The company said it also has instituted a global salary and hiring freeze, will sell four non-core businesses and reduce 2009 capital expenditures by 50 percent.

Alcoa's share price, which was at a 52-week high of $44.76 last May, has plummeted since demand for aluminum fell in the economic downturn.

In after-hours trading following the news, Alcoa's shares were down 5 percent at $11.50. The stock has traded in a 52-week range of $44.76 to $6.82 on the New York Stock Exchange and was the second-weakest performer in the Dow Jones Industrial Average during 2008.

Alcoa said targeted reductions, curtailments and plant closures and consolidations, mostly in the United States and Europe, will reduce its headcount by more than 13,500 employees or 13 percent of the company's worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated.

Smelting reductions of more than 135,000 tonnes per year will be implemented, resulting in reduction of total primary aluminum output by more than 750,000 tonnes, or 18 percent of annualized output.

Production of alumina, which is refined from bauxite and smelted into aluminum, also will be reduced accordingly to a total of 1.5 million tonnes in response to market conditions, Alcoa said. Curtailments will be fully implemented by the end of the first quarter 2009.

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said President and Chief Executive Officer Klaus Kleinfeld.

Alcoa said total charges for the fourth quarter due to restructuring, impairment and other special charges are expected to be between $900 million and $950 million after tax, or $1.13 to $1.19 per share, of which approximately 80 percent is non-cash.

Analysts currently expect Alcoa to report a fourth-quarter loss of 1 cent per share, according to Reuters Estimates.

The restructuring and divestiture program is expected to save approximately $450 million before taxes on an annualized basis, the company said.

The price of aluminum has slumped some 50 percent since peaking at $3,380 per tonne last July as the global economic downturn has hit demand for the metal which is used for aircraft and auto bodies and products such as kitchen foil and beverage cans. On Tuesday, aluminum was selling for around $1,600 per tonne.

(Reporting by Steve James; editing by Carol Bishopric)