Bob

An interesting read...

March 15, 2005

EMPLOYEE BULLETIN NO. 9


CO FILES 10-K WITH SEC, EXPLAINS CONSEQUENCES

OF NOT ACHIEVING RATIFICATION OF THE

TENTATIVE AGREEMENTS WITH ITS FOUR UNIONS ON MARCH 30



CO today filed its annual financial report on Form 10-K as required by the Securities and Exchange Commission (SEC). The filing will likely generate media coverage because SEC regulations require that CO provide detailed information on its future prospects, including what actions CO will be forced to take if the tentative union agreements are not ratified on March 30.



These actions include:

· Increasing the size of needed pay and benefit reductions to $800 million from the current $500 million

-- This 60-percent increase is because, without March 30 ratifications, CO's deteriorating financial condition will require significantly greater pay and benefit reductions from each work group.

· Subleasing or selling 24 Boeing 737-500 aircraft

-- As part of its contingency planning, CO has engaged aircraft broker Focus Aviation to market these aircraft.

-- The 737-500 aircraft has relatively few seats compared to CO's other mainline aircraft and has become less attractive to operate in a low-fare environment.

-- This mainline fleet reduction will result in frequency reductions and aircraft gauge downsizing in various markets.

· Furloughing a significant number of employees

-- With the reduction of the 737-500 fleet, CO will shrink, resulting in the need for fewer employees.

-- The reduction in force will include a significant number of pilots, flight attendants, mechanics and other positions related to the drop in fleet size and block hours.

· Canceling the Boeing aircraft order

-- Cancel plans to lease eight 757-300 aircraft

-- Cancel accelerated delivery of six Boeing 737-800 aircraft

-- Cancel orders for 10 new Boeing 787 aircraft

-- Discuss with Boeing deferring all 40 remaining aircraft on order that are scheduled for delivery beyond 2005

· Needing to post up to an additional $335 million in cash deposits, further reducing cash available for operations and pension contributions

-- This will occur if CO fails to maintain its liquidity covenants contained in its credit card processing agreement.



The entire 10-K can be found at www.sec.gov or at continental.com under "Investor Relations."

__________________
Bob Moyer

EWR FO -> IAH FO -> SAT FO -> IAH CA -> ONT CA -> EWR CA

The circle is complete.
------------------------------
Maine... The way life should be.

whisker bizkit

Wonder were those 73's are going?

__________________
Former EWR ATR CA, IAH ERJ CA
A320 Driver

Happy Camper

This is an interesting line....

WINDSURFNFOOL

What's that mean? I can't imagine smaller PFDs, MFD's, and EICAS's would save the company much $$$..... :lol:

****, I'm funny........

bjb

Two questions arise now. One, does their reduction in fleet size require us to reduce our fleet size as well - you know some kind of ratio thing? On the other hand, two, could this mean more flying for us?

__________________
Ben Boggs

Jordan Van Dyke

Well, I do know that their concessionary TA includes, in its scope clause, a ratio of a/c with 50 seats or less at "Express Carriers" to the number of 100+ seat a/c at mainline. Whether that's a ratio of deliveries to deliveries or a ratio of existing fleet to existing fleet, I don't know. Anyone? You have to give CAL mgmt points for sticking to the playbook, though. Overheard in the boardroom: 'OK, guys, time for the "The Sky is Falling Unless You Vote in the Concessions" press release'. I can personally attest to having heard directly from Ream in March of '02 that if 'industry economics' didn't improve, CAL would be Ch. 11 by January of '03. It doesn't seem to me that there's been any improvement. I am aware that no corporate enitity can lose money forever, but I'm taking this latest salvo with a grain of salt.

maddog

Kinda sounds like Sept. 15, 2001 doesn't it. Can't quite remember what employee bulletin that was. Better hope you are 4 or 5 hundred from the bottom. And yes, there is no more flow-back! Gordo is gone and reality sets in. Is that filing a threat or the truth. You go to jail when you lie to the SEC. I think the scabbies are restless! Are Larry and Mike worried? CALALPA may have screwed the pooch on this one!

ERJRy

And mighty CAL has also been in the news lately. Crying aloud that without the concessions, they're doomed. I remember seeing similar releases just prior to a contract vote late last year. Hmmmmm.

A coincidence I'm sure. :roll: