News Release
Continental Airlines Announces Fleet Restructuring
HOUSTON, August 11, 1998 -- Continental Airlines (NYSE: CAI.B and CAI.A) announced today that its Continental Micronesia subsidiary plans to retire its four 747 aircraft in April 1999 and its remaining thirteen 727 aircraft by December 2000. In the Pacific, the 747s will be replaced by DC-10-30s and the 727s will be replaced with a reduced number of 737s.
"The move further adjusts Pacific capacity to current demand and will allow for further fleet standardization by reducing the number of fleet types by two," said Gordon Bethune, chairman and chief executive officer of Continental Airlines.
Continental said that as a result of the aircraft retirements, planned 1999 capacity growth in its mainline jet operation will be reduced by three percentage points. Available seat miles are expected to grow 5.0 percent in 1999, excluding the new Houston and Newark to Tokyo routes, and 8.4 percent including the new Tokyo flying.
"For the last three years, we have grown profitably out of our underdeveloped hubs in Houston, Newark and Cleveland. We expect more of the same in 1999," said Bethune.
In addition, its Continental Express subsidiary announced today that, as part of its transition to regional jets, it will retire certain of its turboprop aircraft by December 2000, including its fleet of 32 EMB-120 aircraft, as regional jets are brought in to replace turboprops.
Continental Micronesia's fleet retirement decisions will result in a non- recurring charge of $41 million after tax ($65 million pre-tax) and Continental Express' fleet retirement decisions will result in a non-recurring charge of $36 million after tax ($57 million pre-tax). The combined charge will be $77 million after tax ($122 million pre-tax) and will be recorded in the third quarter of 1998.
Continental is the fifth largest airline in the U.S., offering more than 2,000 departures daily to 125 domestic and 67 international destinations. Operating major hubs in Newark, Houston and Cleveland, Continental is strategically positioned for transcontinental travel, and offers extensive service to Latin America and Europe via its Houston and Newark gateways. Continental has entered into a strategic global alliance with Northwest Airlines that will result in interconnection of the two airlines' route systems, code-sharing arrangements, frequent flier reciprocity, cooperation between Continental and Northwest's trans-Atlantic partner KLM, and other cooperative activities, subject to government approval.
The Continental OnePass frequent flyer program was named 1997 Program of the Year and Best Elite-Level Program, as well as having Best Overall Customer Service, Best Program Newsletter and Best Website in InsideFlyer's annual Freddie Awards. In addition, Continental was named "Airline of the Year" in 1997 by Air Transport World and was rated as having the best business class product among U.S. carriers by Conde Nast Traveler, Entrepreneur and Smart Money magazines.