CONTINENTAL Airlines has announced that it is finally scrapping its low-fare Lite operation and has reached agreement on aircraft deferrals with Boeing. The news came as the airline revealed that net losses grew to $613 million in 1994.
The troubled carrier has already trimmed back heavily on the costly Continental Lite service and now says that the venture will be eliminated entirely in July. The service lost its champion in 1994, when chief executive Robert Ferguson resigned abruptly, to be replaced by Gordon Bethune.
Continental, has also reached an agreement with Boeing, to defer all aircraft deliveries scheduled for 1996 and 1997. In addition, five Boeing 767s which had been scheduled for delivery this year have been sold to a third party and replaced by five 767s, which Continental will accept starting in 1998. The delivery delay saves the carrier $200 million. Another 43 Boeing aircraft remain on order for delivery between 1998 and 2002.
Continental has put in place agreements with Boeing and its major lenders to defer $370 million in payments over the next two years, provided that agreements with aircraft lessors are first agreed. The carrier has also recently won clearance from the local authorities to cut back its operations, and therefore costs, at Denver International Airport.
The carrier, which has been through two bankruptcy re-organisations, had already revealed preliminary operating results for 1994, but has now added a $447 million charge to cover the cost of slimming down its operations and aircraft retirements. The year's operating loss was also worse than expected, at $10 million.
Continental hopes that the beginnings of a turnaround will start to show through in the first-quarter results for 1995 when they are released at the beginning of May.
Source: Flight International
