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Continental Airlines

 
Hoover's Profile: Continental Airlines, Inc.
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(NYSE:CAL)
Company Financials
Income Statement
Balance Sheet
Cash Flow Statement

Contact Information
Continental Airlines, Inc.
1600 Smith St., Dept. HQSEO
Houston, TX 77002
TX Tel. 713-324-2950
Fax 713-324-2687

Type: Public
On the web: http://www.continental.com
 Employees: 45,610
Employee growth: 4.2%

If it's a continent, chances are it's accessible via Continental Airlines. The carrier serves about 120 markets in the US and 120 in other countries from hubs in Cleveland; Houston; Newark, New Jersey; and Guam. Its network includes destinations served by regional carriers operating as Continental Express and Continental Connection. Overall, Continental has about 370 mainline jets and 280 aircraft in its regional operations. The carrier supplements its offerings through code-sharing with fellow members of the SkyTeam alliance, which includes Air France, Alitalia, Delta, KLM, and Northwest Airlines, as well as with other airlines. (Code-sharing allows airlines to sell tickets on one another's flights.)

Key numbers for fiscal year ending December, 2008:
Sales: $15,241.0M
One year growth: 7.1%
Net income: ($585.0)M

Officers:
President, COO, and Director: Jeffery A. (Jeff) Smisek
Chairman and CEO: Lawrence W. (Larry) Kellner
EVP and CFO: Zane Rowe

Competitors:
AMR Corp.
Southwest Airlines
UAL

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Incorporated: 1934 as Varney Speed Lines
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation

Continental Airlines, Inc. is the fifth largest U.S. airline, based on 2001 revenue passenger miles (RPMs). The company carries passengers, cargo, and mail throughout the world. The company serves more than 200 airports worldwide, with the majority of them located in the United States, and has extensive service to Latin America. Domestic flight services are operated mainly through its business hubs in Cleveland, Houston, and Newark, from which the carrier has attained a market leading position in the New York area's transatlantic traffic.

Demoralized by bitter labor relations and a takeover by corporate raider Frank Lorenzo in the 1980s, Continental became a poster child for turnaround management in the 1990s. After almost a decade of financial losses and declining sales, Continental finally turned a profit in 1995. Regional unit Continental Express was spun off in a 2002 initial public offering (IPO) as ExpressJet Airlines, Inc.

The beginnings of Continental Airlines, Inc. can be traced back to 1934, when Walter Varney founded an airline company that he named Varney Speed Lines. Varney Speed Lines was the fourth airline created by its founder; the first had been purchased by Boeing's United Aircraft, and the other two had failed. Varney operated his newest business alone until 1937, at which time a man by the name of Robert Foreman Six used $90,000 to purchase a 40 percent interest in the company.

Six had a background as a pilot and flight school instructor, having dropped out of high school to work odd jobs and take flying lessons in the mid-1920s. In 1929, at the age of 22, Six earned his pilot's license and was running the Valley Flying Service in Stockton, California, which sold scenic air tours of the California countryside to area residents and tourists. When the effects of the Depression halted his flying service, Six worked at a Boeing Air Transport flight school in San Francisco, training airline pilots. He later left the United States and worked for the China National Aviation Company in Shanghai. Upon his return to the United States the following year, Six convinced his new father-in-law to lend him the money that was used to acquire his interest in Varney Speed Lines.

Six's $90,000 investment was used mainly to pay debts that Varney had accrued during the company's first three years. After the company's financial standing was restored, only a small portion of money remained to purchase new or upgraded equipment. Therefore, Six used his negotiation skills to convince the Lockheed Corporation to sell Varney Speed Lines three L-12 planes on credit. Soon thereafter, Six led the company in changing its name from Varney Speed Lines to Continental Airlines, contending that the young airline would never be successful with a name like "Varney." Such efforts soon earned Six a position as the company's president.

Following his appointment to the presidency of Continental Airlines, Six led the company through a period of rapid expansion. First on his agenda was the task of enlarging the airline's fleet of planes. At that time, the DC-3 was the most popular, practical, and durable plane on the market; unfortunately, it was also the most expensive, and Continental could not afford it. Instead, Six decided to purchase a number of L-14 Lodestars from Lockheed, and then hired 12 of the company's first stewardesses to staff the new planes. Meanwhile, the company also was working to expand its flight route network, which had previously consisted of a circuit that ran between Denver, Colorado, and El Paso, Texas. First to be added were services to Wichita, Kansas, and Tulsa, Oklahoma.

In the midst of his expansion efforts, Six left the company in August 1942 to enlist in the U.S. Army, leaving Continental in the hands of a lawyer named Terrell Drinkwater. The Japanese had attacked Pearl Harbor, and the country was mobilizing for World War II. Six was sworn in as a captain and stationed in New Caledonia. He was later transferred to the Caribbean, where he was able to use his flight knowledge to aid in maintaining a military air conduit between the United States and Brazil. Meanwhile, Continental had earned several government contracts during wartime and was left with $900,000 in cash and a tiny debt of only $60,000.

Following the war, Six returned to Continental and immediately helped the company acquire a number of DC-3s from military surplus. Although the planes represented an upgrade of the airline company's fleet, DC-3s were no longer the top-of-the-line aircraft that they had been in the 1940s. During the war years, new planes had been developed that were more efficient, many of which had four engines instead of two. These newer planes were designed to carry more passengers greater distances, but were too large for Continental's purposes. Continental was still a small airline when compared with the country's other major airlines, even though its route network had been expanded greatly by the addition of Kansas City and San Antonio, Texas, as flight destinations. But regardless of the company's flight expansion, Continental decided to purchase seven two-engine Convair 340s from Douglas and only two four-engine DC-6Bs, at a total price of $7.6 million. The expenditure represented Continental's gross income for the entire year of 1951, but also made clear Six's commitment to investing in the company's future.

Two years later, as the company continued its push to increase its route network and its flight capacity, Six also engineered the company's first major acquisition. Continental purchased Pioneer Airlines, including its rights to fly into Dallas/Ft. Worth and Austin, Texas. With the purchase came a Pioneer manager by the name of Harding Lawrence, whom Six soon placed in charge of Continental's finances.

Lawrence was an instrumental factor in the success of Continental's next expansion effort, which was the biggest and most ambitious in the company's history to that point in time. In 1955, the Civil Aeronautics Board granted Continental service rights between Denver and Los Angeles, Denver and Chicago, and Chicago and Los Angeles. Operation of the three new cross-country routes put Continental in direct competition with the other major airlines, such as American, United, and TWA--each of which possessed the financial resources to put Continental out of business in a price war.

Continental knew that it would have to purchase several new airplanes once again, including a fleet of the latest jetliners. Therefore, the company invested $60 million in new aircraft: DC-7s, Viscount 810s, and Boeing 707s. The challenge to Continental was then to use its limited jet fleet to cover all of its capacity needs. The problem spurred the creation of Lawrence's "progressive maintenance" program, which routinely called one of the five 707s out of service on a rotational basis. This plan reduced the actual maintenance time spent on the airplanes and allowed the company to identify and correct any problems before they became serious. Thanks to Lawrence's idea, the company was able to use its five 707s for an average of 15 hours a day, which was the longest period of use in the industry at that time. His plan was crucial to Continental's early survival of its entrance into the cross-country flight market.

In 1959, another important player appeared at Continental when Alexander Damm left his job at TWA and was brought aboard by Six. Damm's first contribution was to end Continental's practice of leasing items such as aircraft, trucks, and equipment from other companies. He noted that the country's two most profitable airlines, Delta and Northwest, each used the lowest percentage of leased equipment. He convinced Six to cancel as many leasing arrangements as possible and begin instead to focus the company's resources on purchasing more equipment of its own.

Entering the 1960s, Continental was enjoying a period of relatively good prosperity. In early 1961, a group of bankers in charge of the now financially troubled TWA approached Six with a lucrative offer to become the company's president. When he turned them down, making clear his loyalty to Continental, the group began making offers to merge the two companies. Six still refused, stating that a merger was not in the company's best interest at that time. Therefore, it was somewhat of a surprise later that year when Six and Ted Baker of National Airlines announced a merger of their two companies. The merger, however, was quickly canceled when Six found out that Baker also had secretly negotiated the sale of National to Maytag's Frontier Airlines.

The following year, Continental experienced the first plane crash in the company's 24-year history. The crash occurred on May 22, 1962, and was caused by a bomb that exploded aboard one of the company's 707s. There were no survivors. Continental had already planned on gradually replacing its 707 fleet with new Boeing 720s, a shorter and faster version of the 707. After the bombing, the company increased its original order from four new 720s to five.

In 1963, the Civil Aeronautics Board finally released Continental from its obligation to operate a number of unprofitable rural air services that fed passenger traffic into larger air terminals. Therefore, Continental was able to sell off its smaller aircraft and reassign the pilots and flight staff to its larger and more profitable routes. The following year, the company received a contract from the U.S. government to carry out military transportation services in Southeast Asia. A new subsidiary was formed, called Continental Air Services (CAS), and operated alongside Air America, the Central Intelligence Agency's covertly run airline. CAS, however, did not engage in any CIA activity.

Meanwhile, TWA's chairman, Howard Hughes, had fallen out of favor and was offering to sell his controlling interest in TWA to Continental and make Six the newly formed company's president. But Six knew that the deal would require the approval of TWA's new board of directors, who were happy with the company's performance under Charles Tillinghast at that time. Six once again declined the merger proposition, feeling that the management at TWA did not trust Hughes and that they would be unlikely to go along with any of his ideas.

Later that year, Continental suffered a blow to its management team, as Harding Lawrence left the company to accept a position as president of Braniff Airlines. Initially, no attempt was made to replace him. A year later, however, Six brought aboard Pierre Salinger, the late President Kennedy's press secretary, as a member of Continental's board of directors.

In the late 1960s, the Civil Aeronautics Board invited bids for a commercial air service to link the United States to the approximately 2,500 islands in the South Pacific that make up the American Trust Territory. Continental had wanted to operate a trans-Pacific route for years, and it saw this as the perfect opportunity to demonstrate its ability to do so. In November 1967, Continental was awarded routes to various islands in Micronesia and Northern Mariana. A subsidiary called Air Micronesia was created in partnership with Hawaii's Aloha Airlines and an investor group called United Micronesian. A fleet of 727s was obtained, airports along the route were modernized, and a number of hotels were constructed for tourists.

Unfortunately, Continental faced numerous obstacles as it entered the 1970s, and its financial standing began to suffer. The first blow came just after Richard Nixon took over the presidency of the United States. In one of his very last acts as President, Lyndon Johnson had awarded air traffic rights to Hawaii, Australia, and New Zealand to Continental. To accommodate its increased capacity demands, the company purchased a fleet of four 747s. Barely a month later, Nixon took office and canceled Continental's rights to the three destinations. Later, the routes were awarded again to the company, but then revoked again. Continental was forced to put the four new planes into storage in a hangar in New Mexico, at a cost of $13 million per year. The routes were finally awarded to the company a third time, but three of the 747s had been sold to Iran in 1975.

