AOL to make major job cuts in Europe and US

LONDON - Time Warner is to slash 5,000 jobs at AOL, around one-quarter of its workforce, over the next six months as part of its plans to restructure its internet business, with the bulk of the jobs going in Europe.

It is anticipated that 3,000 job losses will occur in Europe, where AOL intends to finalise a deal to sell off its European internet access business by the autumn. The UK arm of AOL was put up for sale in June with a £1bn price tag. AOL's business in France and Germany are also being sold.

The remaining 2,000 job cuts are expected to occur in the US across AOL's professional and administrative dial-up internet access services.

As reported on Brand Republic earlier in the week, Time Warner plans to offer previous paid-for services to its broadband users for free, abandoning subscriptions and instead focusing on online ad revenues.

Jon Miller, CEO at AOL, confirmed yesterday that the services of around a quarter of its 19,000-strong workforce would no longer be required by early 2007, as the company expects to incur restructuring charges of $350m (£185m) by the end of that year.

AOL will face a payout in the region of $250m-$350m over the next 12 months in the way of severance packages, facility reductions and miscellaneous cutback costs.

The company has shed 4,700 jobs since 2000, with the majority occurring in the US, but the creation of new jobs in India has kept the current workforce at around 19,000. However, it is understood that there will be no creation of jobs once the present round of cuts gets under way.

According to media reports, BSkyB, Carphone Warehouse, and Orange are interested in buying AOL's UK business, with bids for German operations likely to come from Versatel, and United Internet.

AOL said it plans to increase the amount of online space available to customers to five gigabytes for non-paying customers, with 50 gigabytes to be made available to subscribers.

However, customers who now choose to move to another ISP once the European deal is finalised will be able to retain their AOL email addresses.

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