Continental Airlines (IATA: CO, ICAO: COA, Call sign: CONTINENTAL) is a major American airline based in Continental Center I in Downtown Houston, Texas. On October 1, 2010, the acquisition of Continental airlines by UAL Corporation (the parent company of United Airlines) was completed and on the same day UAL changed its name to United Continental Holdings, Inc. These airlines are in the process of merging their operations under the name United Airlines. During the integration period, both airlines will, for a time, run separate operations under direction of a combined leadership team of the new parent company based in Chicago.[5] The merger transaction is estimated to be worth (USD)$3.2 billion.[6][7]
At the time of its acquisition by United Continental Holdings, Inc., Continental was the fourth-largest airline in the US based on passenger-kilometers flown and the fifth largest in total passengers carried. Continental operates flights to destinations throughout the U.S., Canada, Latin America, Europe, and the Asia-Pacific regions. Principal operations are from its four hubs at Newark Liberty International Airport, George Bush Intercontinental Airport, Cleveland Hopkins International Airport and Antonio B. Won Pat International Airport in Guam.
The origin of Continental Airlines dates to the 1934 formation of Varney Speed Lines which operated airmail and passenger services in the American Southwest. The carrier was renamed Continental Air Lines in 1937 and expanded its domestic U.S. network in the 1960s with jet aircraft. International flights to Southeast Asia and South Pacific destinations began in 1978 following industry deregulation. Continental was embroiled in ownership struggles in the 1980s and entered bankruptcy in 1983 and 1990. The carrier exhibited a financial and operational turnaround after 1996,[8] and embarked on international route expansion in the 2000s.
Continental has ownership interests and brand partnerships with several carriers. Continental is a minority owner of ExpressJet Airlines, which operates under the 'Continental Express' trade name but is a separately managed and public 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 Airlines left the SkyTeam alliance on October 24, 2009, and joined Star Alliance on October 27, 2009.[9] Together with its subsidiaries, Continental has more than 2,423 daily departures, serving 130 domestic and 132 international destinations and has 42,210 employees as of December 2009. Since 1998, Continental's marketing slogan has been "Work Hard, Fly Right."
On Sunday, May 2, 2010, the Boards of Directors at Continental and United Airlines approved a stock-swap deal that would combine them into the world's largest airline in revenue passenger miles. The new airline will take on the United Airlines name, Continental's logo and be based in United's hometown of Chicago. The new United will be run by Continental's CEO, Jeffery Smisek, along with United Airline's CEO, Glenn Tilton, serving as non-executive Chairman of the board. The deal received approval from U.S. and European regulators in the summer of 2010. The shareholders of both airlines approved the deal on September 17, 2010.
United Continental Holdings, Inc. (UAL), formerly UAL Corporation, incorporated on December 30, 1968, is a holding company and it’s, wholly owned subsidiaries are United Air Lines, Inc. (United) and Continental Airlines, Inc. (Continental). United and Continental transport people and cargo through their mainline operations, which utilize full-sized jet aircraft, and regional operations, which utilize smaller aircraft that are operated under contract by United Express, Continental Express and Continental Connection carriers. On May 2, 2010, the Company, Continental, and JT Merger Sub Inc., a wholly owned subsidiary of the Company, entered into an Agreement and Plan of Merger providing for a merger of equals business combination. On October 1, 2010, JT Merger Sub Inc. merged with and into Continental, with Continental surviving as a wholly owned subsidiary of UAL Corporation (the Merger). Upon closing of the Merger, the Company became the parent company of both Continental and United and the Company changed to United Continental Holdings, Inc.
The Company, through United and Continental and their regional carriers, operates approximately 5,800 flights a day to more than 375 United States domestic and international destinations from the Company’s hubs at A.B. Won Pat International Airport (Guam), Chicago O’Hare International Airport (Chicago O’Hare), Denver International Airport (Denver), George Bush Intercontinental Airport (Houston Bush), Hopkins International Airport (Cleveland Hopkins), Los Angeles International Airport (LAX), Newark Liberty International Airport (New York Liberty), San Francisco International Airport (SFO) and Washington Dulles International Airport (Washington Dulles). As of January 1, 2011, including its regional operations, United operates approximately 3,350 flights a day to more than 235 the United States domestic and international destinations based on its annual flight schedule. Its hub and spoke system transport passengers between a range of destinations with frequent service. Its hub system also allows it to add service to a new destination from a range of cities using only one or a limited number of aircraft.
