Continental to reduce flights out of Houston

June 12, 2008 5:15:01 PM PDT
Travelers in Cleveland and Houston will be hardest hit when Continental Airlines starts cutting flights later this year in its battle against record fuel costs.The carrier plans to shed about 11 percent of mainline capacity starting in September. Some of the cutbacks ? timed to occur during the normal seasonal travel drop-off at the end of summer ? mean flights will be eliminated altogether. In other cases, Continental will swap smaller planes for larger ones.

The carrier said Thursday that more than half of the seats it is taking out of the air will affect its hometown hub of Houston, where overall capacity will fall 7.9 percent.

Cleveland will feel an even bigger sting. Although that hub accounts for a fraction of Houston's traffic, the cuts go deeper, with 13.1 percent of capacity slated for elimination. Service to 24 cities will be affected by the change.

Left relatively unscathed is Continental's biggest hub at Newark Liberty International, its main gateway to Europe and premier base in the lucrative New York market. Overall capacity will decrease by just 3.2 percent, but the number of flights will be about the same as last fall.

The number of daily flights out of Houston will drop to about 560 from 640 during the fourth quarter last year, and to about 170 from 200 in Cleveland.

Nine smaller U.S. cities will lose Continental service altogether: Chattanooga, Tenn.; Green Bay, Wis.; Montgomery, Ala.; Oakland, Calif.; Palm Springs, Calif.; Reno, Nev.; Sarasota, Fla.; Tallahassee, Fla.; and Toledo, Ohio.

"The financial performance of the flights, coupled with the high cost of fuel, have made the losses too great to continue service in those markets," spokeswoman Julie King said.

Continental is one of a number of major airlines to call for sweeping service cutbacks in recent weeks. It first announced the changes last week, when it also said its two top executives will forgo pay for the rest of the year, but did not say which routes would be affected.

Although it is generally seen as one of the healthiest network carriers, Continental is struggling along with other airlines to cope with rapidly rising fuel costs and a slumping economy.

A number of industry observers say the current crisis is as bad, if not worse than, the sharp downturn that followed the Sept. 11 attacks, which preceded a series of airline bankruptcy filings.

Some analysts have called on U.S. carriers to shrink by about 20 percent. By reducing capacity, airlines can save on fuel and labor costs and increase demand ? pushing ticket prices higher as a result.

King did not rule out the possibility of additional cutbacks in the future.

"These actions are necessary to survive through these tough times and return to sustained profitability," she said.

About 3,000 job losses are expected as a result of the cutbacks. Continental expects most of the cuts will occur "through voluntary programs," which could include early retirement or temporary leaves of absence.

King said it was too early to say how many employees would voluntarily leave the company.

Workers who opt for the leave of absence would not be paid during the time off but would have access to medical and travel benefits for a certain period, and would be able to return to their jobs at the end of the leave. The length of the leave depends on job type and could last as long as 18 months.

Continental shares rose 38 cents, or 3.1 percent, to $12.48 in afternoon trading.

As of Sept. 3, 2008, the airline will be reducing frequencies in certain markets and will also discontinue service between its hubs shown below and the following cities or airports:

Houston George Bush Intercontinental: Cali, Colombia, Chattanooga, Tenn., Guayaquil, Ecuador, Hartford, Conn., Monclova, Mexico, Montgomery, Ala., Oakland, Calif., Palm Springs, Calif., Reno, Nevada, Sarasota, Fla., Tallahassee, Fla., and Washington ? Dulles.

Newark Liberty: Albuquerque, N.M., Cologne, Germany, Santiago, Dominican Republic, Sarasota, Fla., Salt Lake City, Utah, San Jose, Calif., and Tucson, Ariz.

Cleveland Hopkins: Austin, Texas, Birmingham, Ala., Charleston, S.C., Charleston, W. Va., Cincinnati, Ohio, Des Moines, Iowa, Detroit, Mich., Green Bay, Wis., Greensboro, N.C., Lexington, Ky., Little Rock, Ark., Memphis, Tenn., Nashville, Tenn., Norfolk, Va.; Oklahoma City, Okla., Omaha, Neb., Ottawa, Canada, San Antonio, Texas, San Diego, Calif., Sarasota, Fla., Savannah, Ga., Toledo, Ohio, Tulsa, Okla., Washington-Dulles.

Guam A.B. Won Pat: Denpasar, Bali, Indonesia.

As a result of the discontinued service, the following stations will close:

Denpasar, Bali, Indonesia
Oakland, Calif.
Cali, Colombia
Palm Springs, Calif.
Chattanooga, Tenn.
Reno, Nev.
Cologne, Germany
Santiago, Dominican Republic
Green Bay, Wis.
Sarasota, Fla.
Guayaquil, Ecuador
Tallahassee, Fla.
Monclova, Mexico
Toledo, Ohio
Montgomery, Ala.

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