Flight Attendants Stand Alone

Continental Airlines announced Thursday that its pilots, mechanics, dispatchers and simulator engineers ratified the new collective bargaining agreements that they had been working on. The flight attendants were the only group that did not ratify their agreement.

"I recognize that these pay and benefit reductions are painful, and I appreciate that our pilots, mechanics, dispatchers and simulator engineers made the decision to support their co-workers and our airline," Continental Chairman and Chief Executive Officer Larry Kellner said in a news release. "While I am disappointed that the flight attendants failed to ratify their agreement, I believe they recognize our need for cost reductions and want to support our co-workers, but were influenced by other factors."

The company will proceed with previously announced pay and benefit reductions for airport, cargo, reservations, Chelsea food services, management and clerical employees. The airline's officers and board of directors implemented their own reductions at the end of February.

Continental expects to save about $418 million annually with the implementation of these programs. The company claims that current levels of pay and benefits for flight attendants are not sustainable, and plans to reengage in negotiations with the flight attendants. The airline claims that the longer the process takes, the deeper the reductions will have to be.

With most of the agreements ratified, Continental will proceed with delivery of the aircraft under its previously announced Boeing aircraft order. The company will lease eight Boeing 757-300 aircraft this summer and accelerate delivery of six Boeing 737-800 aircraft into 2006. The airline will acquire ten Boeing 787 aircraft beginning in 2009.

Continental has issued to all domestic employees, except flight attendants, stock options for approximately 8.7 million shares of Continental's common stock as a result of the ratifications. These options amount to about 13 percent of the currently outstanding shares of common stock of Continental and have an exercise price of $11.89 per share. The company's previously announced enhanced profit-sharing program also became effective for all employees participating in the pay and benefit reductions.

FMI: www.continental.com