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Continental Airlines Will Cut 1,700 Jobs ..
By: Denise Chow, Writer New York Daily News
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July 21, 2009
Don’t expect any unbeatable deals on travel from Continental Airlines! In fact, you can expect just the opposite.
Continental Airlines Inc. announced today that it will cut 1,700 jobs and raise fees for checked luggage, as a result of significant second-quarter losses and falling air traffic, according to The Associated Press.
The airline announced today that it suffered a $213 million loss in the quarter ended June 30, which equaled a loss of $1.72 per share. In comparison, this time last year the company posted a $5 million loss, or roughly 5 cents per share.
Revenue declined sharply, by 22.7%, totaling $3.13 billion. This figure was close to the projected $3.14 billion predicted by analysts in a survey by Thomson Reuters.
Analysts also forecast a loss of $1.35 per share, excluding one-time charges.
The 1,700 layoffs announced by Continental will make up approximately 3.4% of the airline’s total workforce. These job losses are on top of already proposed plans to cut 500 reservation agent positions and put 700 flight attendants on leave.
In raising fees, Continental hopes to increase its revenue by $100 million per year. Part of this plan includes raising the fee for checked baggage by $5. This means that it will now cost $20 to check the first bag and $30 for a second for passengers who check their bags at the airport instead of online. These changes will be effective immediately for all flights on or after Aug. 19.
Continental has also imposed an added $5 fee for reservations booked over the phone, and the Houston-based airline has also said more revenue-raising measures are in the works.
Traditionally, airlines have cut capacity either by flying fewer flights, or by using smaller planes.
The airline also took a hit after the swine flu outbreak halted travel to Mexico for a time, resulting in $50 million in revenues lost.
In addition to fare hikes, Continental will also experience a change in leadership. CEO Kellner announced recently that he will be stepping down from his position at year-end. He will be replaced by current President Jeff Smisek.
According to The AP, Continental is also set to join the Star Alliance in October, a global network of airlines that includes United Airlines and Lufthansa. The Transportation Department recently granted Continental antitrust immunity that will allow the airline to work closely with its Alliance members to coordinate prices and schedules for international service.
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