Continental to Furlough 12,000 Employees

[Airbubba]

Just the first of many such announcements expected this weekend...

_________________________________________

Continental making major cuts in wake of attacks

September 15, 2001 Posted: 11:39 AM EDT (1539 GMT)

HOUSTON, Texas (CNN) -- The effects on the airline industry from Tuesday's terrorist attacks became more evident Saturday, as Continental Airlines announced major reductions in its flight schedule and staffing.

Continental, in a press release, said it will immediately reduce its long-term flight schedule by approximately 20 percent, and will be forced to furlough some 12,000 employees.

The airline said these cutbacks "are a direct result of the current and anticipated adverse effects on the demand for air travel caused by this weeks terrorist attacks on the United States, and the operational and financial costs of dramatically increased security requirements."

The airline scheduled a 2 p.m. EDT press conference.

"The U.S. airline industry is in an unprecedented financial crisis. We call on the President and members of Congress to take immediate action to restore the stability of this vital industry, on which our nation's economy heavily depends," said Gordon Bethune, Continental chairman and chief executive officer. "Our industry needs immediate Congressional action if the nation's air transportation system is to survive."

[no sponsor]

Just heard the same news on the BBC.

[Vsf]

No.

Tell me it ain't true.

I expected the economic slowdown to grind our fortunes (and dreams) down a bit, but this is looking like a professional distaster for all pilots all the way around. The U.S., we've got plenty of problems already, just ask anyone who worked for Kitty Hawk, Emery, and more other woebegon operators than I care to think about right now.

If things now are going to be as tough as they were 10 or 12 years ago, it will flush a lot of pilots out of the profession for good, I fear.

[411A]

Continental and other US aircarriers cannot blame the cost of "enhanced security procedures" for the increased cost of doing business. Most of these same airlines have in the recent past bought or leased far more aircraft than the traffic dictated, only to find now that increased traffic simply is not there.
So, their reaction is to blame "someone else" when in actual fact the airline managements have way overestimated aircraft needs...big time. This is to say nothing of excessive pilot unions' salary demands. The other shoe has now dropped.

[ 15 September 2001: Message edited by: 411A ]

[Vandelay]

There's talk of Northwest and ALPA have been in communications of NWA furloughs.

[PaperTiger]

The US airlines will right now be seeing massive reservation cancellations and future bookings dwindling drastically. None have made these figures public and with good reason, they must surely be disastrous.
Given the narrow profit margins in good times, it doesn't take much of a downturn in demand to see them disappear, and the upcoming downturn will be of unprecedented proportions IMO. Some big names may go to the wall.

Hope I'm wrong.

[Vsf]

411A--
I just jumped back into the U.S. fixed wing market and can't afford a misstep now. Any ideas which realms might weather the storm the best out here? I'm in ground school for an airline but casting an eye towards corporate if I can find something. The worries, they are mounting.

[Rollingthunder]

We're operating to a target of 70% today, with no flights to the U.S.A. as of yet. There has been an incremental increase of operations day by day.

I do not understand the alleged, projected, dismal consequences to commercial aviation.

This was a totally horrific and cowardly act.

But people are resiliant and air travel is a fact of life and surrender to terrorism is not conceivable.

In the industry, we have been hammered by the recession but we should not cower to these acts. Fly, show confidence, be vigilant. The only workable defence, instantly, is to prevent assasins getting on board. On the larger scale, root out and destroy the mechanism of terrorism with purpose.

No one is taking the train or bus JFKLHR, YVRYHZ , LAXNRT etc. etc. The destinations are safe, the flights are safe, a price will have to be paid for increased security (it's only damn money) but air transport will continue strongly.

imho

edited for the usual

[ 15 September 2001: Message edited by: Rollingthunder ]

[Vsf]

RollingThunder, I don't think the viability of air transport is being questioned. Rather, the incremental effect on the industry is what is at issue. An industry's sales can go down, say, ten percent, and drive companies that were in a profit into a loss and/or bankruptcy. If and when this happens, the number of pilots on the streets looking for work can increase by vast multiples. I remember the days when 3,500 hour pilots were scrapping for CFI jobs. Anybody who says those days can't resume if the airline demand for pilots hiccups is, I think, mistaken.

