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WORLD> America
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Continental Airlines to cut 3,000 jobs, capacity
(Agencies)
Updated: 2008-06-05 21:53 DALLAS - Continental Airlines said Thursday it is cutting 3,000 jobs and reducing capacity by 11 percent, citing record fuel costs that have pushed the industry into its worst crisis since 9/11. It also said its two top executives will forgo pay for the rest of the year.
The job cuts represent about 6.5 percent of the company's work force of 45,000. Houston-based Continental said it will begin pulling back on flights in September, when departures on its mainline operations will be about 16 percent below the numbers of September 2007. For the year, capacity will fall 11 percent. The company also said Chairman and Chief Executive Lawrence Kellner and President Jeff Smisek will not take salaries or incentive pay for the rest of the year. Last year, Kellner got a salary of $712,500 and total compensation that the company valued at nearly $6 million, down 9.3 percent from the year before, according to an Associated Press analysis of a company filing with the Securities and Exchange Commission. However, about one-third of Kellner's compensation was in stock and option grants that are now worth far less than they were when granted in February 2007 because of the slump in the company's stock. Continental becomes the latest airline to make major cuts as the carriers try to cope with record high fuel prices, which have nearly doubled in the past year and pushed Continental to a loss of $80 million in the first quarter. Continental officials did not immediately respond to calls for more comment. In a statement, the company said it plans to offer details on flight and destination reductions and eliminations by the end of next week. Fewer flights will also mean fewer planes. By the end of the second quarter, Continental will operate 375 mainline aircraft and it plans to mothball 67 planes through 2009. The company said that several fare increases have not been enough to offset the rising cost of fuel. Continental estimates it will spend $2.3 billion more this year than last. "These actions are among many steps Continental is taking to respond to record-high fuel prices as the industry faces its worst crisis since 9/11," the company said in a statement. Many analysts consider Continental to be the healthiest of the six big network carriers, excluding low-fare Southwest Airlines Co. But that did not make it immune to cuts. "If they did not do it they would be irresponsible," said Ray Neidl, an analyst with Calyon Securities. "At current fuel prices, the old economics do not work. Ticket prices have to rise dramatically, and the only way that can be achieved is by sharply reducing capacity," he said. "The whole industry has to show this discipline or some big airline will have to go out of business." |
