a barrel, and expressed optimism that the production cuts by Opec members would hold firm.