It's reasonable to assume that we were up an organic economic slowdown to begin with. Plenty of folks idled already. The issue, therefore, is how the fallout from the events of this week is going to mesh with all this. It can't be good. Finance is very sensitive to small changes, and we're now looking at the specter of big changes.

That's just my outlook, from where I sit here in the U.S.

[therosterman]

I highly doubt that the slowdown in the industry will amount to the number spoken of before. However, I do believe there is a possibility, and that is exactly what Continental is preparing for. They are insuring that they won´t be overstaffed if the industry suffers. Remember, most employees will have a couple of months to find work before the layoffs take effect. I think a majority of these layoffs will not go through.

[PaperTiger]

Overcapacity is the bane of all airlines, something RT probably does need reminding of. In a stable situation, matching capacity to anticipated demand is more of an educated guess than a science and I agree some got it wrong. Some consistently get it wrong.

Of course commercial aviation will survive (absent World War III), I just don't expect it to return to pre-WTC levels for a while.

[Rollingthunder]

Thanks PaperTiger. I figure I've been dealing with the business component - capacity - most of my life. CPAir, Canadian Pacific Airlines, Canadian Airlines International, Air Canada.

There is a difference between short term (days?)over capacity and long term over capacity. I don't think it will be problem in the long term.

with all due respect to a retired collegue.

[ 16 September 2001: Message edited by: Rollingthunder ]

[WhaleDriver]

Remember, many weekend warriors wil be activated. A lot of pilots will find themselves on active duty, and those on active duty that thought they were getting out, will not. We are in interesting times.

[Rollingthunder]

We are all focused on the immediate impact to the tragedy, the humanity lost and the effect to the economy and commercial aviation. There will be a downside. If the business does not display confidence in the future instead of dispair,.... an imagined future may come true. Focus on a positive target.

[ 15 September 2001: Message edited by: Rollingthunder ]

[Poke Guy]

During the Gulf War, the load factor was really pitiful. I flew a DC10 at the time and at worst, we had 10 pax with 13 air crew. Hope it's going to be better this time.

[A7E Driver]

Unfortuantely, the news from Midway and Continental is probably just the start of a long series of similar announcements on both sides of the pond. Thanks Osama. Hope one lands right in you lap.

[411A]

Vsf--
If I were you I would look for a position in the time-share execjet market. There will certainly be increased demand for this service due to security and destination concerns. Another avenue that will increase will be cargo, many airlines (and not just US) are limiting belly cargo as a security risk. We have just today received a request for an additional L10 freighter for SE Asia for this service, more to follow i'm sure. The scheduled pax market will experience a severe downturn IMHO.

[PaperTiger]

Sincere apologies to Rollingthunder. I posted Overcapacity is the bane of all airlines, something RT probably does need reminding of.
which of course should have been ...probably does not need reminding of...

Changed the whole sense unfortunately.

[Vsf]

411A--
Thanks for the insights. They jibe with my inclinations, so I guess I am on the right track.

SE Asia is where I'd like to wind up, and I wish you well placing your plane out there. I lived in the general region for years. I'm hoping to work my way back there after I add some jet time to my turboprop experience. I don't eat bread any more; it's rice now. Egads, the far east did grow on me.

I'll send an email your way. I did email you a few months ago, though I dunno if you remember. Your address as listed here a good one?

[ManagedNav]

411-A(hole)...

I must say that your recent coment on this thread finally got my goat...

It amazes me that you can be so cynical even in the face of such a calamity....I think that I can safely say that no decent pilot is interested in your opinion; Take a hint and blow it out your butt!

There are alot of us facing furlough @ the majors over here and the last thing we need to see on an otherwise good forum is your relentless stupidity posted here....

[wallabie]

We'll all know a lot more at market opening Monday morning. As usual, the US will give the world its tune.
European airlines have already lost an average of 35 % of their current market value in just 3 days !!! and I am pretty damn sure that, although there's isn't a train between JFK and London, everyone who can avoid to fly will just do that.The Gulf war will look very mild as far as consequences go.
It's only been a few days and this thing is sooooooo incridible that in my opinion, it hasn't really sunk in yet and it is pretty hard to guess what the real effects will be.
One thing is sure, the party is over and what a tragic hangover !!!