That year, Continental posted a loss of $9.7 million, marking its first annual loss since 1958 and only the second in the company's 41-year history. The high cost of fuel in the mid-1970s and a poor economic climate in the United States caused the airline industry as a whole to experience a steady decline, and Continental was no exception. The Airline Deregulation Act of 1978 only exacerbated Continental's problems. The Act opened up some of the company's most stable and profitable markets to competition from other airline companies. The final hit came as Continental was obligated to honor a number of different labor agreements that were almost too expensive to maintain, because of the agreements' built-in provisions for inflation.

In 1980, Six stepped down from the day-to-day operations of the company and appointed Alvin L. Feldman as his replacement. Feldman took control of a company that was in serious financial trouble. He immediately attempted to negotiate a merger between Continental and the struggling Los Angeles-based Western Airlines, believing that a combination of forces potentially could lift both airlines back into the black. The merger plans were cut short, however, by the announcement that Texas Air Corporation had decided to increase its stake in Continental from 4.24 percent to more than 50 percent.

Instead of a merger with Western Airlines, Continental's employees made moves to purchase the airline themselves, led by two company pilots named Paul Eckel and Chuck Cheeld. Employees approved the plan by a large margin, and nine different banks agreed to help finance the $185 million employee acquisition. But months later, just before the purchase took place, the banks withdrew their support and Texas Air was able to purchase a 50.84 percent majority stake in Continental. At the company's annual meeting in 1982, Robert Six retired from Continental at the age of 74, after expressing his confidence in Texas Air Chairman Frank Lorenzo to carry Continental back into profitability.

Texas Air completed the full acquisition of Continental Airlines in October 1982. Just a year later, Lorenzo filed Chapter 11 proceedings for the company. Labor contracts were invalidated by the courts, new work rules and pay scales were created, and just 56 hours later, Continental was back in the air. It was the first time that an airline had attempted to continue operations while in bankruptcy. Workers went on strike and formed picket lines. Management worried that travel agents would stop writing tickets for Continental and that passengers would be lost because of bad publicity surrounding the company's financial situation.

To counter the bad publicity, Continental offered a $49 fare for any nonstop flight that the airline ran. The idea was to bring passengers aboard and let them see that the airline was capable of functioning as usual, with the hope that most would then return again. The promotion was a success; not only did it earn the company return passengers, but labor opposition dissolved and employees elected to return to work. Questionable strike tactics led the pilots to repudiate their union. Soon 4,000 of the original 12,000 employees were rehired at reduced pay with an increased workload. In response, by 1985 Continental's labor costs had been reduced significantly. The following year, the company emerged from bankruptcy as a nonunion airline that sported low fares due to the industry's lowest labor costs.

Lorenzo then began acquiring numerous other airline companies facing bankruptcy, including Eastern Airlines, People Express Airlines, and Frontier Airlines. These new subsidiaries combined with Continental (which had since absorbed Texas International Airlines) to place Texas Air Corporation in more than $4.6 billion of debt. The number of passengers flying Continental had steadily increased since the strikes, however, and Continental was the only division to begin its debt repayment program. As of September 1986, Continental owed its creditors $925 million and was scheduled to break even in a decade.

In 1988, Lorenzo sold Eastern's "Air Shuttle" service to Donald Trump in an effort to keep the airline afloat. But a machinist's strike and an ever declining financial situation forced Eastern into bankruptcy the following year. The bankruptcy court then removed Eastern from Texas Air's control. Texas Air changed its name to Continental Airlines Holdings, Inc. to better reflect the amalgamation of businesses that it represented, and Lorenzo sold his stake in the company before resigning as chairman, CEO, and president. Hollis Harris, the former president of Delta Air Lines, was named as his replacement.

In late 1990, fuel prices were at a high point and passenger traffic was at a low point, due to effects of the Persian Gulf War. Continental once again filed for protection under Chapter 11 of the federal bankruptcy code, joining fellow subsidiary Eastern. But Eastern could not recover and was forced to liquidate in 1991. Harris left Continental Holdings in 1991 and was replaced by former CFO Robert Ferguson. That same year, Continental sold its Seattle-Tokyo route to American for $145 million, and the following year, it sold most of its LaGuardia assets and six slots at Washington, D.C.'s National Airport to USAir for $61 million. Continental used the earnings to attempt to wrestle its way out of bankruptcy for a second time.

In 1993, Continental emerged once again from bankruptcy and underwent an extensive reorganization. All of the Continental Airlines Holdings, Inc. subsidiaries and divisions were merged into Continental Airlines, and new stock was issued to replace any previously outstanding publicly held interests in the former parent company. Ferguson remained at the new company's helm and began orchestrating plans to restructure the airline's business focus as well.

Under Ferguson, Continental went ahead with the rapid expansion of its Continental Lite operation, which represented the company's own version of Southwest Airlines' short-haul, no-meal, low-fare flights. In less than a year, the program was expanded from the use of 19 aircraft for 173 daily flights serving 14 cities, to 114 aircraft for 1,000 daily flights among 43 cities. The additional aircraft were made available by eliminating the Denver hub and redeploying planes and equipment to other locations. Unfortunately, Continental Lite proved itself to be unprofitable and contributed greatly to the company's 1994 loss of $613 million.

Meanwhile, Gordon M. Bethune, a former Boeing Co. executive, had joined Continental as president and COO in early 1994. Continental Lite continued to lose money and Ferguson continued to push the program forward until he was ousted late that year. He remained as a director, but was replaced as CEO by Bethune, who immediately set in place a "Go Forward Plan" to turn the ailing company around.

First, Bethune renegotiated Continental's debt, arranged concessions from aircraft lessors, and got Boeing to agree to defer delivery of any new planes on order. He then completely cleaned house, sweeping out almost half of the company's high-ranking executives and replacing them with his own managers from businesses such as Northwest, American, and PepsiCo. He hired Gregory D. Brenneman, a former Bain & Co. consultant with no previous airline experience, as his new COO. He grounded 41 planes, slashed capacity, and cut almost 5,000 jobs in 1995. He abolished most of the company's loss-making Continental Lite services. Then, with a guided focus solely on improving the airline's service to its customers, Bethune saw results. The year 1995 not only saw the company turn a profit for the first time since 1986, but saw it turn a hefty profit of $224 million.

As the 1990s drew to a close, the company focused on the goal of luring more high-paying business travelers back to its flights. To do so, Bethune tied company bonuses to on-time performance, as a means of improving the company's dismal last place standing among major airlines for on-time performance in 1994. By early 1995, the airline had risen to a first place rank for the first time in the company's history. Bethune also brought back the frequent-flier program perks that had been cut during Ferguson's reign and spent $8 million to put food back onto some flights so that Continental would appeal to hurried business travelers.

Although Continental was clearly on the road to recovery as it neared the 21st century, it still faced many obstacles along its path to success. Namely, without a unique attribute to offer customers--aside from convenience in its three hub locations only--the airline was having a difficult time convincing passengers to stray from the other major airlines. Many analysts predicted that it would take a merger to give Continental the marketing capabilities and exposure necessary to pull itself to the top of the heap. But if the turnaround created by Bethune in 1995 and 1996 was any indication of the future, then the company seemed to possess the potential to regain the financial integrity that it had possessed during its early years.

Continental logged a record $319 million in earnings in 1996. "Fly to Win" initiatives were introduced to keep the company moving forward. The airline began standardizing the fleet, mostly around the Boeing 737 for the main line and Embraer EMB 145 regional jets for Continental Express. In 1997, Continental had $4.3 billion worth of orders (127) and options (90) for Boeing 737s.

Although salaries had risen an average of 25 percent since 1994, Continental employees were still paid less than their counterparts at other airlines. Morale and attention to detail were boosted by unique incentives, such as a payment of $65 to each employee every time Continental finished in the top three on-time carriers in the United States. The company reduced absenteeism by raffling off Ford Explorers twice a year to those with perfect attendance. On-time performance and motivated employees were key components in luring demanding (and lucrative) business travelers back to the airline. Part of what made Continental's renewed focus on quality so striking was the cutbacks other airlines were making at the same time.

With major markets in the United States nearly saturated, Continental aimed to increase feeder traffic from abroad through strategic alliances with the likes of Air France, Alitalia, and Virgin Atlantic. By the late 1990s, Continental had accords with 17 airlines. The carrier lobbied the governments of Argentina and Spain for a chance to invest in Aerolineas Argentinas, an opportunity it lost to rival American Airlines. Continental also had considerable operations of its own in Europe, Latin America, and the Pacific. Flying from Newark, Continental was flying more transatlantic flights than anyone in the New York area by 1999.

In 1998 Northwest Airlines acquired a 14 percent equity stake/54 percent voting interest in Continental from President and Chief Operating Officer David Bonderman. The move headed off an attempt by Delta Air Lines to acquire Continental. Northwest paid $519 million for the shares, an investment meant to launch a ten-year strategic alliance. An antitrust lawsuit from the Justice Department two years later pressured Northwest to sell its shares back to Continental. Continental sold its own minority stake in America West in 2000, and two years later ended a code-sharing agreement with the Phoenix-based airline.

Continental was the first among major U.S. airlines to cut its staff in the wake of the September 11 terrorist attacks. It let go of 12,000 employees (20 percent of the workforce). Most of these, however, would be called back to work within a year. Bethune soon began lobbying the government for an industrywide federal bailout.

A fourth quarter loss of $149 million left the airline $95 million in the red for the year, a relatively small setback compared with those of other major airlines. The carrier parked 61 of its jets and 23 turboprops as it waited for traffic to return to normal.

ExpressJet Holdings Inc., the parent company for the regional jet unit Continental Express, was spun off in April 2002 in an IPO that raised $480 million. The IPO had been delayed several months due to the September 11 attacks. Continental owned 53 percent of ExpressJet after the offering.

Continental was reported to have approached Delta Air Lines about a possible merger in 1996. This did not happen, but in August 2002, Continental, Delta, and Northwest proposed a massive ten-year code-share agreement. This would allow the airlines to sell tickets on each other's flights, and to share frequent flier programs and airport lounges. Together the three airlines had a 36 percent share of domestic traffic. The alliance was a response to a pending pairing of United and US Airways.

Principal Subsidiaries

Continental Micronesia, Inc.

Principal Competitors

AMR Corporation; Delta Air Lines Inc.; UAL Corporation.

Further Reading

Antosh, Nelson, "Airlines Will Part Company; Continental to End America West Link," Houston Chronicle, March 28, 2002, p. B1.

Armbruster, William, "Rebounding from 9/11: Continental Restores Services, Works to Increase Revenue Yield," JoC Week, February 18, 2002, p. 20.