Services
United offers First and Business class seating on transcontinental flights and United Economy Plus. United’s p.s is a premium transcontinental service connecting New York with both Los Angeles and San Francisco. Premier status for Mileage Plus program members who qualify based on the range of paid flight miles or fares purchased in a calendar year. Premier status passengers receive treatment in check-in and boarding areas, the ability to check up to two bags without fees and access to special security lanes at certain airports. Continental offers flat-bed BusinessFirst seats offered on Continental’s Boeing 777 aircraft and 31 of its 41 Boeing 757-200 aircraft with approximately 6.5 feet of sleeping space, laptop power and 15.4-inch video monitors. Audio Video on Demand entertainment systems in BusinessFirst and economy seats on Continental’s Boeing 777 and 757-200 aircraft featuring a range of movies, television shows, music and interactive video. Continental has completed the installation of DIRECTV on its Boeing 737 Next-Generation aircraft. It provides EliteAccess service for OnePass members who qualify based on a range of paid flight miles or the fares purchased in a calendar year, first class and BusinessFirst ticket holders and travelers with high-yield coach tickets. EliteAccess passengers receive treatment in check-in, boarding and baggage claim areas, the ability to check up to three bags without fees and access to special security lanes at certain airports.
Regional Carriers
The Company has contractual relationships with regional carriers to provide regional jet and turboprop service branded as United Express, Continental Express and Continental Connection. These regional operations are an extension of the Company’s mainline network. This regional service complements its operations by carrying traffic that connects to its mainline service and allows more frequent flights to smaller cities. Atlantic Southeast Airlines, Chautauqua Airlines, Colgan Airlines (Colgan), CommutAir Airlines, ExpressJet Airlines, GoJet Airlines, Mesa Airlines, Shuttle America, SkyWest Airlines (SkyWest) and Trans States Airlines (Trans States) are all regional carriers, which operate under capacity purchase agreements with United and/or Continental. The Company also has prorate agreements with Hyannis Air Service, Inc. (Cape Air), Colgan, Gulfstream International Airlines (Gulfstream), SkyWest and Trans States.
Alliances
United and Continental has a range of bilateral and multilateral alliances with other airlines, which enhance travel options for customers seeking access to markets that United and Continental do not serve directly. These marketing alliances include: joint loyalty program participation; codesharing of flight operations (whereby seats on one carrier’s selected flights can be marketed under the brand name of another carrier); coordination of reservations, ticketing, passenger check-in, baggage handling and flight schedules; and other resource-sharing activities. United and Continental are members of Star Alliance, a global integrated airline network. As of January 1, 2011, Star Alliance carriers served 1,160 airports in 181 countries with 21,000 daily flights. United and Continental both have independent marketing agreements with other air carriers, including Aer Lingus, Cape Air, Colgan, Copa Airlines, Emirates, EVA Airways Corporation, Great Lakes Aviation, Gulfstream, Hawaiian Airlines, Island Air, Qatar Airways, TACA Group, and Virgin Atlantic Airways. In addition, Continental has a train-to-plane alliance with Amtrak.
Loyalty Programs
United’s Mileage Plus program and Continental’s OnePass program build customer loyalty by offering awards and services to program participants. Members in these programs can earn mileage credit for flights on United, United Express, Continental, Continental Express and Continental Connection, members of Star Alliance and certain other airlines that participate in the programs. Miles can also be earned by purchasing the goods and services of its non-airline partners, such as retail merchants, hotels, car rental companies and credit card issuers. As of December 31, 2010, United and Continental had more than 58 million and 41 million members, respectively, enrolled in their programs. Both of the Company’s loyalty programs have co-brand agreements with Chase Bank USA, N.A. (Chase). Under these agreements, loyalty program members accrue frequent flyer miles for making purchases using Mileage Plus and OnePass credit cards issued by Chase. These co-brand agreements provide for joint marketing of the credit card programs and provide Chase with other benefits, such as permission to market to the Company’s customer database.