[411A]

Too bad your attitute, ManagedNav, is so hostile, but suspect that you, like many (especially younger) pilots have looked at the US (and foreign) airlines through rose-colored glasses and now REALITY is there for all to see. Those of us who have been around for awhile have seen this severe downturn scenario before and the picture it presents is not a pretty one. Airlines are NOT bottomless money pits as many pilots believe and the beancounters will have their say, like it or not.
Grow up and face reality, sport.

[Airbubba]

I'm now hearing reports through ALPA channels that Northwest will furlough up to 1000 pilots effective October 1 in addition to the furlough announced before the attack...

[PaperTiger]

Doesn't the NW contract have a furlough cap ?
Only new hires since the effective date, which from a post elsewhere I understand to be 995 total.

[Airbubba]

>>Doesn't the NW contract have a furlough cap ?
Only new hires since the effective date, which from a post elsewhere I understand to be 995 total.<<

I don't think NWA has to contractually give thirty days notice or honor the no-furlough clause in this instance according the 1998 agreement if the company is able to establish that the situation is due to a "war emergency". This definition will surely be vigorously debated.

However I am told that the required written notice (subparagraph 1.D.3) has been or will be shortly delivered.

Most other airline contracts have similar language (e.g. the "force majeure" clauses in the UAL agreement).


Take a look:

SECTION 1

RECOGNITION AND JOB SECURITY


D. Job Security Protection

1. Layoff Protection

No pilot on the Pilots System Seniority List with a date of hire prior to the date of signing of this Agreement shall be laid off during the period from the date of signing of this Agreement through the date one year after the amendable date of this Agreement.

2. The Company shall be excused from compliance with the provisions of subparagraph D.1. above in the event a circumstance over which the Company does not have control is the cause of such noncompliance, but only to the extent, and for the time period, that an exception is made necessary by such circumstance. The term "circumstance over which the Company does not have control" includes, but is not limited to, an act of nature; labor dispute; grounding of a substantial number of the Company's aircraft by a government agency; reduction in flying operations because of a decrease in available fuel supply or other critical materials due to either governmental action or commercial suppliers being unable to provide sufficient fuel or other critical materials for the Company's operations; revocation of the Company's operating certificate(s); war emergency; owner's delay in the delivery of aircraft scheduled for delivery; manufacturer's delay in the delivery of new aircraft scheduled for delivery. The term "circumstance over which the Company does not have control" shall not include any economic or financial considerations including, but not limited to, the price of fuel or other supplies, the price of aircraft, the state of the economy, the financial state of the Company, the relative profitability or unprofitability of the Company's then-current operations, or a shortage of pilot applicants who meet the Company's employment standards.

3. The Company shall immediately notify the Association in writing if it intends to invoke the provisions of subparagraph D.2. above. The Company shall, in the same document, describe in detail the circumstance which it believes permits noncompliance with subparagraph D.1.

...

SECTION 23

REDUCTION IN FORCE, LAYOFF AND RECALL


A. A pilot who is laid off shall be given 30 days notice or 30 days pay in lieu of notice, provided, however, that when there is a layoff because of an act of nature, labor dispute or other circumstances over which the Company does not have control (as defined in Section 1 D.2.), the employees may be laid off without advance notice or payment in lieu of notice.

[ 16 September 2001: Message edited by: Airbubba ]

[PaperTiger]

The only thing I see in para 2 is 'war emergency'. Debatable right now, as you say.
Everything else which could concievably be applied seems to be specifically excluded.

[ManagedNav]

411:

The hostility displayed on the last post was not a result of looking @ the airline industry through "rose-colored glasses" or any other of your suggestions....It simply came from being under duress and seeing one of your famously negative inputs @ the wrong time.

I have never taken my job for granted seeing that it took me 15 years flying around the world to finally get where I am today.

Since you have graciously offered such profound advice to me and countless others on this site, let me return the favor....
retire and get a real life.