Continental to cut 3,000 jobs

Continental Airlines said Thursday that it would cut 3,000 jobs and retire 67 Boeing aircraft, becoming the latest airline to announce capacity reductions in the face of high prices for jet fuel.

Continental's announcement came a day after United Airlines said it was discontinuing Ted, its low-fare airline, cutting 1,100 more jobs on top of previously announced cuts and retiring 100 aircraft. Delta Air Lines and American Airlines have announced similar steps.

Continental's move, which equals a 16 percent reduction in its capacity, had been rumored in industry circles on Wednesday. The details came in a message to employees from Continental's chief executive, Lawrence Kellner, and its president, Jeffery Smisek.

The airline, based in Houston, said Kellner and Smisek would not accept their salaries for the rest of 2008.

“The airline industry is in a crisis,” the two executives said in the message to employees. “Its business model doesn't work with the current price of fuel and the existing level of capacity in the marketplace. We need to make changes in response.”

Continental said that at current prices, it would pay $2.3billion more for jet fuel than in 2007 – or about $50,000 per employee. It said that “a large number” of its flights were losing money, and that fare increases had not been enough to cover the higher fuel costs.

Continental said it would give details next week of the flights that will be cut. It said it expected most employees would leave voluntarily, although there would be some layoffs. Most of the departures will take place in the fall, although some management and clerical employees will leave sooner, the airline said.

Continental, which has already retired six Boeing 737 aircraft this year, said it would retire another 67 planes through 2009.

However, the airline said it would still take delivery of new, more fuel-efficient Boeing 737 aircraft this year and next year. The net reduction in its fleet will be 31 planes by the end of 2009, when it will have 344 aircraft, it said.