During the year ended December 31, 2010, 2.4 million Mileage Plus travel awards were used on United. During 2010, these awards represented 7.5% of United’s total revenue passenger miles. During 2010, 1.6 million OnePass travel awards were used on Continental. During 2010, these awards represented 5.7% of Continental’s total revenue passenger miles. During 2010, in addition, Mileage Plus members redeemed miles for approximately 975,000 non-United travel awards. Non-United travel awards include Red Carpet Club memberships, car and hotel awards, merchandise and travel solely on another air carrier, among others. During 2010, total miles redeemed for travel on United, including class-of-service upgrades, represented 86% of the total miles redeemed.
Distribution Channels
The majority of the Company’s airline seat inventory continues to be distributed through the traditional channels of travel agencies and global distribution systems (GDS). The growing use of internal Websites, such as www.united.com and www.continental.com, alternative distribution systems and new GDS entrants provides the Company with an opportunity to de-commoditize its services.
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.
Scaling Back in 2001
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.
OVERALL
Beta: 1.01
Market Cap (Mil.): $7,891.39
Shares Outstanding (Mil.): 330.46
Annual Dividend: --
Yield (%): --
FINANCIALS
UAL Industry Sector
P/E (TTM): 478.56 19.64 17.03
EPS (TTM): 102.14 -- --
ROI: 0.61 2.35 3.24
ROE: -- 6.40 5.80
Statistics:
Public Company
Incorporated: 1934 as Varney Speed Lines
Employees: 42,900
Sales: $8.97 billion (2001)
Stock Exchanges: New York
Ticker Symbol: CAL
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation
Key Dates:
1934: Varney Speed Lines is founded.
1937: Robert Foreman Six buys a 40 percent interest in Varney.
1955: Three new cross-country routes are added in an expansion drive.
1967: Continental is first awarded Micronesian routes.
1982: Texas Air Corporation acquires Continental.
1983: Continental files bankruptcy.
1986: Continental emerges from bankruptcy; Continental absorbs other airlines facing bankruptcy, including Eastern, People Express, and Frontier.
1990: Continental declares bankruptcy again.
1993: Continental regains solvency, restructures.
1994: Continental ranks last among majors for on-time performance.
1995: Incentive-led Continental ranks first among majors for on-time performance and earns its first profit in ten years.
1998: Northwest Airlines acquires a majority of voting shares.
2000: Continental buys out Northwest's holding.
Name Age Since Current Position
Tilton, Glenn 63 2010 Non-Executive Chairman of the Board
Smisek, Jeffery 56 2010 President, Chief Executive Officer, Director
Rowe, Zane 40 2010 Chief Financial Officer, Executive Vice President
McDonald, Peter 59 2010 Chief Operating Officer, Executive Vice President
Halbert, R. Keith 51 2010 Executive Vice President, Chief Information Officer
Bonds, Michael 48 2010 Executive Vice President - Human Resources and Labor Relations
Compton, James 55 2010 Executive Vice President, Chief Revenue Officer
Foland, Jeffrey 40 2010 Executive Vice President
Foxhall, Irene 59 2010 Executive Vice President - Communications and Government Affairs
Hart, Brett 41 2010 Senior Vice President, General Counsel, Secretary
O'Connor, James 74 1984 Independent Lead Director
Canale, Stephen 66 2002 Director
Morse, Wendy 50 2010 Director
Farrell, W. James 69 2001 Independent Director
Walker, John 53 2002 Independent Director
Isaacson, Walter 58 2006 Independent Director
Vitale, David 64 2006 Independent Director
Garvey, Jane 67 2009 Independent Director
Caldwell, Kirbyjon 57 2010 Independent Director
Corvi, Carolyn 59 2010 Independent Director
Meyer, Henry 61 2010 Independent Director
Munoz, Oscar 52 2010 Independent Director
Simmons, Laurence 64 2010 Independent Director
Yamarone, Charles 52 2010 Independent Director
Address:
1600 Smith Street
Houston, Texas 77002
U.S.A.
