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3,000 Continental Jobs, Capacity To Be Cut

Record Fuel Costs Cited

POSTED: Thursday, June 5, 2008
UPDATED: 1:59 pm CDT June 5, 2008

Continental Airlines announced Thursday that it will cut 3,000 jobs and reduce capacity in the fourth quarter by 11 percent, citing record fuel costs and an industry in "crisis."

The airline said the majority of the job cuts will be made through voluntary programs. While many of the reductions are expected to take effect after the peak summer season, management and clerical cuts will begin sooner, the carrier said.

Also, Continental chief executive Larry Kellner and the company's president, Jeff Smisek, said they will not take a salary for the rest of this year and will decline bonuses.

"The airline industry is in a crisis," Kellner and Smisek said in a message to employees. "Its business model doesn't work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response."

Continental said it also will take 67 planes out of service. By the end of the second quarter, Continental will operate 375 mainline aircraft.

The Houston-based carrier said it expects to reduce domestic mainline capacity starting in September. It said it will provide details on specific flights subject to cuts by the end of next week.

"As fares increase, fewer customers will fly. As fewer customers fly, we will need to reduce our capacity to match the reduced demand. As we reduce our capacity, we will need fewer employees to operate the airline," the message said. "Although these changes will be painful, we must adapt to the reality of today's market to successfully navigate these difficult times."

The announcement comes a day after United Airlines said it plans to cut up to 1,000 more jobs, remove 100 of its fuel-guzzling airplanes from its fleet and slash domestic capacity as it tries to downsize and cope with spiraling fuel prices.

United said Wednesday it will cut an additional 900 to 1,100 salaried, management and contract employees by the end of the year, in addition to the 500 employees it has already planned to lay off.

It also said it will cut mainline domestic capacity by 17 to 18 percent in 2009 and reduce international capacity by 4 to 5 percent.

On Tuesday, Spirit Airlines said it has notified flight crew representatives of possible job reductions "that could be implemented if we continue to see unprecedented fuel price levels." However, the airline said it has made no capacity reduction decisions.

News reports this week had said the low-cost carrier could lay off or displace as many as 60 percent of its flight attendants and 45 percent of its pilots in two months.

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