| Continental Airlines is one of the leading | | | | ways out of this situation is having a great |
| carriers in the United States. Its history | | | | number of international routes. As a matter |
| started in 1934 with Mr. Walter Varney | | | | of fact, Continental has more international |
| establishing the airlines called after him | | | | destinations than any other U.S. airline. |
| Varney Speed Lines at El Paso International | | | | |
| Airport. A couple of years later Mr. Robert | | | | Since September 11, 2001 when the company |
| Six took over the company and moved | | | | started experiencing substantial losses one |
| headquarters to Stapleton Airport in Denver, | | | | of the most crucial goals and objectives for |
| Colorado. Six ran the company for forty | | | | Continental became any possible cost cutter. |
| years. In its sixty eight year history the | | | | Of course, the easiest way to cut the |
| company went through two bankruptcies, in | | | | operation costs is to decrease the labor |
| 1983 and 1991. | | | | costs. Continental changed wages, work rules |
| | | | and benefits for all employees except the |
| On February 29, 1996, the Wall Street Journal | | | | flight attendants and certain employees of |
| reported that Continental gave its | | | | wholly-owned subsidiary Continental |
| shareholders the fifth best return of any | | | | Micronesia, Inc. ("CMI") who are subject to |
| public company during 1995 and ranked it | | | | collective bargaining agreements. Company |
| number one among eight other airlines with a | | | | began implementing changes in early April |
| return that was 213.9% above the peer | | | | 2005, which, when fully implemented, are |
| average. Continental's stock was trading near | | | | expected to result in approximately $418 |
| its 52-week high point. Continental was | | | | million of annual pay and benefits cost |
| growing, serving more and more cities all | | | | savings on a run-rate basis. |
| over the world. On July 17, 1996 the company | | | | |
| split its stock 2 for 1. A number of times | | | | Despite all the difficulties the company |
| Continental was named one of the "100 best | | | | continues to grow. It is very important that |
| companies to work for". Everything was going | | | | Continental management understands that even |
| just fine until September 11, 2001. Along | | | | substantial cuts in labor costs will not |
| with World Trade Center buildings the airline | | | | bring the company back to the long-term |
| business collapsed. When in 2000 Continental | | | | profitability. That is why Continental |
| generated $342 million of net income then in | | | | Airlines expand even more. By 2007 they plan |
| 2001 it was $95 million loss and in 2002 | | | | to open a first non-stop from the United |
| company experienced net loss of $451. It | | | | States route to Shanghai. The company also |
| seemed that the second quarter of the present | | | | expects the delivery of 34 Boeing aircrafts |
| year went well for the company; finally one | | | | by the end of 2006 and another 44 aircrafts |
| can see positive numbers on the financial | | | | from 2008 till 2011. The numbers clearly show |
| reports of the company ($100 million dollars | | | | that Continental Airlines expect on growing |
| of net income for the 2nd quarter). However, | | | | and apparently improving the financial |
| another great challenge for Continental, just | | | | figures. Most people probably think that it |
| as for any other airline, happened to be the | | | | is unethical to cut workers' wages and expand |
| sufficient increase in the prices for fuel. | | | | the company at the same time. However, if |
| Apart from high fuel costs that sufficiently | | | | Continental chose to reduce its business how |
| affect the profitability of the company | | | | many workers would lose their jobs in this |
| Continental also experiences high labor costs | | | | case? |
| for flight attendants, excessive taxation, | | | | |
| increased security costs and significant | | | | The expanding strategy is the good plan to |
| pension liabilities. Continental management | | | | come back to the profitability, only if the |
| views present U.S. domestic network carrier | | | | concept of "economies of scale" works in this |
| financial environment as poor and could | | | | situation. By expanding Continental |
| deteriorate further. Another threat | | | | consequently will have to increase their |
| Continental Airlines being the 5th largest | | | | labor force and along with cutting wages and |
| carrier in the U.S. and 6th in the world is | | | | benefits for employees it could be a tough |
| the growth of low-cost domestic carriers. | | | | task. |
| Although, one the Continental's strength and | | | | |