Banks, Howard, "A Sixties Industry in a Nineties Economy," Forbes, May 9, 1994, p. 107.

Bethune, Gordon, and Scott Huler, "From Worst to First" (excerpt from From Worst to First: Behind the Scenes of Continental's Remarkable Comeback), Fortune, May 25, 1998, pp. 185+.

------, From Worst to First: Behind the Scenes of Continental's Remarkable Comeback, New York: Wiley, 1998.

Bond, David, "Recovery, Phase Two: Majors Change Strategy from Super-Sized Alliances to Drinks Over the Atlantic; Carriers Stop Waiting for the Market to Save Them," Aviation Week & Space Technology, September 2, 2002, p. 24.

Brenneman, Greg, "Right Away and All at Once: How We Saved Continental," Harvard Business Review, September/October 1998, pp. 162+.

Carey, Susan, Scott McCartney, and John Wilke, "Antitrust Suit Could Complicate Future Airline Mergers--Northwest's Controlling Stake in Continental Goes Under Scrutiny in Trial This Week," Wall Street Journal, October 23, 2000, p. B10.

Clark, Andrew, "Sex, Scotch and Speed: Gordon Bethune, Chairman and Chief Executive, Continental Airlines," Guardian (Manchester, U.K.), September 21, 2002, p. 34.

"Continental Cargo Continues Growth Streak," Journal of Commerce and Commercial, September 29, 1997, pp. S18+.

"ExpressJet IPO Proves a Flier," Airfinance Journal, May 2002, p. 19.

Flint, Perry, "Speed Racer: Gordon Bethune Has Continental Airlines on the Fast Track to Success," Air Transport World, April 1997, pp. 33+.

Flynn, Gillian, "A Flight Plan for Success," Workforce, July 1997, pp. 72+.

Goldberg, Laura, "A Woman Who Became a High Flier; Continental Executive Is Still a Pilot," Houston Chronicle, February 26, 2000, p. C1.

Hammonds, Keith H., "Continental's Turnaround Pilot," Fast Company, December 2001, p. 96.

Harris, Nicole, "Marketing Accord by Three Airlines Raises Questions," Wall Street Journal, August 26, 2002, p. A2.

Huey, John, "Outlaw Flyboy CEOs" (interview of Gordon Bethune and Herb Kelleher), Fortune, November 13, 2000, pp. 237+.

Josselson, Steven, "Houston, We Have a Problem," Airfinance Journal, February 2002, pp. 30-32.

Knez, Marc, and Duncan Simester, "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, October 2001, pp. 743-72.

Lipowicz, Alice, "High-Flying Continental Revs Up Newark Plan; While Rivals Trim Growth, Airline to Sharply Expand Foreign Flights," Crain's New York Business, March 20, 2000, p. 32.

Moore, Heidi, "ExpressJet Might Fly But Won't Float," Daily Deal, September 18, 2001.

Murphy, Michael, The Airline That Pride Almost Bought, New York: Watts, 1986.

Oehmke, Ted, "Plane Spoken," Texas Monthly, June 1998, pp. 58-65.

O'Reilly, Brian, "The Mechanic Who Fixed Continental: Believe It or Not, CEO Gordon Bethune, a Former Navy Mechanic, Has Made Continental the Best Airline in the U.S.," Fortune, December 20, 1989, pp. 176+.

Scippa, Ray, Point to Point, The Sixty Year History of Continental Airlines, Houston: Pioneer Publications, Inc., 1994.

Serling, Robert J., The Story of Robert Six and Continental Airlines, New York: Doubleday, 1974.

Stevens, Shannon, "Richard Metzner," Brandweek, October 20, 1997, pp. 98-101.

Thompson, Richard, "Do the Right Thing," Corporate Counsel, December 2001, pp. 54+.

Van der Kraats, Stephan A., "Gaining a Competitive Edge Through Airline Alliances," Competitiveness Review, Summer/Fall 2000, pp. 56+.

Whitaker, Richard, "We Win Together," Airline Business, July 1997, pp. 34+.

Zellner, Wendy, "Back to 'Coffee, Tea, or Milk?,'" Business Week, July 3, 1995, p. 52.

------, "The Right Place, the Right Time," Business Week, May 27, 1996, p. 74.

------, "Why Continental's CEO Fell to Earth," Business Week, November 7, 1994, p. 32.

— Laura E. Whiteley; Updated by Frederick C. Ingram


Wikipedia: Continental Airlines
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Not to be confused with Continental Airways, a low-cost airline in Russia.
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Continental Airlines, Inc.
Continental Airlines Logo.svg
IATA
CO		 ICAO
COA		 Callsign
CONTINENTAL
Founded 1931
(as Varney Speed Lines)[1]
Commenced operations July 15, 1934[1]
Hubs
Frequent flyer program OnePass
Member lounge Presidents Club
Alliance Star Alliance
Subsidiaries Continental Micronesia
Fleet size 343 (+87 orders) excl.subsidiaries
Destinations 265 excl.subsidiaries and code-shares
Company slogan Work Hard. Fly Right.
Parent company Publicly owned (NYSE: CAL)
Headquarters Houston, Texas, United States
Key people Lawrence W. Kellner
(Chairman and CEO) (through 2009)
Jeffery A. Smisek
(President and COO, CEO effective 2010)
Zane Rowe (CFO)
Website www.continental.com

Continental Airlines (IATA: CO, ICAO: COA, Callsign: CONTINENTAL) (NYSE: CAL) is a United States certificated air carrier. Based in Downtown Houston, Texas, it is the fourth-largest airline in the US based on revenue passenger miles. Since 1998, Continental's marketing slogan has been "Work Hard, Fly Right."

Continental operates flights to destinations throughout the U.S., Canada, Latin America, Europe, and the Asia-Pacific regions. Together with its subsidiaries it has more than 4,000 daily departures, serving 133 domestic and 132 international destinations and has 43,246 employees (as of June 2009). Principal operations are from its three hubs at Newark Liberty International Airport (in Newark, New Jersey), George Bush Intercontinental Airport (in Houston, Texas), and Cleveland Hopkins International Airport (in Cleveland, Ohio). Continental Micronesia, a wholly owned subsidiary, operates routes around Micronesia from its hub at Antonio B. Won Pat International Airport in Guam and connects the Micronesian region with destinations in East Asia, Southeast Asia, Honolulu and Cairns, Australia.

Continental Airlines is a minority owner of ExpressJet Airlines, which operates under the trade name Continental Express but is a separately managed and publicly-traded company. Chautauqua Airlines also flies under the Continental Express identity, and Cape Air, Colgan Air, CommutAir, and Gulfstream International Airlines feed Continental's flights under the Continental Connection identity. Continental does not have any ownership interests in these companies.

Continental left SkyTeam on October 24, 2009 and joined Star Alliance on October 27, 2009.[2]

Contents

History

Early history: 1931-1958

Varney Speed Lines Lockheed L-9 Orion in Burbank, California.
Stewardess and passenger, Mother's Day, 1950

Continental Airlines began service in 1934 as Varney Speed Lines (named after one of its initial owners, Walter T. Varney, who was also a founder of United Airlines) operating out of El Paso and extending through Albuquerque, Santa Fe, and Las Vegas, NM to Pueblo, CO. The airline commenced operations with the Lockheed Vega, a single engine plane that carried four passengers. The airline later flew other Lockheed planes, including the Lockheed L-9 Orion, the Lockheed Electra Junior, and the Lockheed Lodestar.[3]

Following cancellation of all domestic airmail contracts by the Roosevelt administration in 1934, Robert Six learned of an opportunity to buy into the Southwest Division of Varney Speed Lines, which needed money to handle its newly-won Pueblo-El Paso route. Six was introduced to Louis Mueller (who would serve as Chairman of the Board of Continental until February 28, 1966). Mueller had helped found the Southwest Division of Varney in 1934 with Walter T. Varney. As an upshot of all this, Six bought into the airline with $90,000 and became general manager on July 5, 1936. Varney was awarded a 17-cent-rate airmail contract between Pueblo and El Paso; it carried passengers as a sideline. The carrier was renamed Continental on July 8, 1937. Six relocated the airline's headquarters to Denver Union (later Stapleton) Airport in Denver in October, 1937.[3][4]

Robert F. Six was one of the colorful group of innovators, pioneers, and visionaries (including Juan Trippe, William A. Patterson, Jack Frye, C.R. Smith, and Eddie Rickenbacker) who established and built the U.S. airline industry. Throughout his life, Six had a reputation as a combative and risk-taking executive who presided forcefully over the airline that was largely forged in his image for more than 40 years.[3][5]

During World War II Continental's Denver maintenance facilities became a conversion center where the airline converted B-17s, B-29s and P-51s for the United States Army Air Force. Profits from military transportation and aircraft conversion enabled Continental to contemplate expansion and acquisition of new aircraft types which became available following the war.[3] Among those types were the DC-3, the Convair 240 and the Convair 340. Some of the DC-3's were acquired as surplus military aircraft following World War II. The Convairs were the first aircraft operated by Continental that were pressurized.[3][4]

The airline's early route network was limited to the original El Paso to Denver route, with routes being added during the Second World War from Denver and Albuquerque across Kansas, Oklahoma, and Texas. By 1946 Continental had expanded new routes from Denver to Kansas City and to Tulsa/Oklahoma City, and from El Paso and Albuquerque to San Antonio. Each of these routes included intermediate stops in several of 22 smaller cities. In 1953 Continental achieved its first major expansion by merging with Pioneer Airlines, gaining access to 16 additional cities in Texas and New Mexico. These Pioneer destinations integrated well with the Continental's post-World War II routes, and provided impetus for the Civil Aeronautics Board (CAB), the industry regulator, to subsequently streamline CAL's routes from Denver to the principal traffic points in Texas, New Mexico, Kansas and Oklahoma. However, Continental was, like most U.S. carriers of the day, essentially a limited regional operation. Bob Six was highly dissatisfied with this situation. He vigorously petitioned the CAB for longer haul routes to larger cities, a part of his plan to transform the regional into a trunkline like United, TWA, and American. Simultaneously, he was quietly discussing with Boeing for Continental to become one of the first among the world's airlines to operate the soon-to-be-launched 707 jet aircraft. The timing was crucial, since the new routes would justify the 707s, and vice versa.[3][4]

