Impact of airline's cuts on Guam still unclear
By Gaynor Dumat-ol Daleno
Pacific Daily News
June 7, 2008
The parent company of Guam-based Continental Micronesia announced it will reduce flights and lay off about 3,000 managers and employees worldwide because of jet fuel prices.
"Our fuel expense this year would be $2.3 billion more than it was last year. That increase alone amounts to about $50,000 per employee," Houston-based Continental Airlines stated in a bulletin to employees.
What Continental Airlines' cutbacks mean to its employees on Guam and the rest of Micronesia is unclear at this time. Continental Micronesia's Guam office isn't commenting on the flight cuts and layoffs announced by its parent company's corporate office.
Grace Garces, with Continental Micronesia's marketing office, said there's nothing to add to what corporate has announced.
On Guam, Continental Micronesia employs about 1,500 people and its $90 million annual payroll has been an asset to the local economy.
When Continental Airlines trimmed as many as 12,000 of its 56,000 global workforce weeks after 9/11, about 250 Continental Micronesia employees were furloughed, according to Pacific Daily News files.
"Continental doesn't anticipate any further comment until after it has had the opportunity to meet with employees during the next week," the airline's Houston corporate office stated.
The airline stated fare increases haven't been enough to cover its soaring jet fuel costs.
They acknowledged, with higher fares, fewer people will fly.
"As fewer customers fly, we will need to reduce our capacity. ... As we reduce our capacity, we will need fewer employees to operate the airline," according to the company statement to its employees.
Continental's 3,000 global job cuts translate to almost a 7 percent reduction in its 45,000 global workforce. The job reductions will take effect after the peak summer season, except for management and clerical reductions, which will begin sooner, the airline states.
"The company will offer voluntary programs in an effort to reduce the number of co-workers who will be furloughed or involuntarily terminated due to the capacity cuts. Details of these programs will be available next week," the airline states.
The airline industry is facing its worst crisis since the terror attacks in 2001, Continental states.
Guam tourism
There's concern globally in the tourism and travel industry about soaring fuel prices, said Gerry Perez, Guam Visitors Bureau general manager.
He said airlines in general are trying to cope by reducing flights and maximizing capacity. The best way to insulate Guam from the impact of any reduction in flights is to aggressively promote the island, he said.
But the visitors bureau's marketing cash has been dwindling, from as much as $18 million for Japan marketing alone in the late 1990s to less than $6 million for Japan marketing last year.
When fuel prices make travel to longer-haul destinations more expensive, Perez said there's a possible "a silver lining" for Guam in the race for tourists from Japan.
But Perez said that silver lining is "a maybe."
Overall, fuel-related economic jitters and the global credit crunch have dampened enthusiasm for travel worldwide, he said.
Still, Guam's visitor arrivals in May showed a rebound from April. Preliminary arrival numbers show Japanese arrivals went up 5 percent and South Korean arrivals increased 15 percent last month compared to May last year, Perez said.
Houston cuts
Continental Chairman and Chief Executive Lawrence Kellner, and President Jeff Smisek, will forgo pay for the rest of the year, the airline stated.
Last year, Kellner's salary was $712,500 and total compensation was valued at nearly $6 million by the company, down 9.3 percent from the year before, according to an analysis by The Associated Press of a company filing with the Securities and Exchange Commission.
However, about one-third of Kellner's compensation was in stock and option grants that are now worth far less than they were when granted in February 2007, because of the slump in the company's stock, the AP reported.
Fewer flights
The airline states it will implement flight reductions in September, at the end of the summer season. Available seats for domestic flights will drop by about 11 percent in the fourth quarter, compared to the same period last year.
Continental will retire 67 Boeing 737-300 and 737-500 aircraft between now and next year and replace them with fuel-efficient aircraft, the airline states.
In the second half of this year, Continental will receive its order for 16 new, next-generation Boeing 737-800s and 737-900ERs. It will receive 18 more of the fuel-efficient aircraft next year. Continental's fleet will shrink from 375 this year to 344 aircraft next year.
Jet fuel is at $151 a barrel now, a 75 percent increase from a year ago, according to Continental.
Showing posts with label Continental. Show all posts
Showing posts with label Continental. Show all posts
Friday, June 06, 2008
Friday, May 30, 2008
Military Makes Guam More Valuable to Continental
Military makes Continental's hub in Guam more valuable
By BILL HENSEL JR.
HoustonChronicle
May 30, 2008
The military is the reason Continental Airlines has a hub on Guam, and the military is the reason it could get a big boost soon.
Continental Micronesia, which began in 1968 as an offshoot of the carrier's troop transport business during the Vietnam War, is expected to benefit over the next few years as the U.S. territory plays a central role in the realignment of U.S. forces in the region.
