Continental to File Reorganization

The parent company of Continental Airlines, which flew into bankruptcy in late 1990, hopes to file a reorganization plan today that would wipe out its existing stock and give new shares to unsecured creditors.

One big loser would be Scandinavian Airline System, which in 1990 entered a complicated deal that gave it a 16.8% share of Continental’s common stock as it bought out Frank Lorenzo’s stake in the company.

SAS stands to lose the money it put up, although it still gets the benefit of having international passengers fed onto its flights from Continental’s strong U.S. domestic system.

Should Continental Airlines Holdings Inc. find a way to successfully emerge from bankruptcy, it would be the first airline company to do so over the past several years of deep financial troubles for the industry.

Continental had been in bankruptcy before, beginning in 1983, but it got out three years later.

“We remain hopeful that we will be able to file a plan,” Continental spokesman Art Kent said Wednesday from the carrier’s headquarters in Houston.

Continental would not comment Wednesday on the specifics of its plan for reorganization.

But Continental has said in filings with the Securities and Exchange Commission, and in a telephone message to employees, that the company’s stock would be eliminated and unsecured creditors would get equity in the reorganized company.

Although Continental’s trip through bankruptcy has included talks of a merger with at least three airlines, USAir, Northwest and TWA, or of a possible cash infusion from a major investor, the company’s reorganization plan would attempt to keep the company alive as a stand-alone entity.