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Verizon sees savings on labor pact but costs from Sandy

Traffic passes Verizon Communications Inc. headquarters in New York, February 14, 2005. REUTERS/Peter Morgan
Traffic passes Verizon Communications Inc. headquarters in New York, February 14, 2005. REUTERS/Peter Morgan

(Reuters) - Verizon Communications Inc said on Friday it expects annual labor savings of up to $500 million from new contracts beginning in 2013 but warned that its current quarter results would be hurt by mega-storm Sandy.

Verizon said it could see a "significant" impact from the storm, which caused outages of its wireline service and the service of Verizon Wireless, its mobile venture with Vodafone Group Plc .

Both companies have been working on restoring service since the storm hit the U.S. Northeast coast on Monday night.

Some Verizon's facilities were hard hit by flooding and power outages, and an executive said that it may be two weeks before some customers have service back.

The company, which recently reached new labor agreements covering about half of its landline workers, said it expects annual savings of $250 million to $500 million from reduced benefit costs, with savings increasing over the term of the contracts.

It said that it does not expect significant cost savings from the contracts in the fourth quarter of 2012.

It also expects to report a significant charge this quarter from a remeasurement of its pension and post-employment benefit assets and liabilities, and a pension annuitization transaction it announced on October 17.

Verizon shares were down 4 cents at $45.10 on New York Stock Exchange on Friday afternoon.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Sreejiraj Eluvangal and Steve Orlofsky)

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