State of the Airlines

Monday, February 28, 2005

NEWS: Continental Airlines Scores Labor Concessions

Unions representing pilots, flight attendants, mechanics and dispatchers at Continental Airlines have tentatively approved a sweeping round of concessions today. The wage and benefit concessions, if ratified by the union membership, would save Continental $500 million a year. The airline had already cut close to a billion in other costs but was one of the last majors to ask for concessions from its employees. The announcement comes on the very day that Continental said they would run out of money if concession were not granted...funny about that. As if to underscore the severity of the situation Continental had also recently reported that they lost $1.5 million a day in January.

Whatever the case, the unions are stepping up and Continental Airlines is getting a much needed cost reduction. It should help their immediate liquidity issues and put them in a better position to renegotiate some long term debts. There's this little matter of $642 million dollars in debt that will come due this year, something they would like to re-structure.