Davies"Unfortunately, the policies that had been successful for more than forty years under Robert Six's cavalier style of management were suddenly laid bare as the cold winds of airline deregulation changed all the rules—specifically, the balance between revenues and expenditures. InTexas International Airlines acquired a controlling interest in Continental. The companies were merged inmoved to Houston, and grew into one of the country's largest carriers despite facing financial and labor issues, eventually becoming one Continental Airlines - Fredda - Marshmallow Paradise (CD the more successful airlines in the United States.
Continental's shareholders received 1. Although the merged airline retained the United name, it uses Continental's operating certificate and livery. Varney Speed Lines named after one of its initial owners, Walter T. Varneywho was also a founder of United Airlines was formed inoperating airmail and passenger services in the American Southwest over a route originating from El Paso and extending through AlbuquerqueSanta Feand Las Vegas, New Mexico to Pueblo, Colorado. The airline commenced operations with the Lockheed Vegaa single-engine plane that carried four passengers.
Following cancellation of all domestic airmail contracts by the Roosevelt administration inRobert F. Six learned of an opportunity to buy into the Southwest Division of Varney Speed Lines which needed money to handle its newly won Pueblo-El Paso route. Profits from military transportation and aircraft conversion enabled Continental to contemplate expansion and acquisition of new airliners after the war.
The Convairs were Continental's first pressurized airliners. Each route included stops in several of 22 smaller cities. In the early s, Continental began several interchange routes with American, Braniff, and United Airlines. Continental's Denver to Kansas City route would interchange onto St. These interchange routes continued for many years until Continental was able to secure routes of its own between each city. Bob Six commented on more than one occasion that, "the reason we bought Pioneer was to get Harding.
During Lawrence's tenure Continental grew by percent. Lawrence left Continental in April to head Braniff Airways. He was discussing with Boeing for Continental to become one of the first to operate the soon-to-be-launched The timing was crucial, since new routes would justify the s, and vice versa. Continental Airlines had seen a broad expansion of its routes, thanks to a responsive CAB and persistent efforts by Six and Executive Vice President Harding Lawrence who came to Continental in the Pioneer mergerwho both frequently referred to his company as "the Airline that needs to grow.
The CAB permitted Continental to drop service at many smaller cities, enabling the carrier's new aircraft to operate more economically on longer flights. In Continental flew more than three times the passenger-miles it had in During the late s and early s Six was the airline industry's leading lower-fare advocate. He predicted that increased traffic, not higher fares, was the answer to the airline industry's problems.
To amazement from the industry he introduced the economy fare on the Chicago-Los Angeles route in He later pioneered a number of other low or discount fares which made air travel available to many who could not previously afford it.
It developed the "progressive maintenance" program, which enabled Continental to fly its fleet seven days a week, achieving greater aircraft utilization than any other jet operator in the industry.
In the company headquarters moved from Denver to Los Angeles. During the late s the company disposed of the last of its turboprop and piston-powered aircraft—one of the first U. The DC-9 and were to become the workhorses of the fleet from the late s.
In a new livery was launched: orange and gold cheatlines on a white fuselage; and a black "jetstream" logo by Six's friend, the noted graphic designer Saul Bass on the iconic "Golden Tails" of the airline's aircraft. Air Micronesia operated as subsidiary Continental Micronesia until A United States Supreme Court decision allowed a Colorado anti-discrimination law to be applied to his case against Continental. Its upper-deck first class lounge and main deck "Polynesian Pub" won awards worldwide for the most refined cabin interior among all airlines, as did meal services developed by Continental's Cordon Bleu-trained executive chef, Lucien DeKeyser.
This decision again proved prescient, since the publicity associated with Continental's splashy service Chicago-Denver-Los Angeles-Honolulu had stimulated increased market share and increased traffic for all carriers.
During the s, Denver served as the airline's main hub. The s were focused on the Chicago-Los Angeles-Honolulu routes, with one daily round trip through Denver. DC-9s and s predominated elsewhere and added frequencies on DC routes. Continental saw market share grow annually in each DC market through the s, until relative market parity was achieved with United, the principal competitor on most of the DC routes.
The same innovations introduced on the s appeared on Continental's DCs, including the "Polynesian Pub", but after the oil crisis more seats were needed and the DC pubs were removed. From the mid s until it merged with Texas International, Continental operated only DCs, s, and s. The facility included the general offices, system operations control, the central maintenance facility, flight kitchen, and Los Angeles crew bases. Inafter years of delays and legal proceedings, Continental started flights between Houston and Miami, and on May 21,Continental was authorized to operate long-sought routes between San Diego and Denver.
President Jimmy Carter and Civil Aeronautics Board chairman Alfred Kahn had been promoting deregulation of the airline industry, which would dissolve the CAB and for the first time in industry history allow U. Petersburg in Florida. The South Pacific service began May 1, Service between Houston and Washington, D. Continental Airlines only operated the DC and the at the time, so flights to Hawaii were cancelled during the grounding.