The "Airline that needed to grow," 1959-1969

Robert F. Six, in 1969.
A Douglas DC-7 in flight, 1958
Logo, ca. 1944-1967

By the end of the 1950s, Six's strategy had succeeded. Continental Airlines had seen a broad expansion of its routes, thanks to a responsive CAB and persistent efforts by Six, who frequently referred to his company as, "the Airline that needs to grow."[3][5] In 1957 it flew for the first time from Chicago to Los Angeles (both nonstop, and via Denver); and non-stop from Denver and Los Angeles to Kansas City. Continental Airlines introduced turboprop service with the Vickers Viscount, on the new medium haul routes. The CAB permitted Continental to drop service at many of the smaller cities on the system, enabling the carrier's new aircraft to operate more economically between points with longer lengths-of-haul. Prior to the introduction of its Boeing 707 jets, Continental acquired the popular DC-7s to operate its non-stop route from Los Angeles to Chicago, as well as Denver-Los Angeles and Chicago-Kansas City (see photos).[3][4]

During the late 1950s and early 1960s, Six clearly established himself as the airline industry's leading lower-fare advocate. He correctly predicted that increased traffic, not higher fares, was the answer to the airline industry's problems. Six stunned the industry when he introduced the economy fare on the Chicago-Los Angeles route in 1962. He later pioneered a number of other low or discount fares which brought air travel to many who otherwise could not have afforded it. One of Continental's early innovations was a system-wide economy excursion fare which cut the standard coach fares by more than 25 percent.[3]

As Six had planned, Continental was one of the earliest operators of the Boeing 707, taking delivery of its first of four 707s in spring of 1959. Although Pan Am and TWA inaugurated 707 service a few weeks before Continental did, Continental was the first airline in the world to widely use the Boeing 707 in domestic service, first utilizing the type on the Chicago-Los Angeles nonstop route on June 8, 1959.[5] However, because Continental's 707 fleet was small relative to other carriers, it required radical innovations to the 707 maintenance program. To maintain its small jet fleet Continental developed an industry first: the innovative "progressive maintenance" program enabled Continental to fly its 707 fleet seven days a week, 16 hours a day, achieving greater aircraft utilization than any other jet aircraft operator in the airline industry.[3]

Six, not being satisfied with 707 service alone, introduced exclusive innovations and luxe cuisine with Continental's 707 operations which were described as, "...nothing short of luxurious" by the Los Angeles Times, and, "...clearly, the finest in the airline industry" by the Chicago Tribune.[5]

Beginning in the early 1960s Continental added routes from Los Angeles to Houston, both nonstop and with 1- and 2-stop services to Houston via Phoenix, Tucson, El Paso, Midland-Odessa, Austin, and San Antonio. New service was also inaugurated from Denver to Seattle, Portland, New Orleans, and Houston (to Houston: both nonstop, and with 1- and 2-stop services via Wichita/Tulsa/Oklahoma City). In 1963 the company's headquarters were moved from Denver to Los Angeles.[3][4]

During the late 1960s, the company disposed of the last of its turboprop and piston powered aircraft—one of the first U.S. airlines to do so.[4] Continental replaced the Viscount fleet with DC-9s from Douglas Aircraft and began an aggressive acquisition of Boeing 727 aircraft. These two types (DC-9 and B-727) were to become the workhorses of the Continental fleet from the late 1960s, and for the next twenty years.[4] The DC-9's were phased out and by the mid to late seventies, Continental used the 727 for its narrow body fleet. In 1968 a new systemwide Continental Airlines livery was launched, the orange and gold cheatlines adorned with a black "jetstream" logo (by Six's friend, the noted graphic designer Saul Bass) on the jets' tails (logo was later altered to red; see photo of 747). The marketing slogans adopted in 1968 and employed for about a decade were, "The Airline That Pride Built" and, "The Proud Bird with the Golden Tail.".[3][5]

Throughout the Vietnam War Continental provided extensive cargo and troop transportation for United States Army and Marine Corps forces to Asian and the Pacific bases. Continental's 707s were the most common non-military aircraft transiting Saigon Tan Son Nhat airport.[5] As a result of Continental's experience in Pacific operations, the carrier formed subsidiary Air Micronesia in May 1968, inaugurating island hopping routes between Yap/Saipan/Guam, Majuro, Rota, Truk, Ponape (Pohnpei) and Honolulu.[3] "Air Mike", as it was known, initially operated with Boeing 727-100 aircraft specially outfitted with open-ocean survival gear, doppler radar, and a large complement of spare parts (including tires).[3] A senior mechanic flew aboard every Air Mike flight until the late 1970s. Air Micronesia now operates as subsidiary Continental Micronesia.

September 1969 saw the realization of a long-cherished goal: introduction of Continental service from Los Angeles to Honolulu/Hilo; and in 1970, Continental was awarded routes from the Seattle and Portland to San Jose, Hollywood-Burbank Airport, and Ontario, California—all rapidly growing airline markets. Nonstop San Francisco to Albuquerque and Dallas services were added in the same year .[3]

First African-American pilot

In 1963, Continental hired the first African-American pilot to work for any major carrier in the United States, Marlon D. Green, after a United States Supreme Court decision allowed a Colorado anti-discrimination law to be applied to his case against Continental.[6] Green flew with Continental Airlines for 13 years, between 1965 until his retirement in 1978. Continental's hiring of Marlon Green paved the way for the hiring of minority pilots by all U.S. carriers, an industry milestone which was finally realized in 1977 after Southern Airways and Piedmont hired their first minority pilots.

Continental introduces the widebody era: 1970-1976

Polynesian Pub, 1972
Flight attendant uniforms, 1972

At Six's insistence, Continental (with Pan Am and Trans World Airlines) was a launch airline for the Boeing 747 aircraft. On June 26, 1970 Continental was the first carrier to introduce the 747 into U.S. domestic service.[5] Its upper-deck first class lounge and main deck "Polynesian Pub" won awards worldwide for the most refined cabin interior among all airlines, as did meal services developed by Continental's Cordon Bleu-trained executive chef, Lucien DeKeyser.[5] Continental's 747 services from Chicago and Denver to Los Angeles and Honolulu set the standard for service in the western U.S.[3][5] When asked by one Denver customer service agent in 1974 why he flew Continental wherever he could, Hollywood legend Henry Fonda remarked, "This operation is class; strictly class!"[5]

On June 1, 1972 Continental's widebody DC-10 service began. Six had insisted that Continental place a large order for DC-10s with manufacturer McDonnell Douglas. This decision again proved prescient, since the publicity associated with Continental's splashy 747 service in the Chicago-Denver-Los Angeles-Honolulu backbone corridor had stimulated not only increased market share, but increased traffic for all carriers in the markets. Additionally Denver, Houston and Seattle were experiencing very rapid growth. The DC-10s quickly assumed most of the duties of flying between Denver and Chicago, Los Angeles, Houston and Seattle (and between Houston-Los Angeles).[3][5]

During the 1970s, Denver continued to be the central hub of the Continental system. The 747s were focused on the Chicago-Los Angeles-Honolulu routes, with a single daily round trip through Denver. The DC-10 aircraft operated in large inter-city markets (usually from Los Angeles to Chicago, Denver, Houston and Honolulu; and from Denver to Chicago, Los Angeles, Seattle and Houston). DC-9 and B-727 types predominated over the rest of the system, as well as supplementing frequencies in the DC-10 markets.[5] Next to Braniff, Continental operated fewer aircraft types (four: the B-747, DC-10, B-727-200, and DC9-10) during this period than any U.S. trunkline, affording substantial savings in parts, maintenance, and crew training logistics and costs.[5]

The DC-10 enabled the airline to capitalize on the burgeoning traffic growth in western U.S. markets. Continental saw market share grow annually in each DC-10 market through the 1970s, until relative market parity was achieved with United, the principal competitor on most of the DC-10 routes. The same service innovations introduced to the 747 fleet were initially implemented on the DC-10s, including the "Polynesian Pub"; although after the 1973 oil crisis-induced fuel price increases, higher seating capacity was needed to achieve profitable economics, and the DC-10 pubs would be removed.[5]

According to Six biographer Robert Serling, quality was the watchword in every detail of the Continental's operations in the 1960s and 1970s.[3] In one anecdotal indication of Six's passion for premium customer service, every page of the airline's Customer Service Manual was inscribed with these words: "Nothing in this manual supersedes common sense." Bob Six relentlessly prowled the Continental system, as well as competitors' flights, to assure tight quality standards and to search for ideas that could be adopted to Continental's network.[3][5] The airline credits Six with instituting a culture promoting customer service.[7]

From 1961 to 1982, Continental was headquartered at the western end of the Los Angeles International Airport property. The facility included the general offices, flight control, central maintenance facility, flight kitchen, and Los Angeles crew bases.[3][5][8]

Deregulation and expansion: 1977-1980

In 1974, after years of delays and legal proceedings, Continental inaugurated service between Houston and Miami, and on May 21, 1976, Continental was authorized to operate between San Diego and Denver--both routes had been long-sought, and signaled a new era of rapid growth for Continental. President Jimmy Carter and Civil Aeronautics Board chairman Alfred Kahn had been promoting deregulation of the airline industry (see Airline Deregulation Act), which would dissolve the CAB and for the first time in industry history allow U.S. carriers to determine without government supervision where they would fly, and how much they could charge for their services. In this context, 1977 was an historic year for Continental and the industry at large, as the CAB began to loosen its regulatory grip. Continental began service from Denver to Miami/Ft. Lauderdale and Tampa/St. Petersburg. In that same year, President Jimmy Carter authorized Continental to begin daily round trips between Air Micronesia destination Saipan and Japan, and approved a route for Continental from Los Angeles to Australia via Honolulu, American Samoa, Fiji, New Zealand and Australia. The South Pacific service began May 1, 1979.[4][5]

After the 1978 passage of the Airline Deregulation Act, Continental embarked on an aggressive program of route expansion. October 1978 saw Continental begin flights from the New York area airports to Houston and Denver, and from Denver to Phoenix.[5] That same month, Continental inaugurated DC-10 service between Los Angeles and Taipei, via Honolulu and Guam. Service between Houston and Washington D.C. began in January 1979. In June 1979, Continental linked Denver with Washington D.C., Las Vegas, San Francisco and San Jose and also began Houston-Tampa service.[5] The airline suffered in 1979 when the DC-10 was grounded, nation wide. Given that Continental Airlines only operated the DC-10 and the 727 at the time, flights to Hawaii were cancelled, during the grounding. By the time of the Texas Air Corp. acquisition in 1981, Continental's post-deregulation growth had allowed it to penetrate every major U.S. airline market (and all of the regional markets) from the hubs in Denver and Houston; and the rapid expansion in the air was answered with large-scale facilities expansions at each of these airports. In Denver, Continental's very rapid growth provided the final impetus for the construction of the new Denver International Airport, which would be completed almost fifteen years later.[4][5]

During 1978, Continental explored the possibility of a merger with Western Airlines.[5] Western was also headquartered at Los Angeles International Airport (LAX) and operated a fleet consisting predominantly of the same B-727 and DC-10 aircraft types as Continental. The route systems would have been complementary, with little overlap; because, although they both served the Western states, Continental had strength in Hawaii, southern-tier and the Great Plains states; Western's strengths were in the California intrastate market, Alaska, Mexico, and the intermountain West. Both airlines served the Pacific Northwest and Rocky Mountain states, but along different routes from Los Angeles, Denver, San Francisco, Seattle and Phoenix. This merger was not consummated, however, and industry changes were to take Continental down a very different path.[4][5]

