New 10k Filing, Game Over If The Unions Vote No


Oct 11, 2003
I hope that when the ballot comes the naysayers who still think the company is putting on a ruse so to get concessions wake up and read the fine print. One would think with the conviction of Ebbers today that the days of filing false reports to the SEC for personal gain are done. Time will tell.

Continental Airlines Files 10-K With SEC, Explains Consequences of Not Achieving Ratification of the Tentative Agreements With Its Four Unions on March 30

These actions include:
* Increasing the size of needed pay and benefit reductions to
$800 million from the current $500 million
-- This 60-percent increase is because, without March 30
ratifications, Continental's deteriorating financial condition will
require significantly greater pay and benefit reductions from each
work group. * Subleasing or selling 24 Boeing 737-500 aircraft
-- As part of its contingency planning, Continental has engaged
aircraft broker Focus Aviation to market these aircraft.
-- The 737-500 aircraft has relatively few seats compared to
Continental's other mainline aircraft and has become less
attractive to operate in a low-fare environment.
-- This mainline fleet reduction will result in frequency reductions
and aircraft gauge downsizing in various markets.
* Furloughing a significant number of employees
-- With the reduction of the 737-500 fleet, Continental will shrink,
resulting in the need for fewer employees.
-- The reduction in force will include a significant number of pilots,
flight attendants, mechanics and other positions related to the
drop in fleet size and block hours. * Canceling the Boeing aircraft order
-- Cancel plans to lease eight 757-300 aircraft
-- Cancel accelerated delivery of six Boeing 737-800 aircraft
-- Cancel orders for 10 new Boeing 787 aircraft
-- Discuss with Boeing deferring all 40 remaining aircraft on order
that are scheduled for delivery beyond 2005
* Needing to post up to an additional $335 million in cash deposits,
further reducing cash available for operations and pension
-- This will occur if Continental fails to maintain its liquidity
covenants contained in its credit card processing agreement.
There's a difference between filing a false report and using the current situation to paint the picture of doom and gloom that is the airline industry. CO is simply playing the game that AA and DL have played over the last couple years. And based on history, everyone caves rather than run the risk of things getting much worse. So don't worry, CO will get the concessions it wants; the quesion is whether it will be enough.
I know a number of CO employees because I lived on the edge of IAH for many years. I doubt they will vote No. CO employees (despite some hotheads) in general believe what management says, because CO's management has dealt fairly and straightforwardly with them over the past few years.