Continental Airlines Files 10-K With SEC, Explains Consequences of Not Achieving Ratification of the Tentative Agreements With Its Four Unions on March 30
HOUSTON, March 15 /PRNewswire-FirstCall/ -- Continental Airlines (NYSE: CAL) today issued the following bulletin to its employees to update them on the company filing its 2004 10-K with the Securities and Exchange Commission:
Continental today filed its annual financial report on Form 10-K as required by the Securities and Exchange Commission (SEC). The filing will likely generate media coverage because SEC regulations require that Continental provide detailed information on its future prospects, including what actions Continental will be forced to take if the tentative union agreements are not ratified on March 30.
These actions include:
* Increasing the size of needed pay and benefit reductions to
$800 million from the current $500 million
-- This 60-percent increase is because, without March 30
ratifications, Continental's deteriorating financial condition will
require significantly greater pay and benefit reductions from each
work group.
* Subleasing or selling 24 Boeing 737-500 aircraft
-- As part of its contingency planning, Continental has engaged
aircraft broker Focus Aviation to market these aircraft.
-- The 737-500 aircraft has relatively few seats compared to
Continental's other mainline aircraft and has become less
attractive to operate in a low-fare environment.
-- This mainline fleet reduction will result in frequency reductions
and aircraft gauge downsizing in various markets.
* Furloughing a significant number of employees
-- With the reduction of the 737-500 fleet, Continental will shrink,
resulting in the need for fewer employees.
-- The reduction in force will include a significant number of pilots,
flight attendants, mechanics and other positions related to the
drop in fleet size and block hours.
* Canceling the Boeing aircraft order
-- Cancel plans to lease eight 757-300 aircraft
-- Cancel accelerated delivery of six Boeing 737-800 aircraft
-- Cancel orders for 10 new Boeing 787 aircraft
-- Discuss with Boeing deferring all 40 remaining aircraft on order
that are scheduled for delivery beyond 2005
* Needing to post up to an additional $335 million in cash deposits,
further reducing cash available for operations and pension
contributions
-- This will occur if Continental fails to maintain its liquidity
covenants contained in its credit card processing agreement.
Roger
EWROPS