Unlike some airlines (notably Braniff whose expansion was so rapid and unsustainable that the additional costs made investment recovery impossible, and the carrier was forced into bankruptcy and liquidation), Continental's rate of expansion following passage of the Airline Deregulation Act seems, in retrospect, to have been appropriate. The markets that were added were almost all profitable, and formed a strong financial base for the wrenching challenges which the company would face between 1982 and 1994.[4]

Acquisition by Texas Air Corporation: 1981-82

Frank Lorenzo, Continental CEO, 1981-1990

In 1981 Texas Air Corporation, an airline holding company controlled by U.S. aviation entrepreneur and raider Frank Lorenzo, acquired Continental after a contentious battle with Continental's management who were determined to resist Lorenzo. Continental's labor unions also fiercely resisted, fearing what they termed as, "Lorenzo's deregulation tactics," which meant that he wanted to make Continental a non-union airline. During this struggle, Continental Airlines President, A. L. Feldman, committed suicide, on August 9, 1981, in his office.[9]

In the end, Texas Air Corp. prevailed. Frank Lorenzo became Continental's new Chairman and CEO. On October 31, 1982 Continental merged with Texas International (the merged carrier retained the Continental name, brand, and identity; the TI brand and identity disappeared), offering service to four continents (North and South America, Asia and Australia) with a fleet of 112 aircraft. The "new Continental" relocated its headquarters to Texas Air's base in Houston, Texas. The merger resulted in a large expansion of Continental's hub at Houston Intercontinental Airport and extensive new routes to Mexico and the south central U.S.[5][10]

Airline unions fought Lorenzo and Continental at every step. In the Federal courts, they unsuccessfully sued to stop the company's reorganization. They were successful in working to persuade Congress to pass a new bankruptcy law preventing bankrupt companies from terminating contracts as Continental had successfully done. The law was too late to affect Continental and the cost cutting and changes that had rescued it from liquidation.[5][10][11]

First bankruptcy and labor relations: 1983-84

On July 1, 1983 the airline's headquarters were located at the America Tower in the Neartown area of Houston, and would remain there until relocation to downtown in 1998.[12][13][14][15][16]

Frank Lorenzo took Continental into Chapter 11 bankruptcy on September 23, 1983, after unsuccessfully attempting to negotiate a lower pay rate with labor unions. Rebuilding the company began immediately. Following bankruptcy, Continental was freed of its contractual obligations and imposed a series of new labor agreement on its union workers, sharply reducing the airline's labor costs at the cost of employee morale.[17] This move made Continental vastly more competitive with the new airline startups then emerging and thriving in the southwestern U.S., but had notable negative impact on employee attitudes and loyalty. In financial terms, the airline's decision to take bankruptcy worked—by the end of 1984, Continental recorded a $50 million profit. On June 30, 1986, Continental emerged from the Chapter 11 bankruptcy.[10][11] Continental has the distinction of being the first U.S. airline to fly through bankruptcy.[10][11]

European service and rapid growth by consolidation: 1985-89

The America Tower in Neartown Houston, Continental's headquarters from 1983 to 1998

On April 28, 1985, Continental began its rebound, as signaled by the inauguration of its first ever scheduled service to Europe with flights from Newark and Houston to London. Soon thereafter, services to Paris, Frankfurt, Madrid and Munich were added.[5]

In October 1985, Texas Air Corp. made an offer for a Denver-based regional carrier, Frontier Airlines, opening a bidding war with People Express, which was headed by Lorenzo's former TI associate Don Burr. PeopleExpress paid a substantial premium for Frontier's high-cost operation. The acquisition, funded by debt, did not seem rational to industry observers from either the route integration or the operating philosophy points of view, but was in the opinion of most industry analysts rather an attempt by Burr to best his former boss, Frank Lorenzo.[5][11]

On August 24, 1986, Frontier filed for bankruptcy and ceased operations. With People Express hemorrhaging cash, Texas Air acquired PeopleExpress on September 15, 1986, at the same time gaining Frontier whose strong network in the Great Plains and intermountain West reinforced Continental's already formidable Denver hub. Because it had been the largest airline operating in the New York market, the PeopleExpress hub at Newark would permit Continental to expand its east coast services dramatically for the first time in its history. Continental soon became the third-largest airline in the U.S., and the predominant force in the New York, Denver and Houston airline markets. Continental emerged from bankruptcy in 1986 with improved asset and cash flow positions and a more competitive route structure with routes radiating to every large U.S. city from major hubs at Denver and Houston.[5][11]

On February 1, 1987, People Express, Frontier, New York Air, and several commuter carriers were merged into Continental Airlines to create the third-largest U.S. airline (and sixth largest airline in the world). In so doing, Continental became an even larger player in the northeastern markets. 1987 saw the creation of Continental's OnePass frequent flier program (jointly with Eastern Airlines); and, in 1988 Continental formed its first strategic partnership (and the first international airline alliance of its kind) with SAS.[5]

Second bankruptcy, new leadership and structural changes: 1990-97

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Continental's reemergence from its second bankruptcy was signaled by its taking on the naming rights to New Jersey's Continental Airlines Arena, which it held until 2007.

In 1990, Frank Lorenzo retired after 18 years at the helm of Texas International and later Texas Air and Continental Airlines, selling the majority of his Jet Capital Corporation to Scandinavian Airlines System (SAS). According to William F. Buckley, in his September 17, 1990 article on National Review, the sale to SAS was conditioned on Lorenzo leaving the company.[10]

On December 3, 1990, Continental filed for its second bankruptcy in a decade. There were a number of circumstances behind the second bankruptcy, most importantly: Lorenzo had dedicated himself almost full time to Eastern Air Lines acquisition and labor relations issues; the 1990 Iraqi invasion of Kuwait and the resultant Gulf War had prompted a dramatic increase in the price of jet fuel; and People Express had also been highly leveraged at the time of its merger with Continental, having purchased Frontier Airlines just two years before. In addition to Lorenzo embarking on deals which saddled the airline with other carriers' debts, he also began consolidating the different airlines into one system. That resulted in a fleet comprising numerous aircraft types, evident in the patchwork array of liveries in the Continental fleet that lasted until Gordon Bethune order all planes to be painted into the current livery.[citation needed]

In the late 1980s, following a dramatic reduction of service by United Airlines and an unsuccessful attempt by USAir to establish point-to-point service, Continental expanded at Cleveland Hopkins International Airport and established what would become its third-largest system hub. Continental quickly gained nearly all of the gates in the airport's C concourse (once dominated by United), and later expanded that concourse in addition to constructing a new Concourse D.[citation needed]

On February 12, 1991, Continental unveiled its new blue and gray livery and the "globe" logo. These continue to be the identity for Continental's fleet and facilities identification.[citation needed]

In 1993 Air Canada, Air Partners and Texas Pacific Group, enabled Continental to emerge from bankruptcy by investing $450 million in the airline. Under the leadership of former Boeing executive Gordon Bethune, who became President in October 1994, Continental began a substantial work of re-invention. When Bethune took over in 1994 as COO and President of Continental Airlines the troubled airline had twice faced bankruptcy and was again headed that direction. A search firm hired by Continental's board of directors suggested Bethune, who had recently completed an Advanced Management Course at the Harvard Business School, to salvage the company.

Bethune quickly made his mark on the carrier recognizing that a good airline was defined by customer satisfaction, not just cost per available seat mile. Bethune ascended to the role of CEO and was elected chairman of the board of directors in 1996.

Continental went from being ranked last in every measurable performance category to winning more J.D. Power and Associates awards for Customer Satisfaction than any other airline in the world. BusinessWeek magazine named Bethune one of the top 25 Global Managers in 1996 and 1997. Under his leadership Continental's stock price rose from $2 to over $50 per share. Fortune magazine named Continental among the 100 Best Companies to Work for in America for six consecutive years. In his final year piloting the airline Fortune magazine ranked Continental 2004's No. 1 Most Admired Global Airline, a title it earned again in 2005, 2006, 2007 and 2008.[1]

Bethune released his book, From Worst to First.[18], in 1999 detailing his success at that carrier.[2]

While at Continental, Mr. Bethune created the Go-Forward plan, to fix problems with the airline, which included employee morale, the quality of the product, and the route structure, among others. He is credited, along with his management team, for saving Continental from extinction.[3] Bethune began by ordering new aircraft in an effort to convert to an all-Boeing fleet. After the opening of Denver International Airport on February 28, 1995, Continental management decided that the Denver hub - its historic operational base and heart of the system for almost 60 years - would be abruptly reduced to spoke status (with service only to Houston, Newark, and Cleveland). This decision centered on cost-reductions, since DIA charges and landing fees were substantially higher than those at Stapleton, which DIA had replaced.

On March 26, 1996 Continental launched the first phase of its website.[19] During this time period Continental was the subject of hostile takeover bids submitted by then Delta Airlines and Northwest Airlines. The final deal struck, as described by Bethune in his book, with Northwest allowed Continental to keep it's corporate identity but all major decisions, mergers and alliances, were controlled by means of a "golden share" owned by Northwest Airlines.

International Expansion Begins: 1997-2007

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The Continental Center I at night, with the airline logo displayed, and the KBR Tower
Boeing 777-200ER "Peter Max" (the colorful aircraft) at George Bush Intercontinental Airport in Houston, Texas. Downtown Houston is visible in the background. The livery was removed in the winter of 2007-2008.

In January 1997 Continental occupied 250,000 square feet of space at the America Tower. In addition it had 200,000 square feet of office space in a building in proximity to George Bush Intercontinental Airport and 75,000 square feet in a building located on Fuqua Road in Houston. The airline planned to move into a new headquarters site; originally it wanted a single site for its operations.[20] In September 1997 the airline officially announced that it would consolidate its Houston headquarters in Continental Center I in Downtown Houston.[21][22] The airline scheduled to move around 3,200 employees in stages beginning in July 1998 and ending in January 1999. The airline consolidated the headquarters operation at the America Tower and three other local operations into Continental Center I and Continental Center II in the Cullen Center. Bob Lanier, Mayor of Houston, said that he was "tickled to death" by the airline's move to relocate to Downtown Houston.[23]

Beginning in 1998, Continental again embarked on a program to expand its international operations. In that year it inaugurated services to Ireland and Scotland, and in October 1998 the airline received its first Boeing 777-200ER aircraft, allowing non-stop flights from Newark and Houston to Tokyo, Japan, and from Newark to Tel Aviv, Israel. Continental in the same year launched partnerships with Northwest Airlines, Copa, Avant Airlines, Transbrasil, and Cape Air, and Continental and America West Airlines became the first two US airlines to launch interline electronic ticketing.[24]

On March 1, 2001, Continental launched non-stop service from Newark to Hong Kong, operating over the North circumpolar route. This service was the first non-stop long-haul route for any airline with flying duration exceeding 16 hours. The SARS outbreak in Asia caused service to be suspended until August 1, 2003. The launch in 2001 initiated a brief battle between Continental, United Airlines and Cathay Pacific over rights to non-stop flights between Hong Kong and New York.

