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Fri, Mar 18, 2005

Continental Expecting Significant Loss For Year

Ratification Of New Employee Agreements Crucial

Continental predicts a loss for the first quarter and a "significant" loss for the year according to its filing with the SEC. A bulletin warned employees the company will have to take several serious steps if the tentative agreements are not ratified by March 30th.

These actions include even larger cuts in pay and benefit reductions, up to a total of $800 million from the $500 million already discussed. Also, additional personnel would be furloughed as the airline would sublease or sell 24 Boeing 737-500s that have become less profitable in the current environment.

In addition, multiple aircraft orders that were cleared a few weeks ago by the board will have to be cancelled if the ratifications do not go through. As if that wasn't enough, the airline would have to cough up another $335 million in cash reserves, limiting operating and pension funds.

The SEC filing indicated that Continental has between $1.3 billion to $1.4 billion available in unrestricted cash and short-term investments, down from $1.46 billion the company had at the end of 2004. Bookings through March were strong, with a slight decrease in April bookings because of and early Easter this year.

A newly approved 777 non-stop flight to China from Newark is one bright spot in the company's future. "The Beijing route holds exceptional long-term promise since it connects the world's fastest growing economy with the financial center of the U.S.," said Continental Chairman and CEO Larry Kellner in a news release on Friday.



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