Continental Sees $300M in Savings for 2005

Continental Airlines Inc. expects to save about $300 million in 2005 from pay and benefit reductions achieved for most work groups, the air carrier said Friday in an update for investors.

In the presentation filed with the Securities and Exchange Commission, Continental said it expects to achieve roughly $418 million of savings on an annualized basis when the cuts are fully implemented.

The Houston-based carrier also said that despite continued improvement in revenue trends, it still expects to record a "significant loss" for 2005, due to record high fuel prices.

Continental said Boeing Co. has agreed to provide backstop financing for the purchase of some airplanes.

Continental recently announced an order for two new Boeing 777-200ER widebody aircraft to support its international expansion. The aircraft are scheduled for delivery in the first quarter of 2007.

The company also said it expects its debt principal and capital lease payments for the third quarter to be around $74 million.

It anticipates ending the third quarter with an unrestricted cash and short-term investments balance between $1.9 billion and $2 billion, and expects to end 2005 with a cash balance of about $1.5 billion and capital spending of around $236 million for the year.

Continental expects to contribute roughly $63 million to its pension plans in 2005, net of pension expense. The amount is based on noncash pension expense of around $241 million and estimated contributions of $304 million.

To date, Continental has contributed $220 million to its pension plans, consisting of 12.1 million shares of ExpressJet stock valued at $130 million during the first half of 2005, $50 million of cash in the second quarter and an additional $40 million of cash in July, the filing said.

Looking ahead, the company said domestic advanced bookings through mid-October are slightly ahead of last year at this time, while international advanced bookings are running slightly behind the same period last year.

Continental said it is seeing a trend toward booking closer to the date of travel, as pricing has made fares closer to the travel date more attractive than in prior periods.