By the time of the Texas Air Corp. But that growth came at the cost of continuing losses. In Denver, Continental's rapid growth provided the final impetus for the construction of the new Denver International Airportwhich would be completed almost fifteen years later.
While deregulation allowed Continental to expand into new areas, it hurt the company's existing business as consumers were for the first time able to choose lower fares over Continental's better service. In Continental and Western Airlineswhich held a nearby headquarters and similar fleet, began a nearly three-year attempt to merge. The route systems would have been complementary, with little overlap; although they both served the Western states, Continental had strength in Hawaii, southern-tier and the Great Plains states; Western's strengths were in the California intrastate market, Alaska, Mexico, and the Intermountain West.
The merger attempt failed when Texas Air Corporation interceded with its acquisition of Continental. Davies: "Unfortunately, the policies that had been successful for more than forty years under Robert Six's cavalier style of management were suddenly laid bare as the cold winds of airline deregulation changed all the rules -- specifically, the balance between revenues and expenditures.
InTexas Air Corporationan airline holding company controlled by U. Management teamed with unions to create a planned Employee Stock Ownership Plan ESOP that would have doubled the number of outstanding shares without shareholder approval, thus diluting Texas Air's ownership stake and maintaining control of the airline. But management lost the legal battle to enact the ESOP without shareholder approval and with its He and his team viewed the company as stuck in the pre-deregulation era and in need of serious changes to be competitive.
Continental was experiencing significant financial challenges both before and after Texas Air's takeover, and management showed how Continental could not compete and survive with its cost structure. On October 31,following approval by shareholders of both companies, Continental merged operations with Texas Internationalretaining the Continental identity and offering service to four continents North and South America, Asia and Australia with a fleet of aircraft.
Continental launched its frequent flyer program, initially called Travel Bank, in Septemberfollowing that of Texas International Airlines in which was the industry's first frequent flyer program, and American Airlines AAdvantage program in In mid, Continental relocated its headquarters to Texas International's base in Houston, Texas, which resulted in a large expansion of its hub at Houston Intercontinental Airport and extensive new routes to Mexico and the south central U.
Even with the cost reductions from the pilots inContinental faced a major competitive threat in when American Airlines was able to implement two-tier wage structures with its unions. American was already one of Continental's main competitors, operating a larger hub miles north of Continental's southern hub in Houston and the growth that was funded by the lower pay rates was larger than all of Continental at the time.
InContinental went to its unions to restructure labor costs to compete with the startup carriers and American's Plan B labor costs. After 19 months of negotiations, the International Association of Mechanics and Aerospace Workers went on strike in Augusteven though the company was offering 20 percent pay raises in return for substantial productivity improvements.
Airline unions fought Continental at every step. On October 1,the pilots and flight attendants joined the IAM, which was still on strike.
When Continental resumed service three days after filing Chapter 11, it initially served 25 cities versus the more than 70 cities previously. In the initial stages of bankruptcy, with no legal agreement that would allow travel agents to book flights, passengers could only book directly with the airline.
And, with no credit card agreements, Continental could only accept cash for travel. In the federal courts, the unions unsuccessfully sued to stop the company's reorganization. They were later successful in working to persuade Congress to pass a Album) bankruptcy law preventing bankrupt companies from terminating contracts as Continental had successfully done, but the law was too late to affect Continental.
Following bankruptcy, Continental was freed of its contractual obligations and imposed a series of new labor agreements on its union workers, sharply reducing the airline's labor costs. Additional service from Newark to London and Paris started after the airline's merger with PeopleExpress Airlines in With that merger came significant customer service issues, especially in the Northeast, for a period Album) time.
In OctoberTexas Air Corp. PeopleExpress paid a substantial premium for Frontier's high-cost operation. The acquisition, funded by debt, did not seem rational to industry observers from either the route integration or the operating philosophy points of view. With PeopleExpress losing money, Texas Air announced the acquisition of PeopleExpress on September 15,at the same time gaining Frontier, whose strong network in the Great Plains and intermountain West reinforced Continental's already formidable Denver hub.
With a reorganization plan that repaid creditors percent, Continental emerged from bankruptcy on June 30, with improved asset and cash flow positions and a more competitive route structure with routes radiating to every large U.
The mergers and the aggressive marketing led to Continental becoming an even larger player in the northeastern markets. Under the agreements, Lorenzo would be leaving the active management of the airline as CEO for the first time in 18 years and would remain on the board of directors for two further years. On December 3,due to the Iraqi invasion of Kuwait and the resultant Gulf Warwhich had prompted a dramatic increase in the price of jet fuel, Continental filed for bankruptcy.