On September 13, 2004 Continental entered SkyTeam alliance along with Northwest/KLM and CSA. Continental introduced new non-stop services to Oslo, Norway and Edinburgh,Scotland in 2004. In 2005, Continental expanded service from Newark to Beijing after being awarded the China route. During the same year, five new European destinations were added: Stockholm in Sweden, Belfast and Bristol in the United Kingdom, and Hamburg and Berlin in Germany. Service was added to Cologne, Germany in 2006 and to Athens, Greece in 2007. Among U.S. airlines, only Delta (with its extensive network of legacy routes dating from Delta's acquisition of Pan American's European network) serves more European destinations than Continental.[citation needed]

In 2005 service to Asia was expanded as Continental introduced daily nonstop service between Newark and New Delhi, India. The success of this Newark-New Delhi route presaged establishment of a second gateway in India with the announcement of daily nonstop service to Mumbai. With the establishment of Mumbai service, Continental offers the most nonstop flights by any carrier from the United States to India.[citation needed]

By May 2006, the carrier's passenger traffic surpassed that of Northwest Airlines, and Continental became the fourth-largest U.S. carrier, the first change in the top-five passenger enplanement rankings since 2001.[citation needed]

The Wall Street Journal reported on December 12, 2006 that Continental was in merger discussions with United Airlines. Of issue would be Continental's golden share held by Northwest Airlines, dating from a stakeholding relationship during the late 1990s, and the divestiture of Continental's Guamanian hub. A deal was not "certain or imminent", with the talks being of a preliminary nature.[25][26] In April 2008, at the height of oil prices, Northwest announced a merger with Delta Airlines. This allowed Continental to buy back the golden share from Northwest Airlines, which it did.[27] Continental then renewed merger talks with United Airlines, but Continental ended the merger talks that same month.[citation needed]

Continental is the dominant operator at Houston Intercontinental Airport

Continental, New York's dominant carrier, operates from Terminal C at Newark Liberty International Airport[28]

Continental aircraft landing at Newark Liberty International Airport

Continental's North Houston Center in the Greenspoint area[14][29]

Continental Center I, a part of the Cullen Center, is Continental Airlines's headquarters in Downtown Houston

Continental Center II, the building to the right, is also a part of Cullen Center and has additional office space for Continental

Developments Since 2008

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In May 2008, Continental Airlines sold its remaining 4.38 million share investment in Panamanian flag carrier Copa for $35.75 a share, netting proceeds of $149.8 million. Continental had been a principal shareholder in Copa.[30]

Continental said on June 5, 2008 that due to national and international economic conditions, it would cut 3,000 jobs and that the CEO and president would reduce their salaries for the remainder of the year. The airline also said it would reduce capacity and eliminate 67 mainline aircraft from its fleet by the end of 2009, retiring all of Continental's 737-300s and all but 35 of its 737-500s.

On June 19, 2008, Continental announced that it planned to withdraw from the SkyTeam Alliance and would join the Star Alliance in order to cooperate more extensively with United Airlines and other Star Alliance airlines. The new Continental-United relationship has been characterized as a "virtual merger" in some circles.[31] Continental notes that its SkyTeam affiliation would, however, be business-as-usual until further notice.[32] Continental had been in discussions with United Airlines earlier in 2008 which might have resulted in a merger of the two carriers, but Continental withdrew from these discussions stating that it intended to continue to operate as presently constituted.

On August 19, 2008 The USA Today reported that Continental would furlough between 140 to 180 pilots. The article also mentioned that more than 2,500 jobs have already been eliminated, mostly by voluntary early out programs. Continental said in June that it would reduce U.S. capacity by 11% after the end of the peak summer travel season. [33]

In September 2008, Continental announced that it would commence providing seasonal non-stop service between Houston and Rio de Janeiro. The new non-stop flight is timed to provide roundtrip flight connections at Continental's Houston hub to more than 160 cities throughout the U.S., Canada, Central America, Europe, and Asia.

On January 7, 2009, Continental conducted the first biofuel-powered demonstration flight of a U.S. commercial airliner. The demonstration flight was powered by a special fuel blend including components derived from algae and jatropha plants - sustainable, second-generation fuel sources that don't impact food crops or water resources and don't contribute to deforestation.[34]

On January 29, 2009, Continental announced that its 4th quarter 2008 net loss widened to $266 million on costs for pilot retirement and reducing the value of its fuel hedges.[35]

On July 10, 2009, the U.S. Department of Transportation (DOT) approved the application for Continental to join the existing antitrust immunized alliance including United Airlines and eight other Star Alliance member carriers. In addition to United, the eight Star Alliance members that have been granted DOT approval for antitrust immunity are Air Canada, Austrian, bmi, Lufthansa, LOT Polish Airlines, Scandinavian Airlines (SAS), SWISS and TAP Portugal. [36]

On July 16, 2009,Larry Kellner announced that he will be stepping down as CEO at year-end (2009) to return to the private-equity business and will be replaced by company president Jeff Smisek. Smisek will be taking full control as of Jan. 1st, 2010. [37][38]

Awards and Recognition

  • No. 1 Most Admired Global Airline; Fortune magazine (2004, 2005, 2006, 2007, 2008, and 2009)[39]
  • No. 1 Most Admired U.S. Airline; FORTUNE magazine (2006)[40]
  • "Airline of the Year" by OAG (2004, 2005)[41]
  • Best Executive/Business Class; OAG Airline of the Year Awards (2003, 2004, 2005, and 2006)[42]
  • Best Airline Based in North America; OAG Airline of the Year Awards (2004, 2005, and 2006)[43]
  • Best Trans-Atlantic and Trans-Pacific Business Class among U.S. airlines; Condé Nast Traveler (1999, 2000, 2001, 2002, 2003, 2004, 2005, and 2006)[44]
  • Award for Highest-Ranked Network Airline by J.D. Power and Associates (2007)[45]
  • Best Large Domestic Airline (Premium class) by Zagat (2008) [46]
  • Continental was named the Best Value for the Money (International) among all airlines. by Zagat (2008) [46]
  • Best Airline for North American Travel by Business Traveler Magazine (2008) [47]

Destinations

Main article: Continental Airlines destinations
Boeing 757-200

Continental, together with Continental Express and Continental Connection, offers more than 3,100 daily departures throughout the Americas, Europe and the Asia-Pacific region. The summer 2008 schedule saw Continental serving 133 domestic and 132 international destinations with more than 550 additional points served via SkyTeam alliance partner airlines. [48]

Continental Airlines operates primarily a hub-and-spoke route network with North American hubs in Cleveland, Houston, and Newark, and a west Pacific hub in Guam. The majority of Continental flights are operated from its hubs, with a few exceptions (Seattle-Anchorage, Los Angeles-Honolulu, and Los Angeles-Havana). Some affiliated airlines using the Continental Connection name also operate flights not involving hubs, such as Gulfstream International Airlines, which operates intra-Florida and Florida-Bahamas services.

To commemorate Continental's 75th Anniversary, Boeing 737-900ER aircraft N75436 was painted with Continental's mid-50s "Blue Skyways" livery.
Boeing 777-200ER at Cibao International Airport in Santiago de los Caballeros, Dominican Republic

For almost 40 years, Continental operated a very large hub in Denver, Colorado, but took the decision to close that hub in 1995 immediately after the opening of Denver International Airport (D.I.A). D.I.A. represented a significantly higher-cost operation than the former Stapleton Airport, which D.I.A. had replaced. The abrupt nature of this change came as a shock to Denver, which was experiencing dramatic growth. The void left by Continental's departure allowed the establishment of the "new" Frontier Airlines (a startup, rather than the original carrier of that name). Both Frontier and Southwest Airlines (which entered the Denver market after Continental's dehubbing) have expanded quickly to fill the vacuum created by Continental's closing of its Denver hub.

Continental Micronesia Boeing 737-800 at Fukuoka Airport, Japan

For the first forty years of its existence, Continental was a domestic airline; however, especially after the incorporation of Texas International routes, it has served more Mexican destinations than any other U.S. carrier since the mid-1980s.

Continental first entered the transatlantic market in April, 1985, with the introduction of a Houston-London Gatwick service. Long prevented from serving London-Heathrow because of the provisions of the Bermuda II agreement, Continental has maintained its London services at London-Gatwick, where in 2007 as many as six flights a day were offered to Newark, Houston, and Cleveland.

In March 2008, an Open Skies Agreement between the U.S. and the European Union became effective, invalidating Bermuda II restrictions that had limited the number of carriers and cities in the U.S. that could serve London-Heathrow. In November 2007 Continental announced that new, nonstop, twice-daily service from its hubs at Houston-George Bush Intercontinental and Newark-Liberty to London-Heathrow would be offered; and this service was inaugurated on March 29, 2008. The service replaced existing frequencies to London-Gatwick and are offered with a combination of Boeing 777-200ER and 767-200ER equipment.[49]

Continental operates domestic mainline flights from Lewis W. Cutrer Terminal C at George Bush Intercontinental Airport in Houston, Texas.
Continental operates international flights from Terminal E at George Bush Intercontinental Airport, Houston, Texas.

During the Vietnam War, Continental's extensive military charter operations established a presence in the Pacific region that formed the basis for the Air Micronesia operation. Service to Japan was initiated in the 1970s from Guam and Saipan, and by the late 1980s, nonstop service between Seattle and Tokyo was briefly offered with 747 equipment, soon to be replaced with a direct Honolulu-Tokyo (Narita) flight. Through the 1990s, Continental maintained a minimal presence in the long-haul trans-Pacific market, until the delivery of 777-200ERs in 1998 which saw the addition of nonstop Tokyo service from Houston and Newark. By 2007, Hong Kong and Beijing were added to the network, and in 2009 Shanghai was added, all from the Newark hub. Continental has served Australia in the past with Douglas DC-10[50] and Boeing 747 service from Hawaii; Continental withdrew from much of the Australian market, but continues Air Micronesia Boeing 737-800 services between Cairns and Guam on a 2x weekly basis.

Continental offers the most scheduled frequencies of any of the U.S. carrier to India, Japan, Mexico, Ireland and the United Kingdom, and is the only U.S. airline to fly to the Federated States of Micronesia, Marshall Islands, and Palau. Continental began service from Newark to Mumbai, India on October 1, 2007 making that city Continental's second Indian destination.

