Continental Identifies $200 Million in Savings

Continental Airlines today
announced that it has identified approximately $200 million of additional
annual pre-tax cost savings in order to further reduce the gap between
revenue and expenses. These initiatives are the carrier’s latest attempt
to reduce its losses, without asking for wage and benefit concessions from
its employee workgroups. Coupled with the carrier’s previously announced
revenue generation and cost savings initiatives, the total contribution of
these efforts is expected to result in approximately $1.1 billion in
pre-tax run-rate benefits. “These are difficult times for all of us,” said Gordon Bethune, Chairman
and Chief Executive Officer. “We continue to struggle to identify
additional ways to lower our costs as continued losses jeopardize our
survival. Our employees are focused on ensuring our long-term viability.
However, unless the revenue environment improves dramatically, we will
need to reduce wages and benefits to compensate for the continued losses.”

The cost savings items are expected to provide approximately $125 million
of pre-tax benefits in 2005 and, when fully implemented by 2007, a
run-rate annual pre-tax benefit of approximately $200 million.

These cost savings include a reduction of approximately 425 positions
through staff reductions, attrition and the elimination of unfilled
positions. A majority of these reductions involve management and clerical
positions, and, together with earlier reductions in force, will result in
a 24 percent reduction in the carrier’s management and clerical workforce
since September 11, 2001. By comparison, over the same time period, most
other work groups at Continental have been affected to a lesser extent
since September 11, 2001: flight operations personnel have been reduced 14
percent, inflight personnel have been reduced 15 percent, mechanics have
been reduced five percent, airport agents have been reduced 15 percent,
and reservation agents have been reduced 26 percent.

Most of the staff reductions announced today will occur immediately, and
do not include the 253 previously announced reservations position
reductions.

The company will provide a package of separation benefits for affected
employees. Additionally, the company will arrange job fairs and make other
efforts to help affected employees transition to new positions outside the
company.

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In addition to staff reductions, Continental is continuing to negotiate
savings from numerous suppliers, demonstrating that its best business
partners are willing to continue to work with the company and support it
in these difficult times. The company is also continuing to pursue other
savings initiatives, including a variety of fuel savings, facilities cost
reductions, reductions in distribution costs, and technology-enabled
productivity enhancements.
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