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Continental Is Cutting Departures, 3,000 Jobs

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By TED JACKOVICS

The Tampa Tribune

Published: June 6, 2008

TAMPA - Continental Airlines said Thursday it will cut 3,000 jobs and 16 percent of its domestic mainline departures by December, joining the growing list of major airlines to trim staff and aircraft to contend with high fuel costs.

The nation's fourth-largest carrier, which ranked sixth in passenger traffic at Tampa International Airport in April, said it will begin reducing seating capacity and staff in September when peak summer travel ends. Some management and clerical cuts will begin sooner.

Continental is expected to provide details next week on specific flights and destinations that will be trimmed.

Continental serves its hubs in Newark, N.J., Cleveland and Houston from Tampa International Airport with 13 daily round-trip flights. It serves other Florida destinations through its Continental Express affiliate.

"We are hopeful we won't see a major impact in Tampa ... because Continental serves its hub airports from here," said Louis Miller, director of Tampa International. "It will be important for them to feed international and other traffic into those hubs."

Continental reported 67,329 passenger departures from Tampa in April, 49 fewer than American Airlines.

Continental's two top officials, Chairman and Chief Executive Larry Kellner and President Jeff Smisek, sent bulletins to Continental's 45,000 employees Thursday outlining the situation, adding they would not comment further until meeting with employees over the next week.

"The airline industry is in a crisis," the executives' message said. "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's fuel prices are 75 percent higher than a year ago, which would cost the airline $2.3 billion more than a year ago, an increase that amounts to about $50,000 per employee.

The airline's reductions to 733 daily domestic mainline departures by December will result in an 11.4 percent decrease in the carrier's mainline domestic available seat miles.

Continental will retire 67 older Boeing 737 aircraft between now and December 2009 and add 34 more fuel-efficient Boeing 737s. That will give Continental a fleet of 344 Boeing 777s, 767s, 757s and 737s by December 2009.

"A large number of our flights are losing money and Continental needs to react to this changing marketplace," the executive said in the bulletin, adding that this is industry's the worst crisis since Sept.11.

That is the same picture that executives from American, Delta, Northwest, United Spirit and USA3000 have painted in recent weeks.

"This is a disaster for American, Continental, Delta, all the big guys," Jon Ash, president of consulting firm InterVistas-GA2 of Washington, told Bloomberg News. "Everyone's in the same boat saying 'There's no way this can continue.' They realize now that they have to cut as much as they can."

In 2007, the world's airlines reported a $5.6 billion profit after $40 billion in losses the six previous years. However, this year's fuel price increases are expected to put many U.S. carriers and others worldwide back in the red.

Reporter Ted Jackovics can be reached at (813) 259-7817 or tjackovics @tampatrib.com.

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