Some 170,000 people live on the Pacific island now, but the population is expected to swell by nearly one-third to roughly 225,000 by 2014, according to David Cohen, former deputy assistant secretary of the Interior Department.
That will mean Guam will have to be better equipped to handle the influx, said Cohen, the federal representative to the U.S. Pacific community from 2005 to 2007.
"The military buildup is going to require that Guam's civilian infrastructure be significantly upgraded and significantly expanded," said Cohen, a lawyer who returned to private practice earlier this year.
"The public infrastructure on Guam is not adequate to meet the needs of the current population."
The buildup will require thousands of additional skilled workers, and that is expected to trigger more business for Continental Micronesia, a subsidiary of Houston-based Continental.
Known as Air Mike, the carrier has 30 departures a day to 23 cities across the Pacific Rim, Micronesia and Hawaii.
Continental Micronesia is the dominant carrier in the region and the largest private employer in Guam, with more than 1,500 workers.
Northwest Airlines, Japan Airlines, China Airlines and All Nippon Airways also serve the island.
The carrier already is seeing a "slight uptick" in travelers, said Mark Erwin, its president and chief executive.
He expects that to accelerate quickly, with an increase of about 12,000 more people than normal during the next year. The carrier now flies about 1.5 million people annually.
"We see this as a great growth opportunity for our fourth hub," he said.
Family ties
Guam Gov. Felix Camacho said during a recent news conference related to Air Mike's 40th anniversary on the island that the carrier, which has a payroll of more than $90 million, is part of Guam's family.
"We do recognize that the privilege of having Continental here on Guam establishes a main transportation hub," the governor said.
"It's not only people who come in and out of Guam. It's also the cargo that comes in daily that affects our lives."
Camacho cited heavy investment at Guam's A.B. Won Pat International Airport that Air Mike has helped attract, and the Federal Aviation Administration recently approved an additional runway.
The Pacific region for Continental, which includes Guam, saw growth of
12 percent during the first quarter of this year compared with last year, according to a recent regulatory filing by the airline. The region generated $257 million in revenue during the quarter, compared with $462 million for Latin America, $606 million for the trans-Atlantic region and $1.3 billion domestically.
Guam often isn't mentioned as a Continental hub alongside Houston, Cleveland and Newark, although that could change as the military shifts some 8,000 Marines — along with about 9,000 dependents — from Okinawa, Japan.
Military presence
The U.S. has long had a military presence in Guam, located on the other side of the International Date Line from the U.S mainland, spurring the slogan "Where America's Day Begins."
The entire island would fit inside Houston's Beltway 8, noted Walter Dias, staff vice president of sales and marketing. Dias has worked for Continental both in Houston and in Guam, where he has lived for the past 15 years.
The relocation of the Marines will cost more than $10 billion and will involve the construction of a new base, housing and improved utilities.
Plans call for billions more to be spent for the Army, Navy and Air Force. Japan will foot about 60 percent of the relocation bill, Cohen said.
The U.S. and Japan came to an agreement to realign U.S. forces and determined it would be in the best interest of both countries if troops were shifted from Okinawa, he said.
"Guam is strategically located but on U.S. soil, which gives the military greater room for maneuvering than is usually the case in foreign nations," Cohen said.
Erwin said Continental could have a Houston-to-Guam flight or Los Angeles-to-Guam flight within about three years. For now, flights from the U.S. mainland stop in Hawaii.
The carrier already has a big presence on Guam, with pilots and flight attendants and others living there, he noted.
Continental Micronesia takes its presence in Guam seriously and is an integral part of the community, Erwin said. That includes donating computers to schools and operating medical evacuation flights when a Guamanian suffers emergency health issues. Those flights are conducted using miles donated by frequent fliers.
Air Mike pilots and flight attendants also largely live there.
"So a lot of money stays on the island," he said.
In addition to the Marines, the buildup is expected to attract an influx of foreign workers, many from the Philippines, as there should be more work available than there are locals to do it as port facilities, the electrical system and wastewater plants will need upgrades.
President Bush signed a bill earlier this month that lifted some caps on temporary foreign workers, although that law may have to be tweaked again, Cohen said.
"But it is certainly a good start to help the military attract the workers it needs to make this happen," he said.
A growing reach
As for Continental, the growth will enhance Continental's international expansion program. Air Mike recently ran a charter flight from China to Guam, which already is a major tourist destination for Japan.
Without naming names, Continental Micronesia's Erwin said Guam's reach will only grow in the coming years.
"This gives us additional opportunities to expand to other international destinations from Guam," he said.
bill.hensel@chron.com
By BILL HENSEL JR.
HoustonChronicle
May 30, 2008
The military is the reason Continental Airlines has a hub on Guam, and the military is the reason it could get a big boost soon.