At the time of its acquisition by United Continental Holdings, Inc., Continental was the fourth-largest airline in the US based on passenger-kilometers flown and the fifth largest in total passengers carried. Continental operates flights to destinations throughout the U.S., Canada, Latin America, Europe, and the Asia-Pacific regions. Principal operations are from its four hubs at Newark Liberty International Airport, George Bush Intercontinental Airport, Cleveland Hopkins International Airport and Antonio B. Won Pat International Airport in Guam.
The origin of Continental Airlines dates to the 1934 formation of Varney Speed Lines which operated airmail and passenger services in the American Southwest. The carrier was renamed Continental Air Lines in 1937 and expanded its domestic U.S. network in the 1960s with jet aircraft. International flights to Southeast Asia and South Pacific destinations began in 1978 following industry deregulation. Continental was embroiled in ownership struggles in the 1980s and entered bankruptcy in 1983 and 1990. The carrier exhibited a financial and operational turnaround after 1996,[8] and embarked on international route expansion in the 2000s.
Continental has ownership interests and brand partnerships with several carriers. Continental is a minority owner of ExpressJet Airlines, which operates under the 'Continental Express' trade name but is a separately managed and public 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 Airlines left the SkyTeam alliance on October 24, 2009, and joined Star Alliance on October 27, 2009.[9] Together with its subsidiaries, Continental has more than 2,423 daily departures, serving 130 domestic and 132 international destinations and has 42,210 employees as of December 2009. Since 1998, Continental's marketing slogan has been "Work Hard, Fly Right."
On Sunday, May 2, 2010, the Boards of Directors at Continental and United Airlines approved a stock-swap deal that would combine them into the world's largest airline in revenue passenger miles. The new airline will take on the United Airlines name, Continental's logo and be based in United's hometown of Chicago. The new United will be run by Continental's CEO, Jeffery Smisek, along with United Airline's CEO, Glenn Tilton, serving as non-executive Chairman of the board. The deal received approval from U.S. and European regulators in the summer of 2010. The shareholders of both airlines approved the deal on September 17, 2010.
United Continental Holdings, Inc. (UAL), formerly UAL Corporation, incorporated on December 30, 1968, is a holding company and it’s, wholly owned subsidiaries are United Air Lines, Inc. (United) and Continental Airlines, Inc. (Continental). United and Continental transport people and cargo through their mainline operations, which utilize full-sized jet aircraft, and regional operations, which utilize smaller aircraft that are operated under contract by United Express, Continental Express and Continental Connection carriers. On May 2, 2010, the Company, Continental, and JT Merger Sub Inc., a wholly owned subsidiary of the Company, entered into an Agreement and Plan of Merger providing for a merger of equals business combination. On October 1, 2010, JT Merger Sub Inc. merged with and into Continental, with Continental surviving as a wholly owned subsidiary of UAL Corporation (the Merger). Upon closing of the Merger, the Company became the parent company of both Continental and United and the Company changed to United Continental Holdings, Inc.
The Company, through United and Continental and their regional carriers, operates approximately 5,800 flights a day to more than 375 United States domestic and international destinations from the Company’s hubs at A.B. Won Pat International Airport (Guam), Chicago O’Hare International Airport (Chicago O’Hare), Denver International Airport (Denver), George Bush Intercontinental Airport (Houston Bush), Hopkins International Airport (Cleveland Hopkins), Los Angeles International Airport (LAX), Newark Liberty International Airport (New York Liberty), San Francisco International Airport (SFO) and Washington Dulles International Airport (Washington Dulles). As of January 1, 2011, including its regional operations, United operates approximately 3,350 flights a day to more than 235 the United States domestic and international destinations based on its annual flight schedule. Its hub and spoke system transport passengers between a range of destinations with frequent service. Its hub system also allows it to add service to a new destination from a range of cities using only one or a limited number of aircraft.
