Posted on: Tuesday, March 1, 2005

Continental, unions agree on $330M in concessions

By Mary Schlangenstein
Bloomberg News Service

HOUSTON — Continental Airlines Inc. reached agreements on about $330 million in pay and other reductions with unions for pilots, attendants, mechanics and dispatchers, helping the company achieve a $500 million annual cost-cut target.

The pacts will be implemented by the end of March if approved by union members, the Houston-based carrier said in a statement yesterday. It didn't provide details of the agreements. Continental since November already had arranged $169 million in concessions from nonunion employees and executives.

Continental, the fifth-largest U.S. airline, sought the reductions by yesterday after losses of $871 million since 2000. The concessions are in addition to $1.1 billion in previous cuts.

"I know a reduction in pay and benefits is painful," Chief Executive Officer Larry Kellner said in the statement. "However, these agreements, along with the reductions from the rest of our work groups, will put in place the tools we need to be successful and grow our company, securing the careers and retirement of all Continental employees."

As part of the agreements, Continental plans to issue union and nonunion employees options for 10 million shares, or about 15 percent of the common stock outstanding.

The Air Line Pilots Association said it's 45-month agreement saves Continental more than $200 million a year. In exchange, the carrier's 4,000 pilots won improved pensions and job security, stock options and a variable compensation plan, the union said.

The flight attendants union said its accord is also for 45 months but didn't give details. The mechanics union told members that it "achieved certain objectives that provide you with future security," without elaborating.