March 8, 4:02 pm ET
March 15, 2005,
Continental warns of drastic cutbacks
Concession plan approval needed by month's end
By BILL HENSEL JR.
Continental Airlines issued a warning Tuesday it would have to lay off significant numbers of workers, downsize its fleet and dramatically cut wages and benefits if employee unions don't agree to concessions by month's end.
The airline says it needs $500 million in employee cutbacks. Last month, it reached tentative deals with unions leaders for about $330 million in reductions, but those still need approval from rank-and-file members. The rest is coming from nonunion employees.
Houston-based Continental said Tuesday, however, that if the union approvals didn't happen by March 30, it would need to increase the $500 million in proposed cuts to $800 million — a 60 percent increase.
The airline said its "deteriorating financial condition" would require the increased cutbacks.
Continental also warned it conceivably could run out of cash by year's end if a combination of negative events occurs.
"These events include the failure of our unions to ratify the tentative agreements, further significant declines in yields and fuel prices higher than current levels for an extended period of time," the carrier said in a filing with securities regulators.
Yields, which are related to passenger revenue, measure the average fares an airline is taking in.
Losses in the billions
U.S. airlines have lost billions the past several years, in part because of intense competition that spurred lower fares. Rising oil prices the past year also have cut deeply into revenue.
Continental said Tuesday it expects to post a "significant loss" in 2005, echoing previous comments projecting losses of hundreds of millions of dollars this year.
The outlook for 2006 is equally grim, according to the scenario Continental laid out in its annual financial reportto federal securities regulat-ors.
"We have significant financial obligations due in 2006 and thereafter, and we will have inadequate liquidity to meet those obligations if the current financial environment for network carriers continues and we are unable to increase our revenues or decrease our costs considerably," the airline said.
Continental said it made the comments because federal regulations require it to give detailed information on its future, including actions it would be forced to take if the union agreements aren't ratified.
Continental announced tentative deals with unions representing pilots, flight attendants, mechanics and dispatchers on the proposed cost-cutting deals on Feb. 28.
Proposed new contracts, including the concessions, are being sent to union members for their votes.
Picture called clear
Brian Wozniak, a spokesman for Continental flight attendants, said Tuesday the dire financial situation facing the carrier was clear during recent negotiations.
Union leaders felt the proposed wage and benefit concessions were necessary, he said, adding that he wasn't surprised by the wording of Continental's filing.
"We felt that was the best course of action to preserve the company from going into bankruptcy," Wozniak said. "Now our members will have a chance to help decide on their own futures."
Don Treichler, spokesman for the mechanics union,said Tuesday the decision is in the hands of the union members.
"I don't know whether they are reporting to their constituency or trying to put pressure on union groups," Treichler said of Continental's statements. "I think our members know the pros and cons of the situation, and they are in the process of voting on the proposal."
The union for Continental's pilots had no comment.
Continental said it would have to sublease or sell 24 Boeing 737-500 planes if union agreements are not approved by month's end. It added that it hired a broker to market the planes as part of its "contingency planning."
Continental also said it would be forced to cancel plans to buy 10 new Boeing planes.
Copyright 2005 Houston Chronicle
March 23, 2005,
School discipline measure advances
AUSTIN - A bill to give principals and other school officials more flexibility over serious disciplinary offenses has been approved by the Senate Education Committee, even as another school shooting has raised questions about student safety.
Sen. Jon Lindsay, R-Houston, said Wednesday that his Senate Bill 126 was designed to encourage school administrators to "use some common sense" in deciding whether to expel students or transfer them to disciplinary campuses.
But Gayle Fallon, president of the Houston Federation of Teachers, said the measure would gut the state's Safe Schools Act, which declares zero tolerance for weapons or drugs that are found on campus.
Fallon blamed unfair punishments on "stupid administrators," not on the law.
Fallon noted that the committee approved the bill Tuesday, the day after a shooting rampage at a high school in Minnesota.
Reacting to that shooting, Lt. Gov. David Dewhurst and several senators held a news conference Tuesday to promote a separate bill, Senate Bill 11, that would require school districts to adopt plans for dealing with a variety of hazards, including campus shootings.