Under the arrangements, Air Canada would have 24 percent of the voting stock, while Air Partners would hold 41 percent of voting interest in the reorganized Continental. In March the airline cancelled its services to nine U. Between andContinental experimented with an "airline within an airline" by launching CALitelater renamed Continental Litewhich provided all-economy, low-fare, no-frills service between primarily leisure destinations. The service was based primarily at Continental's existing hub in Cleveland as well as a new hub established in Greensboro, North Carolina.
The experiment proved unsuccessful and was dissolved in Continental's short-lived Greensboro hub was dismantled in the process. Former Boeing executive Gordon Bethune became president and CEO in October and was elected chairman of the board of directors in Power and Associates awards for Customer Satisfaction than any other airline. BusinessWeek magazine named Bethune one of the top 25 Global Managers in and Fortune named Continental among the Best Companies to Work for in America for six consecutive years.
In his final year piloting the airline Fortune magazine ranked Continental 's No. While at Continental, Bethune created the Go-Forward plan, to fix problems with the airline, which included employee morale, the quality of the product, and the route structure, among others. Bethune began by ordering new aircraft in an effort to convert to an all-Boeing fleet.
Beginning inContinental again embarked on a program to expand its international operations. On March 1,Continental launched a non-stop service from Newark to Hong Kongoperating over the North circumpolar route. It was the first non-stop long-haul route for any airline with flying duration exceeding 16 hours. Among U.
Inservice to Asia was expanded as Continental introduced daily nonstop service between Newark and New Delhi, India. The success of this Newark-New Delhi route presaged establishment of a second gateway in India with the announcement of daily nonstop service to Mumbai.
With the establishment of Mumbai service, Continental offers the most nonstop flights by any carrier from the United States to India. Of issue would be Continental's golden share held by Northwest Airlines and the divestiture of Continental's Guamanian hub. A deal was not "certain or imminent", with the talks being of a preliminary nature. This allowed Continental to buy back the golden share from Northwest Airlines, which it did. In MayContinental Airlines sold its remaining 4. Continental had been a principal shareholder in Copa.
The airline also reduced capacity and eliminated 67 mainline aircraft from its fleet by the end ofretiring all of Continental's s and all but 35 of its s.
The new Continental-United relationship has been characterized as a "virtual merger" in some circles. In SeptemberContinental announced that it would commence providing seasonal non-stop service between Houston and Rio de Janeiro. The new non-stop flight was timed to provide roundtrip flight connections at Continental's Houston hub to more than cities throughout the U.
During the demonstration flight, Continental's test pilots successfully conducted a number of flight maneuvers, and the biofuel met all performance requirements as compared with traditional jet fuel. The biofuel blend included components derived from algae and jatropha plants, both sustainable, second-generation sources that do not impact food crops or water resources or contribute to deforestation.
In JuneContinental Airlines took delivery of another new Boeing ER, which was painted with a retro livery to commemorate the airline's 75th anniversary.
The livery, which was originally used on aircraft beginning in and is called The Blue Skyway, was selected by Continental employees. Continental flew the aircraft to its three hubs for anniversary celebration events for employees and retirees. Post-merger, United Airlines maintains the livery, but on a different ER than the aircraft originally carrying it. Continental was the first airline to use this technology. The route was scheduled to start on June 10, Continental Airlines became the first airline to launch a mobile boarding pass service to London's Heathrow.
The service allowed customers to receive boarding passes electronically on their mobile phones or PDAs. In FebruaryUAL Corporation and Continental Airlines began the advanced stages of merger talks and were expected to announce their decision in the immediate aftermath Continental Airlines - Fredda - Marshmallow Paradise (CD a definitive merger agreement between rival Delta Air Lines and Northwest Airlines.
On April 27,Continental broke off merger negotiations with United and stated it was going to stand alone. United and US Airways were in advanced merger talks in late Aprilfollowing the announcement that Continental had broken off talks with United. The alliance was an agreement to link international networks and share technology and passenger perks. This agreement was termed a "virtual merger" as it included many of the benefits of a merger without the actual costs and restructuring involved.
The alliance took effect about a year after Delta Air Lines and Northwest Airlines completed their merger, as that released Continental from the SkyTeam contract and allowed for the required nine-month notice.
A New York Times report indicated that a deal was close. Union consent was cited as a major hurdle for negotiators to clear. On May 2,the boards of directors at Continental and United Airlines approved a stock-swap deal that would combine them into the world's largest airline in revenue passenger miles. The new airline would take on the United Airlines name, Continental's logo and be based in United's hometown of Chicago.
The deal received approval from US and European regulators in the summer of The shareholders of both airlines approved the deal on September 17, In AugustContinental and United Airlines revealed a new logo that was used after the merger was complete.
Although the two airlines remained separate until the operational integration was completed by mid, as of that day both airlines were corporately controlled by the same leadership. The cookie s will be cleared as soon as you empty your browser cache or 30 days after your visit. These cookies are used to measure website performance and user behavior. All collected data are analyzed anonymously. You can prevent the collection and use of data cookies and IP address by not accepting these cookies or by downloading and activating the browser plug-in available here.
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