Archive for the 'Continental' Category

Continental Dumps Free Meals in Coach

Published
by
Dan Webb
on March 16, 2010
in Continental
. 2 Comments

Yesterday, Continental announced that it would no longer be serving free meals in coach, opting instead for buy-on-board options that will launch this fall. To be honest, this move really isn’t really shocking. Other legacy airlines have had no meals in coach for years now, and Continental was the lone holdout, with coach meals at mealtimes.

The airline was trying to advertise the heck out of that fact though  – below are two advertisements I saw when in New York this past September. My guess is that Continental came to the conclusion that free meals in coach wasn’t bringing them enough customers from other airlines to make it worth their while.

Non-alcoholic beverages and some snacks (like pretzels) will remain complimentary. The latter still puts Continental ahead of some other carriers. Free meals in economy will still be found on intercontinental flights and domestic flights that are longer than six hours. And of course meals will still be found domestically in the first class cabin.

Continental has said that the offerings will be composed of “high quality, healthy food,” though no specific menu will be announced until the airline gets closer to launch. To be honest, I think the food will be of a good quality. When meals are free, an airline is really looking at controlling costs, which means a cheap product. But when an airline starts selling buy-on-board options, making an appealing product becomes much more important. And airlines have already found that customers will pay for quality. United, for example, saw a large increase in food sales when it unveiled new food options over the summer.

So, yes, it’s a bit disappointing to find that no airlines will serve free meals domestically anymore, but the move isn’t all that surprising, and I think we’ll see a higher quality product now.

Looking at January Revenue Estimates

Published
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Dan Webb
on February 8, 2010
in Continental, JetBlue, Southwest and US Airways
. 0 Comments

Quick post today – for one, I’ve been traveling. Second, my main laptop’s battery is broken, so I’m writing with an Asus Eee netbook. It’s a cool little thing, don’t get me wrong, but typing for awhile can be a hassle.

Anyway, here are the PRASM estimates from the carriers who provide them:

And, as always, here’s a graph of Continental’s results, as they provide a final number for the month prior:

So, for each carrier we saw an improvement from the month prior – and that’s great. Of course, Southwest’s results stand out a bit with the double-digit increase, and I think that’s mainly driven by an increase in load factor by over 9 points for the airline. During the airline’s earnings all CFO Laura Wright said that comparisons might get harder as capacity will be down less in future months than in January. But, at the same time, as we move forward, the 2009 numbers that will be used for comparisons for all cariers will be getting progressiviely worse, which can only help the numbers.

On a side note, I wonder how the cutover to Sabre affected JetBlue’s numbers. By all accounts, it went just wonderfully, but during the weekend of the transition load factors were capped at 40-60% on some flights, so that coud’ve had a bit of an effect.



Continental Adds a Pair of Cleveland Routes

Published
by
Dan Webb
on January 27, 2010
in Continental
. 0 Comments

Today, Continental announced new service to Green Bay and Norfolk to Cleveland. Is it really big news? Not really. But it certainly is good news for Cleveland. There’s always been a bit of speculation about its future as a Continental hub (click here for a more recent article). And Cleveland did have a good number of domestic flights cut back in 2008, and has also had routes to London and Paris eliminated.

So, this is good news because Green Bay and Norfolk were two of the cities that Continental cut back in 2008, as it’s a sign that Continental is committed to the hub. It’s even better news for Green Bay since it means the return of Continental (Norfolk already has service to Houston and Newark).

Continental, United Match Delta’s Bag Fee Increase

Published
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Dan Webb
on January 13, 2010
in Continental and United
. 0 Comments

Not surprisingly, now that Delta has raised its checked luggage fees, the other airlines have decided to jump onboard with the exact same policy as Delta – $23 and $32 for the first and second bags, respectively, if the fees are paid online, and $25 and $35 if paid at the airport. (United, for some reason, has decided to not list the discounts for online check-in on its website.) Apparently all of these carriers think the smaller discount is enough to encourage passengers to pay online.

So we’ll have to see what the other legacies do here. US Airways already charges $25 and $35 at the airport, but the discounts are $5 each for paying online. American is charging $20 and $30 for the first and second bags (no matter what). I wouldn’t be surprised if both airlines adjusted their policies. Some other carriers might follow as well.

Meanwhile, I guess Southwest can adjust their “Bags Fly Free” advertising from $100 savings per roundtrip with two bags to $120 in savings – and I suggest they do it quickly, if possible, considering the number of ads they’ve been running during football games this season.

You can see Continental’s baggage policies here and United’s here.

December Revenue Estimates

Published
by
Dan Webb
on January 8, 2010
in Continental, JetBlue, Southwest and US Airways
. 2 Comments

The carriers that usually report monthly PRASM estimates have done so, and below is a summary of the results. Overall, they’re pretty good, especially when one considers that the comparisons for US Airways, Southwest, and JetBlue were less favorable in December than November.

