=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/07/14/f= inancial1622EDT0217.DTL ---------------------------------------------------------------------- Monday, July 14, 2003 (AP) Continental Airlines delays delivery of 36 planes PAM EASTON, Associated Press Writer (07-14) 13:22 PDT HOUSTON (AP) -- Continental Airlines said Monday it would delay by three years the delivery of 36 Boeing 737 airplanes because of continued weakness in the airline industry. Continental said it expects to begin accepting delivery of the planes in 2008 instead of 2005. "We are not going to invest in aircraft that we cannot profitably fly in the current marketplace," Continental chief executive Gordon Bethune said. The company, he said, cannot determine whether it needs additional airplanes "until we see some return on the capital we've invested in our existing fleet of new airplanes and are confident we have a competitive long-term cost structure." Houston-based Continental said it would take delivery of four 737 planes in the fourth quarter of 2003 and a dozen 737 planes in 2004. The deliveries will complete the airline's fleet replacement program, which began in 1995, and will result in the addition of 288 new Boeing aircraft to the airline's fleet. Boeing and Continental are continuing discussions about delivery of 11 7= 57 airplanes that the airline has on order. Boeing Commercial Airplanes spokeswoman Sandy Angers said delivery deferments and order conversions are "a natural part of the business." "Continental has publicly announced their decision, but that doesn't mean this is something new," she said. "We've been in constant communication with all of our customers. The large U.S. carriers have posted some staggering loses. We are committed to helping our customers get through this difficult time in the industry." Angers said Boeing has been in similar negotiations with other airlines, but would not say which ones. "It's just this whole state of the industry that is pretty precarious right now," she said. "That means we do the best we can in terms of building airplanes as efficiently as we can. ... We have to balance the supply of airplanes with market demand." Continental said it expects to retire four MD-80s and 737s during 2003 a= nd 15 in 2004. The airline said it would retire its remaining MD-80 aircraft in 2005. In June, Continental said it operated 358 aircraft compared to 374 in the same period a year ago and 377 two years ago. The airline, which once operated nine fleet types, will reduce that numb= er to three with the retirement of the MD-80. Its total fleet will decrease to 354 aircraft by June of next year and to 348 by June 2005. Continental said the reduction in the types of aircraft it flies will increase maintenance efficiency, flexibility and benefits from spare parts inventory. The reduction also will allow for more flexibility in crew scheduling and reduce training costs. "As our competitors continue to restructure and achieve long-term cost stability, we also need to obtain a long-term competitive cost structure that will permit us to earn a profit," said Continental's chief financial officer, Jeff Misner. The airline said the moves are part of its cost-cutting initiatives, announced earlier this year, to trim costs by $500 million in 2004. Angers said airlines pay a deposit for aircraft when the order is placed and pay the balance upon delivery. A Boeing 737 can range in price from $41 to $68.5 million. "A lot can happen between now and 2005," she said. Continental shares rose 26 cents to close at $15.40 on the New York Stock Exchange, where Boeing shares fell 60 cents to $34.58. On the Net: www.continental.com/ =20 ---------------------------------------------------------------------- Copyright 2003 AP