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Travelocity cutting jobs to rein in costs

The online travel agency is laying off 320 employees as part of a plan that also includes a hiring freeze and cutbacks in advertising.

Online travel agency Travelocity is paring down its work force by 18 percent, or 320 employees, as part of far-reaching cost-cutting measures, the company said Friday.

Fort Worth, Texas-based Travelocity said it laid off 35 workers Friday and will let go of about 285 customer-service employees when it shuts down its Sacramento, Calif., service center in 60 days. Before the layoffs, Travelocity employed about 1,700 workers.

"Our volume of ticket sales has been rising but it's too early to tell where overall bookings will stabilize," Travelocity spokesman Al Comeaux said. "That's why we think it?s a prudent cost-reduction measure at this time."

In addition to the layoffs, Travelocity has also implemented a hiring freeze and has cut back on advertising. Comeaux said the 5-year-old company, which is backed by ticket reservation conglomerate Sabre, will hire more customer service representatives in Forth Worth, Texas, in the coming weeks to make up for the Sacramento, Calif., closure.

The cutbacks at the largest Web travel agency come as the airline industry is trying to rebound from the sharp slowdown in airline travel brought on by the terrorist attacks in New York and Washington.

Airline-backed travel agencies Hotwire.com and Orbitz recently laid off 10 percent of their work forces.

Most of the major airlines have scaled back the number of flights and have made big staff cuts, some as high as 40 percent. Last month, Congress passed a $15 billion bailout package to help the airlines.

Although staff reductions have become commonplace in the airline industry, Web travel has been left relatively unscathed, with sales levels beginning to return to where they were before the terrorist attacks.

Priceline.com said Thursday that its revenue for the third quarter would come in at the high end of the $280 million to $300 million range analysts had predicted before the Sept. 11 attacks.

For the six months ended June 30, Travelocity's revenue totaled $155.2 million, up from $73.8 million. Net loss before accounting changes totaled $52.4 million, up from $22.6 million.