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Southwest came out with the biggest increase at 7%, and I have to think that a good chunk of that improvement is coming from the carrier’s efforts to optimize its schedule and shift capacity, as Southwest saw the biggest increase in load factor of the four carriers – a 6.5 point increase to 76.2%. Plus, Southwest has not been adding cities with new planes – they’ve cut routes that don’t perform all that well, and that capacity can be shifted into new stations like LaGuardia and Boston.

Since Continental revises its monthly estimates with final numbers, here is a graph of those results:

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So, we are absolutely seeing some strong improvements here, and comparisons should turn positive as revenues improve, but also because they will be off 2009’s simply horrendous numbers. But nevertheless, progress is good.

Continental’s Smisek Will Be Paid Only in Profitable Years

Published
by
Dan Webb
on January 6, 2010
in Continental
. 1 Comment

In a letter sent to Continental employees earlier this week, CEO Jeff Smisek (who took over on January 1), said, “I am going to refuse to accept any salary or annual bonus until we make a full-year profit. I am willing to make this commitment because I have faith in you, and because the tone for any business is set at the top.” Smisek’s annual salary is $730,000. It should be noted that analysts are expecting a full-year profit from the Houston-based airline.

Of course, that $730,000 is only base pay – Smisek is still eligible for other forms of compensation. For example, as President and COO, Smisek’s annual salary was $576,000, but he made nearly $4.9 million in 2008, almost $6.4 million in 2007, and over $5.8 million in 2006, according to Continental’s most recent annual proxy statement. But Smisek has made adjustments in this area in the past – from the same proxy statement:

Messrs. Kellner and Smisek each voluntarily waived his salary for the period June 1, 2008 through December 31, 2008, representing a waiver of $415,625 and $336,000 in compensation, respectively, and voluntarily withdrew from the annual incentive program for 2008.

Still a lot of money, but it is a reduction.

This move is great from a public relations perspective. While rhetoric about executive compensation has died down from a year ago, it’s still a polarizing issue. It also makes Smisek look better when compared to some of

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Photo credit: Chris Weyer.

But the biggest hope is, of course, that this move sends a positive message to employees, saying that Smisek is committed to the company and willing to sacrifice like everyone else. And to be honest, I think that message will get across to many employees.

Of course, not all of the employees are happy, and this probably won’t change a thing in some cases. For example, take a look at this snippet from a recent “The Magenta Line,” a newsletter for Newark-based pilots:

…Mr. Smisek has been flitting around the system on his Lowering Expectations Tour, clogging access to our cockpits everywhere as he solemnly explains why he deserves his but we don’t deserve ours and there will be nothing but hard candy stuck to the bottom of our Christmas stockings this year because management didn’t want to pay for candy wrappers.

But Mr. Smisek can’t make everyone happy. His decision is a great move and should be applauded. Another Magenta Line excerpt can be found after the jump. Continue reading ‘Continental’s Smisek Will Be Paid Only in Profitable Years’

ANA, Continental, and United Seek Anti-Trust Immunity

Published
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Dan Webb
on December 24, 2009
in ANA, Continental, Star Alliance and United
. 0 Comments

The Japanese government has said that  both ANA and JAL need to enter immunized agreements with their partners in the United States. So, not surprisingly, ANA, Continental, and United have submitted their application for anti-trust immunity to the Department of Transportation. The three carriers said in a joint news release that immunity would allow them “to create a more efficient and comprehensive trans-Pacific network, generating substantial service and pricing benefits for consumers.”

dec24

In the DOT application, the airlines said the deal will “expand consumer choice and enhance competition in the global marketplace” because it will “improve Joint Applicants’ ability – and the ability of the Star Alliance – to compete effectively with the SkyTeam and oneworld alliances.” They also said that the deal “will not substantially lessen” competition on service between the United States an Asia.

Interestingly, the airlines “evaluated the feasibility of including Air Canada in the Pacific JV, but decided that the additional complexities involved, including restrictions under the Canada-Japan bilateral agreement, would preclude implementation of the JV.”

United already has immunized relationships with carriers in the Pacifc region – Air New Zealand and Seoul-based Asiana.

Assuming this deal goes through, Star is in great shape when it comes to the Asian market – so the big question is what happens to the other two alliances. Will JAL stay with oneworld or hop over to SkyTeam? That question is a huge issue for American and Delta. Personally, I think that American/oneworld has a lot to lose here, while Delta/SkyTeam would be successful either way.

