Continental’s Hawaii
services look secure

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Star-Bulletin staff and wire

While Continental Airlines revealed plans yesterday to slash costs, a spokeswoman for the airline hinted the local effect might be small because Hawaii is a strong market for the airline.

The Houston-based carrier announced plans to generate additional revenue and join the downsizing frenzy rife in the struggling airline industry.

The moves ranged from reducing the issuance of plastic knives and full cans of soft drinks to grounding aircraft and a hiring freeze.

While Continental said it hopes to avoid layoffs, Chairman and Chief Executive Officer Gordon Bethune said action had to be taken.

"Unless market conditions improve quickly, we'll be forced to make further changes in every aspect of our operation," Bethune said.

The changes come in the wake of a tumultuous week for airlines with United Airlines saying it might have to file for bankruptcy protection, and American Airlines planning to cut thousands of jobs.

US Airways, which has filed for bankruptcy protection, announced plans today to reduce its mainline jet service 13 percent by the end of the year and reduce the fleet by 33 planes -- 10 percent -- to 278. The reductions will result in 250 pilot layoffs in November, on top of 1,070 already been furloughed.

Continental says the measures it plans to take could save more than $350 million annually.

Some of the airline's initiatives, such as the hiring freeze, were already in effect.

Continental is a major force in the Hawaii-mainland tourist trade.

The airline "anticipates that they will be flying to all markets as they do now," but will continue to examine the capacity it needs to provide for each market, said the spokeswoman, Ruth-Ann Becker. "Hawaii has been a very good market" for Continental, she said.

Becker said many of the changes other airlines are making now in their financial crises were made by Continental over the past several years. Continental, like its big competitor United Airlines, is running more seats to Hawaii now than it did this time last year, according to recent statements.

Continental said it will retire 11 of its MD-80 fleet by the end of next year.

A total of 49 of the MD-80 aircraft have been grounded since September 2001. Plans call for the rest of the fleet to be phased out by 2005.

Continental said it hopes to avoid additional furloughs of employees through retirements, voluntary leaves and attrition. About 4,000 employees were laid off last year.

The airline reportedly told its flight attendants that it needed to cut 1,300 jobs, according to a source close to the airline.

However, it appears enough flight attendants volunteered recently for unpaid leave to meet the airline's goal, the source said.

Yesterday, the company issued a letter to flight attendants saying there would be no need for new furloughs.

The cost-cutting doesn't include any furloughs for the pilots, said Jim Moody, a spokesman for the Continental pilots.

Continental said it would also:

>> Start charging a $20 fee for all domestic paper tickets..

>> Create fees for services that low-fare customers select.

>> Eliminate discounts on certain published and unpublished low-fare categories.

>> Establish rebidding of many supplier contracts, including the one to supply peanuts for snacks, which could save tens of thousands of dollars.

>> Implement strict collection of excess baggage charges.

>> Modify some employee programs.