Continental Airlines (NYSE: CAL and CAL.A) announced today that, as a result of the sale of its interest in Amadeus Global Travel Distribution S.A., it has increased the size of its stock repurchase program by $400 million, bringing the total current size of the program to $1.2 billion, and that its Board of Directors has also authorized it to use up to one-half of its 2000 and later adjusted net income, and all of the net proceeds of future sales of non-strategic assets, for additional stock repurchases.
Separately, the carrier announced that its expected mainline jet capacity growth in 2000 will decrease from 6 percent to 4.6 percent, as a result of early retirement of DC-10-30 aircraft.
Stock Repurchase Program Increase
In announcing the significant increase in the carrier’s stock repurchase program, Larry Kellner, executive vice president and chief financial officer, said, “We recently received over $400 million from the sale of our stake in Amadeus, and our operating cash flow remains strong.”
Continental Airlines has expended approximately $670 million repurchasing its stock since the program began in 1998, and anticipates completing the $1.2 billion stock repurchase program during 2000. No time limit has been placed on the duration of the repurchase program. The carrier currently has approximately 68.4 million shares on a diluted basis.
Continental’s repurchase program authorizes the repurchase of the company’s common stock and convertible securities. The repurchases may be effected from time to time in accordance with applicable securities laws, through solicited or unsolicited transactions in the market or in privately negotiated transactions. Subject to applicable securities laws, such repurchases will be at times and in amounts as the company deems appropriate.
2000 Expected Capacity Growth
Separately, Continental Airlines announced that it and its Continental Micronesia subsidiary were early retiring six DC-10-30 aircraft in 1999 and the first half of 2000, and that it would dispose of related excess inventory. The aircraft will be replaced by Boeing 757 and 737-800 aircraft on certain routes, and by Boeing 777 aircraft on other routes.
As a result of these aircraft retirements, the carrier expects that its growth in mainline jet capacity (available seat miles) for 2000 will be approximately 4.6 percent, a reduction from the approximately 6 percent capacity growth during 2000 previously anticipated by the company.
“The early retirement of six of our DC-10-30 aircraft permits us to replace these aircraft with modern, more fuel efficient aircraft and adjust downward our capacity growth next year, which should help us preserve yields,” said Gordon Bethune, chairman and chief executive officer of Continental Airlines.
The company anticipates that this fleet retirement, together with a decrease in the market value of Boeing 747 aircraft no longer operated by the company and other items, will result in a non-recurring charge of approximately $50 million after tax which will be recorded in the fourth quarter of 1999.
Continental Airlines is the fifth largest airline in the U.S., offering more than 2,100 departures daily to 129 domestic and 85 international destinations. Operating major hubs in Newark, Houston and Cleveland, Continental (http://www.continental.com) has extensive service throughout the Americas, and to Europe and Asia. Continental recently initiated a strategic global alliance with Northwest Airlines.