Houston-based Continental (CAL: news, chart, profile) said late Friday it is exercising its option under federal legislation that allows it to suspend contributions during economically difficult times. High fuel costs and financial woes in the industry drove its decision, the airline said.
"Using the relief afforded by the Pension Funding Equity Act is the prudent course of action," a Continental representative said.
Congress passed the act last spring to help lift the airline and steel industries through these turbulent times. Right now, Continental has the smallest pension obligation of the big six U.S. carriers, according to a recent Bear Stearns research report.
The carrier had a required minimum payment of $17 million due this year. It had originally planned to contribute $250 million to maintain the plan's funding at 90 percent of its current liability. At the end of 2003, Continental's pension plan was underfunded by $1 billion, the Bear Stearns report noted.
"Using the relief afforded by the Pension Funding Equity Act is the prudent course of action," a Continental representative said.
Congress passed the act last spring to help lift the airline and steel industries through these turbulent times. Right now, Continental has the smallest pension obligation of the big six U.S. carriers, according to a recent Bear Stearns research report.
The carrier had a required minimum payment of $17 million due this year. It had originally planned to contribute $250 million to maintain the plan's funding at 90 percent of its current liability. At the end of 2003, Continental's pension plan was underfunded by $1 billion, the Bear Stearns report noted.