Replying to Topic 'Continental Airlines to Become First Major U.S. Airline'
CO er veldig aggressive naa ....
Fra CO'e Q&A til sine ansatte:
AIRCRAFT ORDER Q AND A TO EMPL OF CONTINENTAL AIRLINES
Dec. 29, 2005
Why are we leasing additional aircraft at the same time we are asking for $500
million in annual wage and benefit reductions?
We need to act now to take market share from our weaker competitors. The 757s have become available from Boeing because of the current bankruptcy of ATA, a lowcost competitor. The 737s have become available because American Airlines recently deferred delivery of them due to their financial challenges. Even after lengthy negotiations with Boeing, we were able to keep this opportunity available to us only until Feb. 28, 2005, as Boeing will not hold these aircraft off the market indefinitely. If we don’t take these aircraft by then, someone else will — most likely a low-cost carrier. We need to obtain board approval by Feb. 28, 2005, and with your help in making the business case, we can obtain these aircraft. They will help us avoid losing domestic market share to low-cost carriers as we shift our domestic 757-200 aircraft to grow our profitable international network. We don’t want to be forced down the path of our failing competitors, who are shrinking and ceding market share and jobs to low-cost carriers. The Boeing agreement represents our belief in you and in the airline’s future. While it is important to act quickly to survive the current industry downturn, we must plan and prepare for the future. We need to grow (we are currently only the fifthlargest U.S. airline) and become stronger to compete in the future. Should consolidation occur, we need to be in a position of strength. Adding international growth helps return us to profitability sooner and cements our position in the marketplace.
In the last seven years, low-cost carriers have significantly increased their market share, while legacy carriers (excluding CO) have shrunk by an average of 10 percent. However, CO has increased its mainline capacity by 25 percent over the same period. Our fleet utilization is already stretched, so to continue this growth, we need additional aircraft. Prior to today’s announcement, our plans included only five replacement aircraft over the next three years, offering no prospect for any incremental growth. By flying these 757 and 737 aircraft on high-density domestic flights, we can free up existing domestic aircraft to expand internationally. In addition, the long-range 7E7 represents the platform for further international growth in years to come. Before we can justify and get approval from our board of directors for a growth strategy, we must first achieve a cost structure, with your help, which allows us to stop
bleeding cash.