Continental Airlines will cut 3,000 jobs, or 6.7 percent of its 45,000 employees; retire 67 mainline aircraft; and reduce mainline flights because of soaring fuel costs, making it the second major airline in as many days to announce cutbacks.
In a release Thursday, the Houston-based airline (NYSE: CAL) said it will offer voluntary programs to reduce the number of employees it will furlough or involuntarily lay off. The company said it will detail the programs next week.
The job cuts will occur after the peak summer season, except for management and clerical reductions, which will start sooner.
Company Chairman and CEO Larry Kellner and President Jeff Smisek decided not to take salaries or any incentive program payments for the rest of 2008 in light of the actions.
In a memo to employees, Kellner and Smisek said: "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."
Continental has three daily departures from Wichita's Mid-Continent Airport.
Starting in September, Continental will reduce the number of its flights, with fourth-quarter domestic mainline departures decreasing 16 percent from the same period last year. This will result in a fourth-quarter decrease of domestic mainline capacity by 11 percent compared with last year. The airline said it will give details of flight reductions or eliminations by the end of next week.
Chicago-based United Airlines (Nasdaq: UAUA) said Wednesday that it will ground 100 fuel-inefficient aircraft, reduce domestic mainline capacity by 17 percent to 18 percent and cut 1,400 to 1,600 salaried management employees and contractors, including 500 previously announced job cuts.
Continental said it will ground its least-efficient planes by speeding the retirement of its Boeing 737-300 and 737-500 fleets. The airline removed six older aircraft from services in the first six months of 2008 and will retire an additional 67 Boeing 737-300 and 737-500 aircraft, 37 of them in 2008 and 30 in 2009. Twenty-seven of the 67 aircraft will be removed in September, and all 737-300 aircraft will be retired Continental's fleet by the end of 2009.
Continental said it will continue to take delivery of new, fuel-efficient NextGen Boeing 737-800s and 737-900ERs, 16 of them in the second half of 2008 and 18 in 2009.
By the end of the second quarter, Continental will operate 375 mainline aircraft. That number will decrease to 356 in September and 344 at the end of 2009.
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