CAL Wins Labor Concessions
Continental Brings Labor Aboard
By Ross Snel
TheStreet.com Staff Reporter
2/28/2005
With time about to run out, Continental Airlines (CAL:NYSE - commentary - research) reached tentative agreements on wage and benefit concessions with several of its unions.
The airline said Monday it negotiated new contracts with its pilots, flight attendants, mechanics and dispatchers, meeting a goal of securing concessions with its labor groups by the end of February. The nation's fifth-largest airline did not disclose details of the new contracts, saying it wanted to give the unions time to explain them to members.
Continental now expects the wage and benefit reductions for all employees to become effective at the end of March.
The airline expects lower wages will help it meet its goal of saving $500 million a year, along with previously announced cuts. Airport ticket, gate, ramp and cargo agent employees already agreed to a $99 million cut; management and clerical employees agreed to $48 million of concessions; reservation workers agreed to $22 million.
The airline's board also has agreed to cut its fees by 30% and will forgo its stock-option grant this year.
The airline has now concluded its negotiation process with all employees, except some of its international workers.
Continental was the last of the U.S. network airlines to seek companywide pay cuts in the wake of the Sept. 11, 2001, terrorist attacks.
Airlines' revenue remains under pressure from overcapacity, fierce price competition and high fuel costs.
Shares jumped in after-hours trading following the announcement and were up 44 cents, or 4.1%, to $11.15.