Emery to Drop Fleet, Fire Workers

CNF Inc. (CNF), parent company to Emery Worldwide airlines, announced Wednesday that it will discontinue use of the company’s grounded air fleet and combine its Emery Worldwide, Menlo Logistics and Vector SCM subsidiaries under the new name Menlo Worldwide.

CNF, listed No. 3 on the 2000-2001 Transport Topics 100 list, will take a $200 million fourth-quarter charge for discontinuing the operation of its fleet of aircraft. Emery’s air fleet has been grounded since Aug. 13 because of reports about poor maintenance.

"By altering the basic business model of Emery in North America, we are taking a major step in CNF's strategy of reducing assets in a way that will benefit both customers and investors," Gregory L. Quesnel, president and chief executive officer of CNF. "Emery freight division customers utilizing domestic and international services can rely on Emery to offer its extensive services as usual with no interruptions."

As part of the plan, Emery Worldwide will also fire 100 workers, about 42% of its air cargo workforce.

The company said the new combined subsidiary will have an annual revenue of more than $3 billion, employ 15,000 people worldwide and operate more than 200 facilities. Its headquarters will be in Redwood City, Calif. Vector SCM will maintain a headquarters in Novi, Mich.

"There is a clear trend among companies -- from middle market to giant multinationals -- to outsource the management of increasingly complex supply chains and logistics services in order to lower costs, reduce inventories, and increase speed, flexibility and efficiency," Quesnel said.

"Menlo Worldwide is ideally positioned to meet this growing demand by combining its air and ocean freight forwarding competencies, its extensive proprietary information systems and a full range of value added supply chain management services including transportation, warehouse, inventory management and customs clearance on a global scale,” he said.

The move will shift John H. Williford, formerly chief executive officer of Menlo Logistics, to Menlo Worldwide as president and chief executive officer. Emery’s CEO Chutta Ratnathicam will return to his former position as chief financial officer of CNF.

The company said that the the newly structured Emery will continue providing full network service and coverage for its North American overnight and deferred delivery services through a fleet of contract air carriers. Since Emery Worldwide had its air fleet grounded in August, it has been contracting out air cargo services.

(Click here for the full press release.)

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