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July 23, 2006
Continental Airlines has selected Chautauqua Airlines to operate 44 regional jets in a move that effectively reduces its regional fleet.

The planes to be operated by Chautauqua, a unit of Republic Airways Holdings, will partially replace 69 planes that regional airline partner ExpressJet chose to retain after Continental canceled a capacity-purchase agreement.

Continental said it has no plans to replace the other 25 planes that will be withdrawn from its regional fleet, which operates under the Continental Express brand.

In the face of surging jet fuel prices and persistent losses, airlines have been reducing fleets in order to cut costs. The reduced capacity in turn has given carriers more leeway to raise fares.

A Continental spokeswoman said the airline expects the switch to Chautauqua will save it more than USD$100 million annually.

Chautauqua, which is responsible for supplying the aircraft, will begin operating the 50-seat regional jets for Continental between January and July 2007. The planes will be operated for terms between two and five years.

The Republic unit will become Continental's second regional partner after ExpressJet, which will still operates 205 planes for Continental's regional service after the capacity reduction. Republic operates 166 regional jets, which fly for other carriers.

ExpressJet, a former Continental unit, is still deciding what to do with the 69 planes it's retaining from Continental, company spokeswoman Kristy Nicholas said.

It is considering options including starting a corporate shuttle or charter service, hooking up with another partner in the United States or overseas, or flying under its own brand, she said, and aims to reach a decision by the end of the year.