Continental Airlines (CAL)

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Continental Airlines was founded over 60 years ago by Walter T. Varney and his partner Louis Mueller as Varney Speed Lines.

On July 15, 1934, Continental's first flight was flown by its precursor Varney Speed Lines on a 530-mile route from Pueblo, Colorado to El Paso, Texas with stops in Las Vegas, Santa Fe and Albuquerque, New Mexico. That same year, Varney ceded control to Mueller. In 1936, Mueller sold 40 percent of the new company to Robert F. Six, who led the company for more than 40 years. Six changed the company’s name to Continental Airlines in 1937.

In 1953, Continental signed a merger agreement with Pioneer Airlines that added 16 new cities in Texas and New Mexico to its growing route map. Continental's Pacific experience during the war led to the formation of Air Micronesia in 1968.

In 1982, the airline merged with Texas International led by Frank Lorenzo (retaining the Continental name), offering service to four continents (North and South America, Asia and Australia) with a fleet of 112 aircraft. In 1987, Continental became third largest U.S. airline with the consolidation of Frontier, People Express and New York Air.

In 2006, Continental Airlines was the sixth largest U.S. airline in terms of passenger enplanements.

Under its CEO Frank Lorenzo the airline spent much of the 1980s in turmoil. There were separate strikes by pilots and flight attendants, mergers that brought on debt, and the first of two Chapter 11 bankruptcy reorganizations. However, by the mid-1990s, Continental had emerged as a relative bright spot in a struggling industry.

From its emergence from its second bankruptcy in the early 1990s until 2001, Continental performed better than most network carriers. However, the red ink returned with a vengeance in the wake of the Sept. 11 2001 terrorist attacks. Continental launched a plan to cut $1.1 billion in costs in 2002, but still lost $462 million. In late 2004, the company targeted another $500 million in annual costs with a plan to cut pay and benefits and change work rules. By year’s end, the airline said it achieved all those savings and reported net income of $343 million. 

On March 30, 2005, Continental pilots approved a new 45-month contract designed to cut annual costs by an additional $213 million. That including freezing pilots’ defined benefit pension plans. As part of its agreement with the Air Line Pilots Association, Continental will not declare a cash dividend or repurchase its outstanding common stock for cash until it has contributed at least $500 million to the pilots' defined benefit pension plan starting March 31, 2005. Through February 23, 2007, the airline had made $294 million of contributions to that plan. The pilots’ contract becomes amenable in December 2008.

Continental continues to recruit new pilots and FLTops.com members can review their requirement and pilot hiring statistics in our “Pilot Hiring – Major Airlines” table.

Continental’s mainline fleet has changed dramatically during the past decade. Gone are the older, noisier, three-pilot aircraft. The airline has a young fleet of mostly narrow body aircraft. As of April 2007, nearly 72 percent of its fleet was composed of Boeing 737 aircraft. As of March 31, 2007, Continental had firm commitments for 86 new aircraft from Boeing (60 737 aircraft, one 777 aircraft and 25 787 aircraft), with an estimated aggregate cost of $5.0 billion including related spare engines. The airline is  scheduled to take delivery of those aircraft between 2008 and 2013.

Like Delta Air Lines, Continental has relied increasingly on international routes for profitable growth. It intends to grow its mainline capacity approximately 5% in 2007 and between 5% and 7% annually over the next several years, down from 8.9% in 2006. The slower growth rate reflects rising competition from other legacy carriers that have emerged, or will emerge this year, from bankruptcy. While many of those carriers were trimming their fleets in 2006, they are adding flights this year, making it harder to pass along rising fuel costs by raising fares. Continental has noted that competition is also spreading to its more lucrative international routes.

Continental has been widely recognized in recent years for being a well-run airline. Readers of OAG, a magazine for frequent flyers, recently recognized Continental for offering the best international business-class and being the best North American airline. It was also ranked as the most admired U.S. airline by Fortune magazine, above even Southwest. On Feb. 14, it paid out $111 million in profit sharing to its employees, marking the first such payment since 2000 and the largest of any U.S. carrier this year.