Continental Airlines said yesterday that it had reached tentative agreements with its unions on $500 million in annual savings, the fifth major airline to obtain cuts from all its workers. þþContinental, the nation's fourth-largest airline, had set yesterday as its deadline for getting wage and benefit concessions from pilots, flight attendants, mechanics and other workers. þþContinental had warned that without the cuts it would face a cash shortage and post significant losses for 2005.þþThe tentative agreements, which are for 45 months, are subject to approval by leaders of each union and a vote of the members. þþContinental said it hoped the contracts would be approved by the end of March, when it expected the new terms to take effect. Neither the airline nor its unions released any details. þþIn making the agreement, Continental joined American Airlines, United Airlines, Delta Air Lines, and US Airways, which have all gained cuts from labor groups in the last three years. Late last year, pilots at Northwest Airlines approved a contract with $265 million in wage and benefit cuts. Northwest is still talking to other unions about further cuts.þþUnlike other airlines' labor negotiations, which have been fraught with anger and delays, Continental made the request for wage and benefit cuts in November and achieved them in a relatively calm 90 days. They came two months after Continental's new chief executive, Larry Kellner, took office. þþLong the leanest of the major airlines, Continental significantly cut its labor costs during two bankruptcy filings in the 1980's and 1990's.þþBut like its rivals, Continental has been pressured by record prices for jet fuel and competition from low-fare airlines that prevented it from raising ticket prices. þþAs a result, the airline lost $363 million in 2004. Mr. Kellner told employees last month that the airline lost $3 million a day in January.þþYesterday, Mr. Kellner said that he knew the cuts were painful, but that the agreements ÿwill put in place the tools we need to be successful and grow our company, securing the careers and retirement of all Continental employees.ÿ þþContinental said it would grant $10 million in stock options, equal to about 15 percent of outstanding shares, to its employees by the end of March, once the contracts are ratified. That plan requires the approval of the New York Stock Exchange.þþThe biggest portion of the proposed cuts, about $200 million, came from members of the Air Line Pilots Association, which represents Continental's 4,100 pilots. In a news release, the pilots union said it had gained ÿenhanced pension and job securityÿ but did not specify what that meant. þþDuring negotiations, the two sides discussed freezing the pilots' traditional pension plan and offering future pension benefits through a defined-contribution plan, like a 401(k) program. þþJim Moody, a spokesman for Continental's pilots, said he did not know if that proposal was part of the tentative agreement.þþ
Source: NY Times
