01 October 2005

Cancelling Flights

In our daily newsletter yesterday, 30 September 2005, the company announced it is considering cancelling flights in select markets due to high fuel prices and the fact that the company hasn't been able to achieve wage reductions from all work groups, mainly the flight attendants. I find it difficult to believe that the still to be enacted wage reduction for that one workgroup is making the difference in us being profitable or not, since the company was only looking for approx. $78 million in concessions from them, far less than every other work group.

With jet fuel almost reaching $125 per barrel this week, CO is considering temporarily suspending some flights in select markets. The extremely high cost of fuel, together with the fact that CO has not been able to achieve its targeted wage and benefit reductions, means that the revenue from some flights doesn't even cover the cash costs of operating those flights.

The company went on to say that high fuel costs and the flight attendants not reaching an aggreement on concessions have combined to render revenue from certain flights to not cover the cash operating expenses.

Both American Airlines and Delta Airlines announced flight cancellations. American announced that they are cancelling 15 round trip flights out of it's Chicago and Dallas-Ft. Worth hubs and will re-evaluate at the end of the month their decision. Delta announced that they are 'proactively' cancelling 'some' flights in order to conserve fuel.

Now at the same time, we are having a system wide employee appreciation day, with free ice cream and free t-shirts for all the employees. Supposedly this appreciation day is being underwritten by General Electric since they are designing and building the GEnx engines that will power Continental's Boeing 787 aircraft.

While I'm sure the front line employees will eat up the ice cream and t-shirts, i would tend to think that it doesn't make up for the pay reductions and financial uncertainty that our company is careening towards at an ever-increasing speed.


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