On September 24, 2007 the Department of Transportation tentatively awarded Continental permission to begin daily direct service between Newark and Shanghai, beginning in March 2009. The transpacific segment of the route will be operated with a Boeing 777-200ER aircraft, while the flight will originate and terminate in Cleveland with a change of equipment at Newark.[51]

Continental is considering routes from its hub in Houston to Dubai, Rome, Milan, and Madrid which are planned to commence when it takes delivery of 787 aircraft after 2010. [52]

Continental announced on June 12, 2008 that it would end service to fifteen destinations as part of efforts to trim costs.[53] The airline closed its gates and ticket counters in each of these airports.[53] Service to the following cities was discontinued: Denpasar, Bali, Indonesia; Cali, Colombia; Cologne, Germany; Guayaquil, Ecuador; Monclova, Mexico; Santiago, Dominican Republic; Oakland, California; Palm Springs, California; Reno, Nevada; Sarasota, Florida; Tallahassee, Florida; Green Bay, Wisconsin; Chattanooga, Tennessee; Toledo, Ohio and Montgomery, Alabama.[53][54]

As worldwide passenger traffic contracts as a result of economic conditions, service to other destinations may also be reduced or eliminated from Continental's hubs in Newark, Houston, Cleveland and Guam. Travelers at Houston and Cleveland are expected to be hardest hit by the planned service reductions.[53]

Fleet

Continental's all-Boeing fleet had an average age of 10.2 years as of April 2008. The fleet consists of four types (Boeing 737, 757, 767, and 777) in eleven variants, with two variants of the Boeing 787 Dreamliner scheduled to enter service in 2011. Continental has consistently been the most efficient trunkline operator of jets since they came on the aviation scene. The company's daily aircraft utilization is usually at the top of the industry.[5]

The Continental fleet consists of the following aircraft:[55]

Continental Airlines Fleet, July 2009
Aircraft In Service Orders Passengers
(First*/Economy)		 Routes Notes
Boeing 737-300 11 0 124 (12/112) Domestic short-medium haul
US, Mexico, Canada		 Will be retired by end of 2nd Quarter 2010 [56]
Boeing 737-500 37 0 114 (8/106) Domestic short-medium haul
Boeing 737-700 36 0 124 (12/112) Domestic and Caribbean short-medium haul All configured with winglets
Installing DirecTV[57]
Installing Wi-Fi service offered by LiveTV
Boeing 737-800 117 53 (Next Gen) 152 (20/132)
157 (16/141)
160 (16/144)		 Domestic and Central America short-medium haul
Continental Micronesia
US, Mexico, Canada, Caribbean		 All configured with winglets
Installing DirecTV[57]
Installing Wi-Fi service offered by LiveTV
Boeing 737-900 12 0 173 (20/153) Domestic short-medium haul All configured with winglets
Installing DirecTV[57]
Installing Wi-Fi service offered by LiveTV
Boeing 737-900ER 27 0 173 (20/153) Domestic medium-long haul
US, Mexico, Caribbean		 All feature DirecTV
Installing Wi-Fi service offered by LiveTV
Boeing 757-200 41 0 175 (16/159) Domestic/international medium-long haul
and
Caribbean, Western Europe		 Configured with BusinessFirst seats
All equipped with AVOD[58]
Boeing 757-300 17 4
(used)		 216 (24/192) Domestic medium-long haul, Caribbean
 Deliveries: 1 in 2009, 3 in 2010
Installing DirecTV[57]
Installing Wi-Fi service offered by LiveTV
Largest operator of the Boeing 757-300.
Currently retrofitting with blended winglets.
8 are ex-ATA Airlines.
Boeing 767-200ER 10 0 174 (25/149) International medium-long haul
Europe, South America
hub to hub domestic (EWR-IAH)
Boeing 767-400ER 16 0 235 (35/200)
256 (20/236)		 International medium-long haul
Continental Micronesia, Mainland Hawaii, Europe,
South America, Asia		 One of only two operators of the Boeing 767-400ER
Boeing 777-200ER 20 5 285 (50/235) International long haul
hub to hub domestic (EWR-IAH)		 All equipped with AVOD
Deliveries: 2010-2012.
2 dry leased from ILFC.
Boeing 787-8 0 11 International long haul Entry into service projected: 2011
Boeing 787-9 0 14 International long haul Entry into service projected: 2013
Total 346 87

*First Class is offered on Domestic Flights. BusinessFirst is offered on Transatlantic/Transpacific Flights.

Continental Airlines was one of three carriers (with American Airlines and Delta Air Lines) to sign an exclusivity agreement with Boeing in the late 1990s. When Boeing acquired McDonnell Douglas, the European Union forced Boeing to void the contracts. Both parties have been adhering to the terms under a gentlemen's agreement.

Continental was one of the first major airlines to fly the Boeing 757 on transatlantic routes. There have been some instances of range limitations on west-bound transatlantic flights due to strong headwinds resulting in a fuel stop which does not appear on the timetable, but these stops are not common. The use of the 757 with its smaller seating capacity has allowed for "thin" routes (routes with less passenger traffic) to be economically viable. It has allowed non-stop service from smaller cities, such as Oslo, Norway and Hamburg, Germany to the New York gateway. Previously, customers originating at these and similar cities needed to connect at European gateways like London, Paris or Frankfurt in order to travel to New York.

The 1960 CAL fleet

Continental Airlines fleet in March, 1960 [59]
Aircraft Total Orders Notes
Boeing 707-320 4 1
Douglas DC-3 10 0
Douglas DC-6 1 0 Leased
Douglas DC-6B 2 0 One leased
Douglas DC-7B 5 0
Vickers Viscount 812 15 0
Total 37 1

The 1970 CAL fleet

Continental Airlines fleet in March, 1970 [60]
Aircraft Total Orders Notes
Boeing 707-320 13 0
Boeing 720 8 0
Boeing 727 13 0
Boeing 747-100 0 4
Douglas DC-9-10F 19 0
Total 53 4

The 1980 CAL fleet

Continental Airlines fleet in December, 1980 [61]
Aircraft Total Orders Notes
Boeing 727-100 14 0
Boeing 727-200 39 7
Douglas DC-10-10 7 0
Douglas DC-10-10CF 4 0
Douglas DC-10-30 2 0
Total 66 7

Cabin

Continental Airlines has a two-class service configuration, First/BusinessFirst and Economy Class, for aircraft in the mainline fleets.[62]

BusinessFirst

In-flight meal in BusinessFirst

Continental's recently announced, but not yet installed, BusinessFirst seats will allow customers to lie completely flat, reclining 180-degrees and providing 6 1/2 feet (2 m) of sleeping space in the fully extended position on its widebody aircraft. The lie-flat seat will offer a seat measuring up to 25 inches (640 mm) wide when the adjustable armrest is positioned flush with the seat cushion. Electronic "one-touch" controls will enable customers to easily move the seats to pre-set upright, cradle and fully extended sleep positions and additional controls allow customers to adjust the seat back, lumbar support and leg and foot rests. iPod connectivity will also be available in the new Business Class at the seat. The new BusinessFirst seats will also have a six-way adjustable head rest, an individual overhead reading light and an adjustable seat light allowing a Business Traveller to read in bed without disturbing their neighbour and a privacy shell that allows for seclusion from other travelers. BusinessFirst customers also receive one of the highest crew to passenger ratios (1:8). [63]

The new BusinessFirst seats are currently believed to begin flying in the third quarter of 2009. The anticipated completion of the roll-out across Continental's entire international fleet is August 2012.

Domestic First Class

Domestic First Class is offered on domestic flights. It is available on all Boeing 737 family aircraft, as well as Boeing 757-300 aircraft. Seats range from 20.75 to 21 inches (530 mm) wide, and have between 37 and 38 inches (970 mm) of pitch. Passengers aboard this class receive free meals, refreshments, and alcoholic beverages. Passengers can watch movies on overhead TV screens located throughout the cabin. Beginning in 2009, Continental plans to add LiveTV television and Wi-Fi services to all next-generation Boeing 737s and Boeing 757-300s which will be free of charge to First Class customers.[57]

International Economy Class

767-400ER economy cabin.

Economy Class is available on all international flights. Seats range from 17.2 to 17.9 inches (450 mm) wide, and have between 31 and 32 inches (810 mm) of pitch. Passengers aboard this class receive free meals, snacks, and non-alcoholic beverages; alcoholic beverages can be purchased for five United States dollars per drink or one Continental Currency coupon per drink.[64]

Domestic Economy Class

Economy Class is available on all domestic flights. Seats are 17.2 inches (440 mm) wide, and have between 31 and 32 inches (810 mm) of pitch. Passengers aboard this class receive free meals, snacks, and non-alcoholic refreshments. Alcoholic beverages may be purchased on board. Passengers on select Boeing 737-300, most Boeing 737-700, -800, -900, -900ER, and all 757-300 aircraft can watch movies on overhead television screens located throughout the cabin, with headsets available at a charge. In January 2009, Continental began to add LiveTV television and Wi-Fi services to all next-generation Boeing 737s and Boeing 757-300s. LiveTV will be chargeable for Economy Class customers, while the Wi-Fi service will reportedly be complimentary.[57]

In-Flight Entertainment

Continental's LiveTV Seat Controls aboard a Boeing 737-900ER.

Boeing 757-200 and 777-200ER aircraft include Audio-Video On-Demand (AVOD) in every seat back. Boeing 767 family aircraft are equipped with a personal television located in every seat back, using a tape system. On all Boeing 757-200 and AVOD Boeing 777-200ER aircraft, all rows are equipped with power-ports (two power ports per group of 3 seats) that do not require special power adapters or cables.


Continental's LiveTV System aboard a Boeing 737-900ER.

Continental Airlines Inc. says it will offer 75 channels of live television to all passengers on its Boeing 737 700's, 800's, 900's, and 900ER's and Boeing 757-300's, starting in January 2009. Continental also said it would introduce onboard Wi-Fi services including e-mail and instant messaging, subject to LiveTV being able to offer the service, which is in testing. A growing list of carriers are planning or testing such services. The TV lineup includes CBS, NBC, Fox News, CNN Headline News, ESPN, Discovery, Disney and additional movie channels. The service becomes available "appoximately 15 minutes after the doors close (main-cabin door)". Movies start at a set time and cannot be paused, rewound or fast-forwarded. The service is free to first-class passengers and is available for a charge in the coach cabin. Service becomes limited during descent.