Continental Micronesia, which began in 1968 as an offshoot of the carrier's troop transport business during the Vietnam War, is expected to benefit over the next few years as the U.S. territory plays a central role in the realignment of U.S. forces in the region.
Some 170,000 people live on the Pacific island now, but the population is expected to swell by nearly one-third to roughly 225,000 by 2014, according to David Cohen, former deputy assistant secretary of the Interior Department.
That will mean Guam will have to be better equipped to handle the influx, said Cohen, the federal representative to the U.S. Pacific community from 2005 to 2007.
"The military buildup is going to require that Guam's civilian infrastructure be significantly upgraded and significantly expanded," said Cohen, a lawyer who returned to private practice earlier this year.
"The public infrastructure on Guam is not adequate to meet the needs of the current population."
The buildup will require thousands of additional skilled workers, and that is expected to trigger more business for Continental Micronesia, a subsidiary of Houston-based Continental.
Known as Air Mike, the carrier has 30 departures a day to 23 cities across the Pacific Rim, Micronesia and Hawaii.
Continental Micronesia is the dominant carrier in the region and the largest private employer in Guam, with more than 1,500 workers.
Northwest Airlines, Japan Airlines, China Airlines and All Nippon Airways also serve the island.
The carrier already is seeing a "slight uptick" in travelers, said Mark Erwin, its president and chief executive.
He expects that to accelerate quickly, with an increase of about 12,000 more people than normal during the next year. The carrier now flies about 1.5 million people annually.
"We see this as a great growth opportunity for our fourth hub," he said.
Family ties
Guam Gov. Felix Camacho said during a recent news conference related to Air Mike's 40th anniversary on the island that the carrier, which has a payroll of more than $90 million, is part of Guam's family.
"We do recognize that the privilege of having Continental here on Guam establishes a main transportation hub," the governor said.
"It's not only people who come in and out of Guam. It's also the cargo that comes in daily that affects our lives."
Camacho cited heavy investment at Guam's A.B. Won Pat International Airport that Air Mike has helped attract, and the Federal Aviation Administration recently approved an additional runway.
The Pacific region for Continental, which includes Guam, saw growth of
12 percent during the first quarter of this year compared with last year, according to a recent regulatory filing by the airline. The region generated $257 million in revenue during the quarter, compared with $462 million for Latin America, $606 million for the trans-Atlantic region and $1.3 billion domestically.
Guam often isn't mentioned as a Continental hub alongside Houston, Cleveland and Newark, although that could change as the military shifts some 8,000 Marines — along with about 9,000 dependents — from Okinawa, Japan.
Military presence
The U.S. has long had a military presence in Guam, located on the other side of the International Date Line from the U.S mainland, spurring the slogan "Where America's Day Begins."
The entire island would fit inside Houston's Beltway 8, noted Walter Dias, staff vice president of sales and marketing. Dias has worked for Continental both in Houston and in Guam, where he has lived for the past 15 years.
The relocation of the Marines will cost more than $10 billion and will involve the construction of a new base, housing and improved utilities.
Plans call for billions more to be spent for the Army, Navy and Air Force. Japan will foot about 60 percent of the relocation bill, Cohen said.
The U.S. and Japan came to an agreement to realign U.S. forces and determined it would be in the best interest of both countries if troops were shifted from Okinawa, he said.
"Guam is strategically located but on U.S. soil, which gives the military greater room for maneuvering than is usually the case in foreign nations," Cohen said.
Erwin said Continental could have a Houston-to-Guam flight or Los Angeles-to-Guam flight within about three years. For now, flights from the U.S. mainland stop in Hawaii.
The carrier already has a big presence on Guam, with pilots and flight attendants and others living there, he noted.
Continental Micronesia takes its presence in Guam seriously and is an integral part of the community, Erwin said. That includes donating computers to schools and operating medical evacuation flights when a Guamanian suffers emergency health issues. Those flights are conducted using miles donated by frequent fliers.
Air Mike pilots and flight attendants also largely live there.
"So a lot of money stays on the island," he said.
In addition to the Marines, the buildup is expected to attract an influx of foreign workers, many from the Philippines, as there should be more work available than there are locals to do it as port facilities, the electrical system and wastewater plants will need upgrades.
President Bush signed a bill earlier this month that lifted some caps on temporary foreign workers, although that law may have to be tweaked again, Cohen said.
"But it is certainly a good start to help the military attract the workers it needs to make this happen," he said.
A growing reach
As for Continental, the growth will enhance Continental's international expansion program. Air Mike recently ran a charter flight from China to Guam, which already is a major tourist destination for Japan.
Without naming names, Continental Micronesia's Erwin said Guam's reach will only grow in the coming years.
"This gives us additional opportunities to expand to other international destinations from Guam," he said.
bill.hensel@chron.com
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