CO to cancel 7E7 order, maybe?

[General Lee]

Continental may cancel 7E7 order

BLOOMBERG NEWS

Continental Airlines said yesterday that it may lose hundreds of millions of dollars this year and may have to scrap an order for Boeing Co. 7E7s unless the carrier gets $500 million in wage and benefit cuts by the end of next month.

The airline made the comments in a Securities and Exchange Commission filing yesterday and didn't give a figure for the potential loss. Houston-based Continental said that without the cost reductions, its board might reject delivery of a Boeing airplane order of more than $1.3 billion that was announced Dec. 29.

Continental, the fifth-largest U.S. airline, has been in talks with its unions after saying Nov. 18 that it needed the pay and benefit reductions to survive after losses of $665 million since the end of 2000. The company posted net losses of $157 million in 2004's first three quarters and said in October that it expected a "significant loss" for last year and for 2005.

The airline last month said it would buy 10 Boeing 7E7s in its first aircraft purchase since the September 2001 terrorist attacks. Continental also said then that it would lease eight 757s from Boeing starting in July and take six Boeing 737 aircraft two years earlier than planned in 2006.

Continental spokeswoman Julie King said the possible order rejection applies to all the aircraft announced Dec. 29. Talks with the unions are continuing, she said.

Failure to get the cost cuts by the end of February "could ultimately result in the company having inadequate liquidity to meet its obligations," Continental said in its filing. The airline said it has about $984 million in debt and pension payments due this year, an increase of $500 million from 2004.



I see the carrot being dangled. What will they do? It is a tough choice, and I have a feeling I already know the answer.


Bye Bye--General Lee

 

[Indapool]

..and thus the squeezing of the labor groups begins...

Good luck to all! You may need it.

 

[Rule of thumb]

Why would you go ahead and announce a large Boeing order one week and then the next threaten to cancel.Mind games to help everybody make the right decision.

Boeing were desperate to get more orders for the 7e7 and would not be too pleased with the negative publicity an order cancellation would attract.
CAL will get the new aircraft don't you think ??

 

[michael707767]

Makes me wonder if CAL ever really wanted the 7E7, or if they were always planning on using it as a bargaining chip.

 

[Boeingman]

Makes me wonder if CAL ever really wanted the 7E7, or if they were always planning on using it as a bargaining chip.

I think their efforts to use this as a carrot has fallen flat on it's face. At least amongst the pilot group.

On an other note. A very credible source states we will hire off the street starting in August.

Good luck to all.

 

[P38JLightning]

so typical

Why wouldn't management try this? Its been sucessful everywhere else its been tried recently (except Comair, ASA and ExpresJet, who shoved it back in management's faces).

Here kitty, kitty, kitty...want some shiny new state of the art jets?

Gee I bet if they offered to fly them at slightly below Comair's 50 seat RJ rates they would get all the growth! That seems to be the magic trick for everything these days. Thanks CHQ and SKYW.

I don't know all the details of the CAL PWA but I've always been under the impression that it has been very management friendly and afforded them significantly more than industry average productivity for par pay (or less) for a very long time.

Then again, you can't blame them for trying. They always have their next brandy sniffing ivy league mercenary Air Transport Association at the country club (almost as posh as an ALPA BOD meeting from what I hear) to worry about impressing their peers.

 

[Heavy Set]

I think their efforts to use this as a carrot has fallen flat on it's face. At least amongst the pilot group.

On an other note. A very credible source states we will hire off the street starting in August.

Good luck to all.

Would COEX pilots have any advantage whatsoever over non-related pilots if hiring restarts?

 

[I.P. Freley]

Doesn't CO still have the "one of three new hires must be from ExpressJet" thing? Or did that go away when EJ was spun off?

 

[Boeingman]

I.P.

I believe (and I am sure I will be corrected by someone) that all the eligible XJET pilots will be on board by August. At that point there are no more people on the "Schindlers List" at XJET. However, I am a little fuzzy on that whole flow through program.

Heavy:

Unknown. I will say, and I may be completly wrong, I have never heard of a XJET pilot coming on board CAL other than the flow through. If any XJET'rs have any other info on this board it may be more accurate.

 

[I.P. Freley]

A friend of mine at XJet bemoaned some years ago that it was probably easier to get on at CO "off the street" than as a COEX pilot... Just because your time might be competitive but you can't go the traditional route to CO until your number is up.

Of course, that was pre-9/11. If there is still a flow-thru agreement, I guess those very senior EJ cap's will be amongst the first to go once all the flow-backs have gone home to roost.

 

[imadumbpilot]

I.P.

I believe (and I am sure I will be corrected by someone) that all the eligible XJET pilots will be on board by August. At that point there are no more people on the "Schindlers List" at XJET. However, I am a little fuzzy on that whole flow through program.

113 XJET pilots to come over via the "flow through" Then there are 150 - 200 XJET pilots that have already done preferential interviews, and been given welcome to Continental letters. It is anyones guess weather they will be given jobs before CAL hires off the street or along with off the street hires.

 

[CLE145CA]

You have never heard of an ExpressJet pilot getting hired by CAL other than the flow through because that was the only way to get hired by CAL as an Express pilot.

While the flow through was in effect, Express pilots who qualified could flow up to CAL under the 1-for-2 (i.e. one Express pilot for each two hired off the street). The only other way to get to CAL sooner was for the Express pilot to quit Express and then apply to work at CAL. No guarantee there that the pilot would be successful.

The final flow-backs will be gone by the end of spring. The unofficial plan is that "Schindler's List" of 113 will be the next hired sometime by the end of summer. (They actually have to be the first "new" pilots hired when CAL determines that it is time to hire after all the furloughs are back.) The remaining "preferential" pilots could start leaving by this fall if the rumored CAL hiring of pilots actually starts. However, there is no requirement that these "preferential" pilots be the next ones hired, a percentage of the next hired or even given a date to be hired. So as far as they go it's anyone's guess as to when they will really leave.

 

[SuperFLUF]

They won't cancel the 7E7. They may threaten it. They may "say" they canceled it or begin talks with Boeing to cancel it but they won't.

That airplane has a competitive advantage that will be needed. The first delivery isn't for over 4 years anyhow. If mgmt. doesn't secure the delivery positions they will be picked up by the competition and necessary future expansion will have to be delayed or employed with older, less efficient aircraft. Not a smart move.

CAL managment isn't that stupid. You don't scrap a business plan that may be the only way to survive just because the employees didn't rush to give without some take.

CAL pilots aren't foolish enought to fall for the bluff.

"I'll see your 7E7 and call................"