As of October 18th, 2009, all 29 Boeing 737-900ER's have been complete. Work has been begun on the 108 Boeing 737-800's. Expected completion is by Oct. 2010.[65]

OnePass

Continental Airlines OnePass logo.png

Established in 1987 in cooperation with now defunct Eastern Airlines, OnePass is the frequent flyer program for Continental Airlines, Copa Airlines and AeroRepública. OnePass offers regular travelers the privilege to obtain free tickets, First Class upgrades on flights, discounted membership for its airport lounge (President's Club), and other types of rewards. Customers accumulate miles from flight segments they fly or through Continental Airlines partners. OnePass elite tiers are Silver, Gold, and Platinum Elite which have benefits such as free upgrades, mileage bonus, priority check-in, priority boarding, and much more. Continental previously had a frequent flyer program prior to OnePass, which was started not long after American Airlines started its frequent flyer program in 1981 and when most large United States airlines followed, but this was merged with Eastern Airlines' frequent flyer program in 1987 to form OnePass.[66][67] The name "OnePass" refers to the ability to accumulate miles on two major airlines, namely Continental and Eastern, in one frequent flyer program.

In addition to its Continental Express, Continental Connection, and Star Alliance partnerships, Continental has frequent flyer partnerships with the following airlines:

Presidents Club

CO Presidents Club logo.png

The Presidents Club is the membership airport lounge program of Continental Airlines, Copa Airlines and AeroRepublica. The clubs all have open bars, but have also started a premium bar service where higher end wines and alcohol can be purchased. Continental was the first airline to offer free wi-fi in their lounge.[68] There are 25 clubs throughout the world and members have full reciprocal privileges at over 40 additional locations including lounges operated by selected Star Alliance partners including United Airlines and Lufthansa. The Presidents Club offers lifetime memberships, something that as of November 2008 costs non-elite OnePass members $5,500.[69] BusinessFirst customers flying an international itinerary as well as International Business Class customers are allowed access to the clubs. BusinessFirst customers may bring up to two guests and Presidents Club members may bring two guests or their immediate family (spouse and children under 21 years of age). American Express Platinum and Centurion card members are granted access to Presidents Clubs if they are flying on a Continental operated flight that day under a Continental flight number.

Locations

The Presidents Club locations are listed below:

Continental Currency

At airport kiosks Continental Airlines allows customers to buy "Continental Currency", a prepaid credit for audio headsets and alcoholic beverages on flights.[70]

Continental allows customers to buy "Continental Currency" in the following quantities:[70]

  • 1 coupon for $5USD
  • 2 for $10
  • 3 for $13 (airline advertises this as a $2 discount)
  • 6 for $25 (airline advertises this as a $5 discount)

Codeshare agreements

Continental Connection aircraft

Continental Airlines has codeshare agreements with the following airlines as of October 2009:
(This list does not include Star Alliance airlines)

Continental Connection codeshares

The operators of Continental Connection are:

  • CommutAir operates mostly from Continental's Cleveland and Newark hubs.[71]
  • Colgan Air operates out of Houston and Newark. Colgan, as a subsidiary of Pinnacle Airlines Corp. operates out of Newark out of Houston as 'Continental Connection'.[72]
  • Cape Air operates (Continental also has a codeshare with the mainstream Cape Air) in Southern Florida and from Guam to Saipan, Saipan to Rota and Rota to Guam.[73]
  • Gulfstream International Airlines operates in the Bahamas, Miami, Ft. Lauderdale, Orlando, Tampa, and West Palm Beach, Jacksonville, Fort Walton, Tallahassee, Fort Myers, Key West, and Sarasota.[74]

Environmental record

Continental Airlines has made many efforts to minimize the negative environmental effects of commercial aviation. It has made substantial progress in modifying operational activities to reduce environmental impact; for example, the carrier invested over $12 billion for the purchase of the current 270 fuel-efficient aircraft and related equipment that make up part of the airline's fleet. [75] These efforts have contributed to significant reductions of greenhouse gas and noise emissions, and have decreased fuel consumption by 45% per mainline revenue passenger mile over the past decade.[75] Continental Airlines was also one of the first carriers in the world to fit winglets to as much of their fleet as they could, reducing fuel burn by 3-5%. [76]

Continental has implemented a program that gives passengers the opportunity to offset their carbon emissions per flight for a fee of $2. Funds collected from the carbon offset scheme are directed for tree planting in reforestation areas. Passengers can also contribute $50 dollars or more to fund renewable-energy projects such as wind- or solar-power projects, or to re-establish algae in oceans or large scale reforestation.[77]

The U.S. Environmental Protection Agency's (EPA) "Design for the Environment Program" has recognized Continental (2008) for use of a non-chromium aircraft surface pre-treatment that is environmentally compatible. Continental Airlines is the first carrier in the world to utilize this technology on their aircraft. The product, "PreKote", eliminates hazardous chemicals that are usually used in the pre-treatment phase before painting an aircraft. This technology provides improved environmental conditions for maintenance employees, while also reducing wastewater.[75]

Continental Airlines is planning flight tests using aircraft powered by biofuel rather than traditional Jet-A1. On January 7, 2009, Continental partnered with GE Aviation to conduct a biofuel demonstration flight, making the airline the first U.S. carrier to conduct tests using biofuels. The test bed, a Boeing 737-800 (registered as N76516), ran one of its engines on a mix of 50% kerosene, 6% algae, and 44% jatropha, a weed that bears oil producing seeds.[78] The engine running partly on biofuel burned 46 kg less fuel than the conventional engine in 1 and a half hours while producing more thrust using the same volume of fuel. Continental's CEO, Larry Kellner, commented "This is a good step forward, an opportunity to really make a difference to the environment" citing jatropha's 50-60% lower CO2 emissions as opposed to Jet-A1 in its lifecycle. [79]

Continental Airlines has been recognized by NASA and Fortune Magazine for positive environmental contributions.[75]

Incidents and accidents

The following are major incidents and accidents that have occurred on Continental Airlines mainline aircraft.

Continental Airlines reported incidents
Flight Date Aircraft Location Description Passengers and crew Injuries
Fatal Serious Minor Ground or other injuries/fatalities
11[80] May 22, 1962 Boeing 707-100 Unionville, MO A passenger intent on claiming money from life insurance planted a bomb on the aircraft which departed Chicago-O’Hare, destined for Kansas City Municipal Airport. The bomb exploded, breaking off the aircraft's tail, and the plane crashed on a farm near Unionville, Missouri. All 45 on board died. This aircraft had previously been subject to an attempted hijacking to Cuba, although the hijackers were captured in El Paso, Texas. 45 45
210[81] July 8, 1962 Vickers Viscount Lubbock International Airport Damaged beyond economic repair when the propellers struck the runway shortly after take-off. A wheels-up landing was made in a wheat field. 16
290
[82]		 January 29, 1963 Vickers Viscount Kansas City, MO Flight 290 enroute from Midland, Texas to Kansas City crashed on approach, near the south end of the runway and burst into flames. 8 8
N/A [83] April 13, 1973 NA-265 Sabreliner Montrose, CO After bringing Bob and Audrey Six to their Colorado ranch, the Sabreliner crew departed MTJ, for the return flight to Los Angeles (LAX). The thrust reverser of the aircraft was deployed in flight shortly after takeoff. The Sabreliner descended from 1,000 feet (300 m), struck the ground, and was destroyed. 2 2
426
[84]		 August 15, 1975 Boeing 727-200 Denver, CO Flight 426, bound for Wichita, Kansas, crashed near the departure end of runway shortly after takeoff. The aircraft encountered severe windshear at an altitude and airspeed which precluded recovery to level flight. The aircraft descended at a rate which could not be overcome even though the aircraft was flown at or near its maximum lift capability throughout the encounter. The windshear was generated by the outflow from a thunderstorm which was over the aircraft's departure path. All passengers and crew were safely evacuated. The aircraft was a total loss. 131 15
603
[85]		 March 1, 1978 McDonnell Douglas DC-10 Los Angeles, CA Flight 603 was scheduled to fly to Honolulu, HI from Los Angeles. The DC-10 overran the runway at Los Angeles (LAX) during an aborted takeoff as a result of a tire explosion resulting in a fire engulfing the aircraft. The aircraft was a total loss. 200 2 31 167
1713[86] November 15, 1987 McDonnell Douglas DC-9 Denver, CO Flight 1713 bound for Boise, Idaho crashed on take-off during a snowstorm at Stapleton Intl. Airport. 82 28 28 26
55
[87]		 July 25, 2000 McDonnell Douglas DC-10 Paris, France Flight 55 contributed to the crash of Air France Concorde Flight 4590 in Paris. The Continental jet dropped a strip of titanium alloy from its thrust reverser on the runway during its takeoff roll. When AF4590 subsequently departed, Concorde's left main landing gear tires struck the strip of metal and were punctured. The tires exploded as Concorde began its takeoff roll. The tire rubber fragments penetrated Concorde's wing fuel tanks, starting fires in engines 1 and 2, leading to the crash which killed all aboard. According to the official report on the accident, the strip of metal installed on the Continental jet was made from a different alloy than had been approved by the US Federal Aviation Administration or the engine manufacturer. This led French authorities to begin a criminal investigation into Continental Airlines.[88] 113 fatalities
1404 December 20, 2008 Boeing 737-500 Denver, CO Flight 1404 bound for Houston, pulled left and ran off of the runway during its takeoff roll at Denver International Airport. The cause of the incident is unknown, however the right side of aircraft caught fire once coming to a stop. Of the 115 people on board, 38 sustained injuries, with 2 seriously injured, including the pilot.[89] 115 2 36

Minor incidents

  • On July 1, 1965 Continental Airlines Flight 12 ran off the runway at Kansas City Downtown Airport landing in heavy rain. All 66 on board survived.
  • On October 28, 2006, Continental Flight 1883, a Boeing 757-200 aircraft carrying 160 passengers, landed on a narrow unoccupied taxiway parallel to runway 29 at Newark Liberty International Airport. No one was injured and both pilots were removed from flying status duties pending an investigation. They have since been reinstated. Potentially confusing runway lighting and pilot error were cited in the investigation.[90]
  • In January 2007, a Continental Boeing 757 pilot died en route from Houston to Puerto Vallarta, Mexico. The flight was diverted to McAllen, TX.[91]
  • On June 18, 2009, the captain of Continental Airlines Flight 61, a Boeing 777-200ER, en route from Brussels, Belgium, to Newark, New Jersey, died of natural causes during the trip. The airline alerted federal authorities around 10:30 that morning that Flight 61 was being flown by the co-pilot and relief pilot. The plane with 247 passengers aboard landed safely at Newark Liberty International Airport at about noon EDT.[92][93]
  • On August 3, 2009, a Continental Airlines Flight 128, a Boeing 767-200ER, flying from Rio De Janeiro to Houston encountered severe turbulence, resulting in 26 injuries. The plane safely diverted to Miami.

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Sources

  • Continental Airlines, Customer Service Manual, 1970 edition.
  • Vietor, Richard H. K. "Contrived Competition: Airline Regulation and Deregulation, 1925-1988", The Business History Review, Vol. 64, No. 1, Government and Business (Spring, 1990), pp. 61–108

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