Continental Reaches Union Deals on Wage, Benefit Cuts

Continental Airlines Inc. reached its goal of finding $500 million in annual savings by Monday with the announcement of tentative agreements for wage and benefit cuts with unions representing pilots, flight attendants, mechanics and dispatchers.

The Houston-based carrier with 41,000 employees announced the tentative contract agreements Monday but revealed no details so that unions could spread the word directly to their members. The pacts are subject to union leadership approval and ratification by each work group, the results of which are expected by the end of March.

Continental had identified $169 million in wage and benefit cuts from nonunion employees, such as those in management, reservations and food services, as well as workers in clerical jobs and those in domestic airport ticket, gate, ramp, operations and cargo jobs.

The carrier said last year that it needed concessions from employee groups to stave off a potential liquidity crisis, layoffs and deeper payroll cuts in light of soaring jet fuel costs. Continental was the last of the nation’s large carriers to seek such concessions after squeezing $1.1 billion in savings and revenue enhancements.

The airline expects to achieve about $500 million a year in savings if the agreements are implemented.

“I know a reduction in pay and benefits is painful. However, these agreements, along with the reductions from the rest of our work groups, will put in place the tools we need to be successful and grow our company, securing the careers and retirement of all Continental employees,” said Larry Kellner, chairman and chief executive, in a statement.

Those savings don’t include the noncash costs of about 10 million stock options that Continental would issue to most employees in connection with the proposed wage and benefit cuts, the company said Monday.

Kellner said the stock option grants, which would not be made to officers and directors, would “give employees a meaningful stake in the company’s future success.”

Continental shares declined 18 cents to $10.71 on the New York Stock Exchange.