American’s share (as measured by nonstop seats) in the United States-Asia market is a measly 4.5% and and is 12.5% for the mainland U.S.-Japan Market (JAL has 11.5% and 13.4%, respectively). Meanwhile, Delta’s market share in those markets is 15.0% and 30.9%, respectively. The Narita hub acquired from Northwest helps them as well. Basically, American really needs JAL to help stay competitive, though it would still have an Asian partner in Cathay Pacific. (Those numbers are from the Star filing.)

The application is 203 pages long. I know what I’ll be reading this weekend. :)

Anyway, I won’t be posting tomorrow as I’ll be taking Christmas off. I will be writing my usual weekend posts, though. Next week, make sure to come visit and read my review of Up in the Air and why I no longer like Al Roker! :D

Continental Gets Closer to United With OnePass Changes

Published
by
Dan Webb
on December 10, 2009
in Continental
. 0 Comments

Continental announced a couple of changes to OnePass yesterday, and it looks like a couple of moves that align the program with United’s Mileage Plus. The first change is that passengers who earn 100,000 EQMs or 120 EQSs will get four systemwide upgrades, which is kind of similar to United’s 1K – though those who reach the 100,000 mile mark there will get six upgrades (United requires 100 segments instead of 120, too).

The other interesting change is the addition of a new elite tier, Presidential Platinum Elite – which seems like a blend of United’s Global Services and 1K programs. It sounds like Global Services in the sense that it’s an invitation-only program where revenue is a factor. It’s not like Global Service status, though, as there are published requirements – 75,000 EQMs or 90 elite qualification points plus annual spending of $30,000 with Continental.

The new tier does have some nice benefits. For example, members on United flights will board right after Global Services and 1K, which is a nice perk as Continental Platinum members are behind United’s Premier Executive members with the current system. Another great perk is a Presidential Plus World MasterCard with the annual fee waived, and that is an attractive benefit as the card includes a free membership to the Presidents Club.

You can see all of the details here on FlyerTalk.

Continental To Offer $200 Million in Notes

Published
by
Dan Webb
on December 8, 2009
in Continental
. 0 Comments

Continental announced yesterday that it would be offering $200 million in notes, along with a $30 million over-allotment option. Continental is expecting between $194.75 and $224 million dollars in proceeds, depending on if the over-allotment option is exercised. The notes will pay annual interest of 4.5%. Of course, we’ll have to see what the yield turns out to be.

This, like all of the other liquidity moves in the industry, makes sense when airlines need to maintain their cash position. Plus, according to the airline’s most recent 10-K, Continental does have a decent amount of long-term debt – $968 million – maturing in 2010.

Today’s big story is obviously United’s decision to order both the Airbus A350 and the Boeing 787, and I’ll have a post on that tomorrow.

Continental Announces More Hawaii Flights from Orange County

Published
by
Dan Webb
on December 7, 2009
in Continental
. 0 Comments

Continental is continuing to fill the void left by Aloha’s bankruptcy, by boosting its previously announced flight to Honolulu and announcing the addition of a nonstop to Maui.

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Photo credit: Chris Weyer.

Awhile back, Continental announced that it would begin four-times weekly (Thursday, Friday, Saturday, Sunday) service to Honolulu starting on March 7. The airline also said that it was planning to make that service daily during the summer. Well, now that service will be daily from the beginning, and will add four-times weekly service (Thursday, Friday, Saturday, Sunday) to Maui. Both flights will be operated with 737-700 aircraft.

What’s interesting to me is how they’re scheduling these flights. Honolulu was originally going to leave Orange County at 5:20 PM, and return at 7:45 AM the next day, allowing the aircraft to do other flying during the day. Now, the flight to Maui with those same departure and arrival times. Now, the Honolulu flight operates during the day, leaving at 9 AM and returning at 9:35 PM. Based on Continental’s current schedule out of Orange County, it appears that the aircraft will be spending the night at Orange County.

The Hawaiian market has certainly been fun to watch of late. Let’s see what happens. :D

Looking at November Revenue Estimates

Published
by
Dan Webb
on December 7, 2009
in Continental, JetBlue, Southwest and US Airways
. 0 Comments

Well, it’s the beginning of the month, and that means we can now look over the results of the four airlines that provide PRASM estimates: Continental, JetBlue, Southwest, and US Airways. The good news is that all of the airlines mad progress compared to last month. The bad news is that there’s still more progress to be made. Here are the results:

dec7

This month’s results were probably boosted by Thanksgiving – last year, the holiday fell later in the month, making some traffic go into December. It did fall a bit earlier this year, though, which boosts this month’s comparison. Southwest’s impressive 12% increase was also aided by the fact that the PRASM increase in November 2008 was only 1%, providing for an easier comparison here.

Since Continental actually gives revised final numbers, here’s a graph of their performance the past few months:

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So, progress is being made here.