Continental to Lay Off 600, Cut More Than 100 Flights

Continental Airlines said Tuesday it will lay off 600 employees and cut more than 100 flights daily as it tries to fight its way out of Chapter 11 bankruptcy.

The company said that it will give up 22 jets it has been leasing and that it has negotiated $315 million in cost deferrals from 32 aircraft lessors.

The moves were the first of what Continental Airlines Holdings Inc. has hinted will be sweeping changes resulting from a “broad re-examination” of corporate strategy announced this month.

More flight reductions and layoffs can be expected, Continental spokesman Dave Messing said.

“That review of the company’s expenses is continuing,” he said. “Today’s announcement partly reflects the outcome of that review, and we expect in the weeks ahead another phase leading to further staff reductions.”

Continental also won a victory in its bankruptcy proceedings Tuesday when U.S. Bankruptcy Court Judge Helen Balick extended the company’s exclusive right to file a reorganization plan for another 120 days.

It was the third such extension for the airline company, which filed for bankruptcy in December, blaming high gasoline prices and oil prices and a severe slump in travel for its financial losses.

The company, formerly known as Texas Air Corp., also has about $4 billion in long-term debt, much of it dating to its aggressive expansion in the 1980s.

Some of the 600 layoffs announced Tuesday were positions that are “subject to recall” when the airline emerges from the industry’s traditional fall slump, Messing said.

Most were in airport service and cargo divisions, but future cuts “will primarily affect headquarters management and clerical staffs,” the company said in a news release.

The airline said it will cut its number of daily departures from 2,137 to 2,004, which will enable it to drop the 22 leased jets from its fleet.

The lost flights were largely to secondary and seasonal destinations such as Bar Harbor, Me., and Martha’s Vineyard, Mass.

The company also said it has completed a previously announced deal for a $120-million commercial bank line of credit.

“I think this can be summed by saying it all adds up,” Messing said. “The company is very interested in cutting expenses.”

Continental’s creditors committee, impatient with the airline’s slow progress on formulating a plan to get out of bankruptcy, had asked that it be allowed to file its own plan, but the judge rejected the idea.