Majik
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- Nov 30, 2001
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Tue May 18 20:05:45 2004 EST
HOUSTON, May 18, 2004 /PRNewswire-FirstCall via COMTEX/ --
Continental Airlines,
Inc. (NYSE: CAL) today announced that it has raised fares worldwide, effective
immediately. The carrier also said it is considering additional furloughs, wage
and benefit concessions and reduced pension funding.
The fare increase is $10 USD each way for flights up to 1,000 miles, and $20 USD
each way for flights over 1,000 miles. The carrier expects that the fare
increase will only offset 15 - 20 percent of the economic impact of record fuel
prices, which recently hit their highest price since crude oil contracts began
trading on the New York Mercantile Exchange 21 years ago.
"We worked hard to generate $900 million of operating income improvements by
removing non-value added expense and generating additional revenue over the past
two years. We originally expected that this would let us break even in 2004,"
said Gordon Bethune, chairman and chief executive officer of Continental
Airlines. "While we may be faring better than our financially weaker
competitors, none of us can afford to operate with these high fuel costs. If we
are not successful in passing along these exorbitant fuel costs through higher
fares, we will ultimately be forced to seek significant wage and benefit
concessions and furloughs of our dedicated and hard working co- workers in order
to survive."
The price of crude oil closed at a record high of $41.55 per barrel on May 17,
2004, and continues to trade above $40 per barrel. In March 2003, when
Continental originally planned for breakeven results in 2004, it expected jet
fuel prices to average approximately $.68 per gallon for the year. At today's
prices of approximately $1.14 per gallon, Continental faces an additional $700
million in annual operating expenses. With fuel prices at these levels and the
current weak fare environment, the company expects to post a loss in the quarter
ending June 30 and a significant loss for 2004 and beyond.
Continental expects to end the second quarter with an unrestricted cash and
short term investment balance of between $1.5 and $1.6 billion. However,
continued record high fuel prices without an offsetting improvement in the
revenue environment will result in continued pressure on the company's cash
balances.
Unless Continental experiences a prompt and significant reduction in fuel prices
or a material improvement in the weak revenue environment, the company
anticipates that it will have no recourse but to furlough additional employees
and seek wage and benefit concessions from all its employee groups.
Continental is also reevaluating whether to fund its pension plan above the
minimum amount of $17 million required for 2004. In order to maintain
flexibility for its funding options, the company also expects to apply for
deficit reduction contribution relief under the recently enacted Pension Funding
Equity Act for pension contributions otherwise due in 2004 and 2005. Continental
had originally expected to contribute approximately $300 million to its pension
plan in 2004 to maintain the plan's funding at 90 percent of the company's
current liability.
Continental Airlines is the world's sixth-largest airline with more than 2,800
daily departures throughout the Americas, Europe and Asia. Continental serves
149 domestic and 117 international destinations -- more than any other airline
in the world -- and nearly 200 additional points are served via codeshare
partner airlines. With 41,000 mainline employees, the airline has hubs serving
New York, Houston, Cleveland and Guam, and carries approximately 51 million
passengers per year. For more company information, visit continental.com .
This press release may contain forward-looking statements that are not limited
to historical facts, but reflect the Company's current beliefs, expectations or
intentions regarding future events. All forward-looking statements involve risks
and uncertainties that could cause actual results to differ from those in the
forward-looking statements. For examples of such risks and uncertainties, please
see the risk factors set forth in the Company's 2003 10-K and its other
securities filings, which identify important matters such as terrorist attacks,
domestic and international economic conditions, the significant cost of aircraft
fuel, labor costs, competition and industry conditions including the demand for
air travel, airline pricing environment and industry capacity decisions,
regulatory matters and the seasonal nature of the airline business. We undertake
no obligation to publicly update or revise any forward-looking statements to
reflect events or circumstances that may arise after the date of this report.
SOURCE Continental Airlines, Inc.
