Continental announces downsizing; $1.2B IAH expansion unaffected

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Following the lead of other legacy carriers in the current fuel-cost environment, Continental Airlines today announced that it would be shrinking both its workforce and (mainly) domestic flight capacity:

Citing a “crisis” because of record fuel prices, Houston-based Continental Airlines said today it will cut 3,000 jobs and reduce 11 percent of its domestic flight capacity starting later this summer.

Most of the job reductions should come from voluntary departures but there will be layoffs, the company said. Some management positions also will be affected.

[snip]

Continental expects its number of domestic depatures [sic] in the fourth quarter of this year to be down 16 percent from the same period in 2007. Specific flights and cities that will be affected should be laid out by the end of next week, [Larry] Kellner and [Jeff] Smisek said.

Continental’s international schedule, which is more lucrative, will see a slight decrease in fourth-quarter capacity, but that could increase slightly in 2009.

The company’s top two leaders also noted they will stop taking a salary for the remainder of the year and will decline any bonuses.

Remember several weeks ago when we raised questions about the rush to spend tons of money revamping Terminal B? Mayor White says not to worry, the city is still committed to spending that money:

Houston Mayor Bill White said Kellner advised him of the announcement shortly before it was made and it should not affect the planned $1.2 billion renovation and expansion of Bush Intercontinental Airport’s Terminal B.

Is it possible that now isn’t the best time to be spending so much money on Terminal B, in light of other city priorities? Nobody else seems willing to suggest that to Mayor White or Richard Vacar, so we’ll toss it out again for consideration.

As usual, some of the best discussion on Continental’s move can be found on FlyerTalk.


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Kevin Whited is co-founder and publisher of blogHOUSTON. Follow him on twitter: @PubliusTX