News and Notes from Continental's 10-K

Who’s ready for Continental’s 10-K? Well, here it is. Just a few tidbits to think about today.

• In 2008, Continental had 50 percent of its mainline operation going international. With the weakening of international demand, it will be interesting to see how much this balance changes.
• Still no firm date for joining the Star Alliance . . . “We plan to implement these relationships and join United, Lufthansa and Air Canada (and other member airlines) in Star Alliance as promptly as practicable following our exit from SkyTeam. We will exit SkyTeam effective with our last flight on October 24, 2009.”
• Continental still likes what travel agents can do for them. You don’t often hear airlines admit that.

  “As with other major domestic hub-and-spoke carriers, a majority of our revenue comes from tickets sold by travel agents. Although we generally do not pay base commissions, we often negotiate compensation to travel agents based on their performance in selling our tickets. A significant portion of our revenue, including a significant portion of our higher yield traffic, is derived from bookings made through third party global distribution systems (”GDSs”) used by many travel agents and travel purchasers.

  “We use the internet to provide travel-related services for our customers and to reduce our overall distribution costs. We have marketing agreements with internet travel service companies such as Orbitz, Hotwire, Travelocity and Expedia. Although customers’ use of the internet has helped to reduce our distribution costs, it also has lowered our yields because it has enhanced the visibility of competing fares offered by low-cost carriers.”

• Of course, they like the web as well and it now accounts for 26 percent of their total passenger revenue during 2008. That likely means that it accounted for a larger percent of traffic since it’s lower-yielding stuff.
• “As of December 31, 2008, our operating fleet consisted of 350 mainline jets and 282 regional aircraft.”
• The only fleets at Continental with a greater than 10-year average age are the 737-500 and 737-300 fleets. At the end of 2008, there were 42 737-500s and 23 737-300s left in the fleet. Thirty-one of those are planned to be removed by year-end.
• “Approximately 44% of our full-time equivalent employees are represented by unions. The collective bargaining agreements with our pilots, mechanics and certain other work groups became amendable in December 2008. During 2008, we met with representatives of the applicable unions to engage in bargaining for amended collective bargaining agreements. These talks will continue in 2009 with a goal of reaching agreements that are fair to us and to our employees. Although there can be no assurance that our generally good labor relations and high labor productivity will continue, the preservation of good relations with our employees is a significant component of our business strategy.”