Will Ground 67 Older 737s; 3000 Positions To Be Eliminated
In a release to the airline's more than 45,000 employees
Thursday, Continental Airlines CEO Larry Kellner and president Jeff
Smisek announced the carrier plans to eliminated 3,000 jobs in the
coming months, and will ground 67 aircraft from its mainline
"We've always said that you deserve open, honest and direct
communication," the letter states. "The airline industry is in a
crisis. Its business model doesn't work with the current price of
fuel and the existing level of capacity in the marketplace. We need
to make changes in response."
Kellner and Smisek said despite several recent fare increases,
those hikes still have not been sufficient to cover rising fuel
costs... especially as normal attrition becomes a factor. "As fares
increase, fewer customers will fly," the letter states. "As fewer
customers fly, we will need to reduce our capacity to match the
reduced demand. As we reduce our capacity, we will need fewer
employees to operate the airline."
Airline managers will meet with
employees over the next week, and Continental hopes most of the
layoffs will be accomplished through voluntary separation
agreements. The 3,000 jobs cut will include a number of management
positions, Kellner said; as a show of solidarity, both Kellner and
Smisek have declined their salaries throughout the rest of 2008, as
well as any annual incentive payments.
"Although these changes will be painful, we must adapt to the
reality of today's market to successfully navigate these difficult
times," the letter states. "We regret the loss of jobs caused by
this crisis, and we will do our best to minimize furloughs and
Continental will begin reducing capacity in September, at the
end of the peak summer travel season. The carrier aims for an 11
percent reduction in domestic mainline capacity in the fourth
quarter; Continental says it will provide details on specific
flights and destinations to be culled "by the end of next
Following a plan similar to that unveiled by United Airlines
earlier this week, capacity cuts at the Houston-based airline will
be accomplished through the accelerated retirement of its Boeing
737-300 and 737-500 fleets. Continental will retire an additional
67 Boeing 737-300 and 737-500 aircraft, with 37 of these additional
retirements occurring in 2008 and 30 in 2009.
The airline added it will continue to take delivery of 34 new
737-800s and 737-900ERs from Boeing, a measure Continental expects
will improve its overall fuel efficiency "measurably" over the
less-efficient models those planes will replace.
By the end of the second quarter of 2008, Continental will
operate 375 mainline aircraft. Taking into account both the
accelerated retirements and scheduled deliveries, Continental's
fleet count will shrink to 356 aircraft in September 2008 and 344
aircraft at the end of 2009.