CONTACT: Corporate Communications of Continental Airlines, Inc.,
+1-713-324-5080, or [email protected]
URL: http://www.continental.com
http://www.prnewswire.com
HOUSTON, May 18, 2004 /PRNewswire-FirstCall via COMTEX/ --
Continental Airlines,
Inc. (NYSE: CAL) today announced that it has raised fares worldwide, effective
immediately. The carrier also said it is considering additional furloughs, wage
and benefit concessions and reduced pension funding.
The fare increase is $10 USD each way for flights up to 1,000 miles, and $20 USD
each way for flights over 1,000 miles. The carrier expects that the fare
increase will only offset 15 - 20 percent of the economic impact of record fuel
prices, which recently hit their highest price since crude oil contracts began
trading on the New York Mercantile Exchange 21 years ago.
"We worked hard to generate $900 million of operating income improvements by
removing non-value added expense and generating additional revenue over the past
two years. We originally expected that this would let us break even in 2004,"
said Gordon Bethune, chairman and chief executive officer of Continental
Airlines. "While we may be faring better than our financially weaker
competitors, none of us can afford to operate with these high fuel costs. If we
are not successful in passing along these exorbitant fuel costs through higher
fares, we will ultimately be forced to seek significant wage and benefit
concessions and furloughs of our dedicated and hard working co- workers in order
to survive."
The price of crude oil closed at a record high of $41.55 per barrel on May 17,
2004, and continues to trade above $40 per barrel. In March 2003, when
Continental originally planned for breakeven results in 2004, it expected jet
fuel prices to average approximately $.68 per gallon for the year. At today's
prices of approximately $1.14 per gallon, Continental faces an additional $700
million in annual operating expenses. With fuel prices at these levels and the
current weak fare environment, the company expects to post a loss in the quarter
ending June 30 and a significant loss for 2004 and beyond.
Continental expects to end the second quarter with an unrestricted cash and
short term investment balance of between $1.5 and $1.6 billion. However,
continued record high fuel prices without an offsetting improvement in the
revenue environment will result in continued pressure on the company's cash
balances.
Unless Continental experiences a prompt and significant reduction in fuel prices
or a material improvement in the weak revenue environment, the company
anticipates that it will have no recourse but to furlough additional employees
and seek wage and benefit concessions from all its employee groups.
Continental is also reevaluating whether to fund its pension plan above the
minimum amount of $17 million required for 2004. In order to maintain
flexibility for its funding options, the company also expects to apply for
deficit reduction contribution relief under the recently enacted Pension Funding
Equity Act for pension contributions otherwise due in 2004 and 2005. Continental
had originally expected to contribute approximately $300 million to its pension
plan in 2004 to maintain the plan's funding at 90 percent of the company's
current liability.
Continental Airlines is the world's sixth-largest airline with more than 2,800
daily departures throughout the Americas, Europe and Asia. Continental serves
149 domestic and 117 international destinations -- more than any other airline
in the world -- and nearly 200 additional points are served via codeshare
partner airlines. With 41,000 mainline employees, the airline has hubs serving
New York, Houston, Cleveland and Guam, and carries approximately 51 million
passengers per year. For more company information, visit continental.com .
This press release may contain forward-looking statements that are not limited
to historical facts, but reflect the Company's current beliefs, expectations or
intentions regarding future events. All forward-looking statements involve risks
and uncertainties that could cause actual results to differ from those in the
forward-looking statements. For examples of such risks and uncertainties, please
see the risk factors set forth in the Company's 2003 10-K and its other
securities filings, which identify important matters such as terrorist attacks,
domestic and international economic conditions, the significant cost of aircraft
fuel, labor costs, competition and industry conditions including the demand for
air travel, airline pricing environment and industry capacity decisions,
regulatory matters and the seasonal nature of the airline business. We undertake
no obligation to publicly update or revise any forward-looking statements to
reflect events or circumstances that may arise after the date of this report.
SOURCE Continental Airlines, Inc.
CONTACT: Corporate Communications of Continental Airlines, Inc.,
+1-713-324-5080, or [email protected]
URL: http://www.continental.com
http://www.prnewswire.com
