CO Makes More Cost Cuts, Executive Changes

Continental Airlines yesterday announced a series of measures meant to improve 2004 performance by $500 million. They include additional employee reductions totaling 1,200 by year-end, elimination of paper tickets worldwide by the middle of next year and significant distribution cost reductions to be achieved "by implementing a plan to more than double the utilization rate of continental.com, reduce CRS booking fees and reduce other distribution costs by the end of 2004."

"We need $500 million in annual cost savings and revenue generation to permit us to be a survivor during the worst financial crisis in aviation history," said chairman and CEO Gordon Bethune. "If the war in Iraq is prolonged, or if other events further degrade revenue or increase costs, we will need to find additional savings or ways to generate more revenue in order to compete effectively."

Meanwhile, Continental indicated further service reductions may be necessary, impacting small and medium-size communities. The carrier previously announced a slimmer international schedule in certain markets.

Continental also announced a reshuffling within management ranks. Dave Hilfman, previously vice president of multinational sales and revenue programs, has been named vice president of sales. June Bennett assumes the role of vice president of sales for North America. President Larry Kellner takes on the additional title of COO following the previously announced retirement of airline veteran C.D. McLean. Executive vice president of corporate and secretary Jeff Smisek now also oversees corporate development and alliances. Jim Compton shifts from senior vice president of pricing and revenue management to senior vice president of marketing. Glen Hauenstein, previously senior vice president of scheduling, now reports to Compton as senior vice president of network with new responsibilities in revenue management, pricing and scheduling. Deborah McCoy, senior vice president of flight operations, assumes additional responsibilities overseeing inflight food services and safety.

Announced retirements, effective March 25, include senior vice president of technical operations George Mason, senior vice president of sales and distribution Bonnie Reitz, senior vice president of international Barry Simon and senior vice president of purchasing and material services Kuniaki Tsuruta. The four retirements bring Continental's total executive officer reductions to 25 percent.

Reitz, a 26-year industry veteran who helped Continental successfully turn around in the early 1990s, is well known in corporate travel circles. "Bonnie has a special awareness of what is right and what is wrong with our product," Bethune said. "She has an innate ability to know what customers value and brings a litmus test to customer satisfaction."

Reitz will advise Continental in the coming months on the First to Favorite initiative, which aims "to differentiate the airline to its most valued business customers through personalized service." She also recently founded a new company, InsideOut Culture to Customer.