Services
United offers First and Business class seating on transcontinental flights and United Economy Plus. United’s p.s is a premium transcontinental service connecting New York with both Los Angeles and San Francisco. Premier status for Mileage Plus program members who qualify based on the range of paid flight miles or fares purchased in a calendar year. Premier status passengers receive treatment in check-in and boarding areas, the ability to check up to two bags without fees and access to special security lanes at certain airports. Continental offers flat-bed BusinessFirst seats offered on Continental’s Boeing 777 aircraft and 31 of its 41 Boeing 757-200 aircraft with approximately 6.5 feet of sleeping space, laptop power and 15.4-inch video monitors. Audio Video on Demand entertainment systems in BusinessFirst and economy seats on Continental’s Boeing 777 and 757-200 aircraft featuring a range of movies, television shows, music and interactive video. Continental has completed the installation of DIRECTV on its Boeing 737 Next-Generation aircraft. It provides EliteAccess service for OnePass members who qualify based on a range of paid flight miles or the fares purchased in a calendar year, first class and BusinessFirst ticket holders and travelers with high-yield coach tickets. EliteAccess passengers receive treatment in check-in, boarding and baggage claim areas, the ability to check up to three bags without fees and access to special security lanes at certain airports.
Regional Carriers
The Company has contractual relationships with regional carriers to provide regional jet and turboprop service branded as United Express, Continental Express and Continental Connection. These regional operations are an extension of the Company’s mainline network. This regional service complements its operations by carrying traffic that connects to its mainline service and allows more frequent flights to smaller cities. Atlantic Southeast Airlines, Chautauqua Airlines, Colgan Airlines (Colgan), CommutAir Airlines, ExpressJet Airlines, GoJet Airlines, Mesa Airlines, Shuttle America, SkyWest Airlines (SkyWest) and Trans States Airlines (Trans States) are all regional carriers, which operate under capacity purchase agreements with United and/or Continental. The Company also has prorate agreements with Hyannis Air Service, Inc. (Cape Air), Colgan, Gulfstream International Airlines (Gulfstream), SkyWest and Trans States.
Alliances
United and Continental has a range of bilateral and multilateral alliances with other airlines, which enhance travel options for customers seeking access to markets that United and Continental do not serve directly. These marketing alliances include: joint loyalty program participation; codesharing of flight operations (whereby seats on one carrier’s selected flights can be marketed under the brand name of another carrier); coordination of reservations, ticketing, passenger check-in, baggage handling and flight schedules; and other resource-sharing activities. United and Continental are members of Star Alliance, a global integrated airline network. As of January 1, 2011, Star Alliance carriers served 1,160 airports in 181 countries with 21,000 daily flights. United and Continental both have independent marketing agreements with other air carriers, including Aer Lingus, Cape Air, Colgan, Copa Airlines, Emirates, EVA Airways Corporation, Great Lakes Aviation, Gulfstream, Hawaiian Airlines, Island Air, Qatar Airways, TACA Group, and Virgin Atlantic Airways. In addition, Continental has a train-to-plane alliance with Amtrak.
Loyalty Programs
United’s Mileage Plus program and Continental’s OnePass program build customer loyalty by offering awards and services to program participants. Members in these programs can earn mileage credit for flights on United, United Express, Continental, Continental Express and Continental Connection, members of Star Alliance and certain other airlines that participate in the programs. Miles can also be earned by purchasing the goods and services of its non-airline partners, such as retail merchants, hotels, car rental companies and credit card issuers. As of December 31, 2010, United and Continental had more than 58 million and 41 million members, respectively, enrolled in their programs. Both of the Company’s loyalty programs have co-brand agreements with Chase Bank USA, N.A. (Chase). Under these agreements, loyalty program members accrue frequent flyer miles for making purchases using Mileage Plus and OnePass credit cards issued by Chase. These co-brand agreements provide for joint marketing of the credit card programs and provide Chase with other benefits, such as permission to market to the Company’s customer database.
During the year ended December 31, 2010, 2.4 million Mileage Plus travel awards were used on United. During 2010, these awards represented 7.5% of United’s total revenue passenger miles. During 2010, 1.6 million OnePass travel awards were used on Continental. During 2010, these awards represented 5.7% of Continental’s total revenue passenger miles. During 2010, in addition, Mileage Plus members redeemed miles for approximately 975,000 non-United travel awards. Non-United travel awards include Red Carpet Club memberships, car and hotel awards, merchandise and travel solely on another air carrier, among others. During 2010, total miles redeemed for travel on United, including class-of-service upgrades, represented 86% of the total miles redeemed.
Distribution Channels
The majority of the Company’s airline seat inventory continues to be distributed through the traditional channels of travel agencies and global distribution systems (GDS). The growing use of internal Websites, such as www.united.com and www.continental.com, alternative distribution systems and new GDS entrants provides the Company with an opportunity to de-commoditize its services.
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.
Scaling Back in 2001
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.
OVERALL
Beta: 1.01
Market Cap (Mil.): $7,891.39
Shares Outstanding (Mil.): 330.46
Annual Dividend: --
Yield (%): --
FINANCIALS
UAL Industry Sector
P/E (TTM): 478.56 19.64 17.03
EPS (TTM): 102.14 -- --
ROI: 0.61 2.35 3.24
ROE: -- 6.40 5.80
Statistics:
Public Company
Incorporated: 1934 as Varney Speed Lines
Employees: 42,900
Sales: $8.97 billion (2001)
Stock Exchanges: New York
Ticker Symbol: CAL
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation
Key Dates:
1934: Varney Speed Lines is founded.
1937: Robert Foreman Six buys a 40 percent interest in Varney.
1955: Three new cross-country routes are added in an expansion drive.
1967: Continental is first awarded Micronesian routes.
1982: Texas Air Corporation acquires Continental.
1983: Continental files bankruptcy.
1986: Continental emerges from bankruptcy; Continental absorbs other airlines facing bankruptcy, including Eastern, People Express, and Frontier.
1990: Continental declares bankruptcy again.
1993: Continental regains solvency, restructures.
1994: Continental ranks last among majors for on-time performance.
1995: Incentive-led Continental ranks first among majors for on-time performance and earns its first profit in ten years.
1998: Northwest Airlines acquires a majority of voting shares.
2000: Continental buys out Northwest's holding.
Name Age Since Current Position
Tilton, Glenn 63 2010 Non-Executive Chairman of the Board
Smisek, Jeffery 56 2010 President, Chief Executive Officer, Director
Rowe, Zane 40 2010 Chief Financial Officer, Executive Vice President
McDonald, Peter 59 2010 Chief Operating Officer, Executive Vice President
Halbert, R. Keith 51 2010 Executive Vice President, Chief Information Officer
Bonds, Michael 48 2010 Executive Vice President - Human Resources and Labor Relations
Compton, James 55 2010 Executive Vice President, Chief Revenue Officer
Foland, Jeffrey 40 2010 Executive Vice President
Foxhall, Irene 59 2010 Executive Vice President - Communications and Government Affairs
Hart, Brett 41 2010 Senior Vice President, General Counsel, Secretary
O'Connor, James 74 1984 Independent Lead Director
Canale, Stephen 66 2002 Director
Morse, Wendy 50 2010 Director
Farrell, W. James 69 2001 Independent Director
Walker, John 53 2002 Independent Director
Isaacson, Walter 58 2006 Independent Director
Vitale, David 64 2006 Independent Director
Garvey, Jane 67 2009 Independent Director
Caldwell, Kirbyjon 57 2010 Independent Director
Corvi, Carolyn 59 2010 Independent Director
Meyer, Henry 61 2010 Independent Director
Munoz, Oscar 52 2010 Independent Director
Simmons, Laurence 64 2010 Independent Director
Yamarone, Charles 52 2010 Independent Director
Address:
1600 Smith Street
Houston, Texas 77002
U.S.A.