CO Ex Capacity to Drop

Responding to the continuing industry fuel crisis, Continental Express capacity will drop by 4.1 percent in the fourth quarter and between 5.4 percent and 7.4 percent in 2009, according to a Continental bulletin to employees released yesterday. The move came as ExpressJet, which is having difficulty with its mainline partner and former owner, announced it is entering into negotiations for a new capcity purchase agreement with Continental. Related Story During the third quarter, Express partners will fly 1,425 departures, up 3.6 percent from the year-ago period. The company said that several successful fare increases have failed to cover rising fuel costs.
While Continental CEO Larry Kellner and President Jeff Smisek pledged to suspend their salaries for the rest of the year and decline any incentive payments for 2008, the airline is eliminating about 3,000 positions, including management positions, through voluntary and involuntary separations, with the majority expected to be through voluntary programs.
Continental will reduce its flights, with fourth quarter domestic mainline departures to be down 16 percent year-over-year. This will result in a reduction of domestic mainline capacity by 11 percent in the fourth quarter, compared to the same period last year.
It is accelerating the retirement of its Boeing 737-300 and 737-500 fleets in favor of taking deliveries on 16 NextGen Beoing 737-800s and 737-900ERs this year and 18 next year. In the first six months of 2008, Continental removed six older aircraft from service. Continental will retire an additional 67 Boeing 737-300 and 737-500 aircraft, with 37 of these additional retirements occurring in 2008 and 30 in 2009. Given the need for prompt capacity reductions in today's environment, the airline said, 27 of the 67 aircraft will be removed in September. By the end of 2009, all 737-300 aircraft will be retired from Continental's fleet.
By the end of the second quarter of 2008, Continental will operate 375 mainline aircraft. Taking into account both the accelerated retirements and scheduled deliveries, Continental's fleet count will shrink to 356 aircraft in September 2008 and 344 aircraft at the end of 2009.