Continental will cut jobs, raise some fees

When the summer travel season ends after Labor Day weekend, so will the jobs of nearly 1,700 Continental Airlines employees.
The Houston-based carrier is slashing its payroll to “match the demand environment and to maximize revenue and reduce costs,” Chairman and CEO Larry Kellner said in a Tuesday conference call after Continental reported a second-quarter net loss of $213 million.
The airline also announced it is hiking some baggage fees by $5 to boost revenue and is bumping the price of making reservations by phone instead of online.
Jay Pierce, chairman of the Continental chapter of the Air Line Pilots Association, said he anticipated Continental would cut some more jobs after announcing the elimination of 500 reservation agent positions and a voluntary leave of absence program for up to 700 flight attendants.
“But I did not expect it to go this deep; the 1,700 number is a surprise,” Pierce said, adding that the total reductions this spring and summer of nearly 3,000 jobs seem excessive.
“Continental is about to join the Star Alliance and a new joint venture, which are both growth-type moves,” Pierce said. “The sole purpose of joining the Star Alliance is to generate more revenues.”
Earlier this month, the U.S. Transportation Department gave final approval to Continental to operate immune from antitrust laws within the Star Alliance, which also includes United Airlines and eight other carriers. The department also approved a separate Continental joint venture with United, Air Canada and Lufthansa for trans-Atlantic service.
Pierce said Continental will need all its pilots, including those who were furloughed in the last round of cuts, to fly new routes created by the alliance.
He plans to fight the layoff plan and push for it to affect only pilots who want to retire early, voluntarily take a leave of absence or reduce their flying time.
Antitrust immunity
Kellner has touted Continental's switch to the Star Alliance from the SkyTeam alliance, which is dominated by the merged Delta Air Lines and Northwest Airlines, as a way for Continental to grow with less direct competition from its allies.
Antitrust immunity lets airlines cooperate in setting prices and schedules on routes covered by the immunity without being accused of prohibited collusion.
Chicago-based United and Continental considered a merger in 2008, before Continental announced it would go it alone. But Continental said it would join the Star Alliance with United and leave its partnership with Delta. The move to the Star Alliance is scheduled for October.
United on Tuesday reported second-quarter net income of $28 million.
Continental said its fuel expenses in the April-June quarter fell by 46 percent compared with a year ago, when oil prices were moving toward a record high near $150 a barrel, more than double the price now.
But revenue plummeted $918 million year-over-year to $3.1 billion.
The company blamed lower fares, the swine flu scare — which caused Continental to slash its extensive Mexico schedule last spring — and business travelers who are saving money by buying economy class tickets or reducing travel during the recession.
Kevin Mitchell, chairman of the Business Travel Coalition, predicted that it will take five years or more for business travel to regain its pre-recession pricing and usage levels. link....