Continental defers Boeing jet deliveries = = = = Monday July 14, 12:49 PM EDT = (Adds Continental CEO interview, updates stock activity, background, adds= byline) By Kathy Fieweger CHICAGO, July 14 (Reuters) - Continental Airlines Inc. (CAL) said on Mond= ay it is pushing back delivery of 36 narrow-body planes from Boeing Co. (= BA) as an unprecedented industry slump persists, bringing more bad news f= or the world's largest plane maker. Houston-based Continental said it would defer the delivery of 36 Boeing 7= 37 airplanes scheduled from 2005 to 2007, representing most of a $2.5 bil= lion order from Boeing. In a potentially life-threatening move for another one of Boeing's produc= t lines, Continental said it was in discussions to defer delivery of slig= htly larger 757s. "We've given it all the room we can to see a glimmer of hope for an econo= mic recovery," Continental Chief Executive Gordon Bethune said in an inte= rview. "It's not a prudent thing to continue to commit to add more capaci= ty because we're not making any money with the airplanes we have." = People are flying, but fares are cheap. The No. 5 U.S. airline and its pe= ers have worked to slash billions of dollars in annual costs as sizable f= inancial losses continue. The 737 is the best-selling plane in Boeing's line, aimed at short- to me= dium-haul flights. Continental's shares were up nearly 3 percent in midday New York Stock Ex= change trade, while Boeing fell about 1 percent as analysts continued to = question whether the company would be able to meet its 2003 delivery targ= et of about 280 planes. BOEING SAYS TARGET ON TRACK Boeing is sticking by its targets because the deliveries on the 737s now = being deferred weren't scheduled to begin until 2005, said spokeswoman Sa= ndy Angers. Continental said it still plans to accept delivery of four 737-800 aircra= ft in the fourth quarter and another 12 of them next year. It would use t= hose airplanes to replace older models. But beyond that time, some industry experts said other big airlines, stil= l amassing large losses, are likely to follow Continental in deferring de= liveries, while low-cost carriers like JetBlue Airways Corp. (JBLU) keep = ordering planes. "Major airlines continue to retreat; discounters continue to grow," said = J.P. Morgan analyst Jamie Baker. "Continental's deferrals are likely welc= ome news at JetBlue, which will be introducing its second fleet type just= as Continental suspends its 737 deliveries." In what could be a signal of things to come for the 757 jet, Continental = said it is in talks with Boeing on delivery terms of all 11 of the 757-30= 0s it has on order. Delaying delivery of those plans could drive down production of the 757 t= o well below one a month, making it difficult to build the model profitab= ly, analysts said. Boeing has just seven 757 orders beyond the 11 placed by Continental and = has not booked a new order for the model since December 2001, the manufac= turer's Web site showed. In recent months, Boeing has been largely left out of some high-profile a= ircraft orders, including two from Dubai-based Emirates and Qatar Airways= =2E Its defense business has also been under a cloud as the federal gover= nment investigates alleged use of a competitor's proprietary documents in= bidding for big rocket launch contracts. Continental said it would retire 19 MD-80s and 737-300s during the fourth= quarter and next year. It plans to retire the rest of its MD-80s in Janu= ary 2005 and expects its fleet to shrink to 354 aircraft by June 2004 and= 348 by June 2005. Continental shares, whose price had nearly tripled in the second quarter,= were up 43 cents at $15.57. Boeing was down 44 cents at $34.74. = =A92003 Reuters Limited. = Roger EWROPS