Agency for International Development (AID) and Central Intelligence Agency (CIA) contractor William Bird & Son sells its Vientiane (Laos)-based air transport division to Continental Airlines on September 1, 1965 for over $1 million. Bird & Son, back on May 20, have already lost the first man to the Pathet Lao when a pilot, Ernest C. Brace, is captured at a small Laotian airstrip. He will become the longest-held “civilian” POW of the Vietnam conflict.
The contractor’s general manager, Robert L. “Dutch” Brogersma, a CIA and Civil Air Transport (CAT) veteran from whom the Bird enterprise had originally been purchased in 1956, is kept on to lead the 350-employee Continental Air Services. CAS had been formed in April as a wholly owned, Nevada-registered subsidiary of Continental Airlines.
Brogersma’s affiliation with CAS now leads to one of the stranger events in covert air operations — competition between an established but secret spy airline, Air America, and a private, public carrier, Continental. In order to avoid revelation of Air America’s real owners — knowledge that would surely become public should Continental sue the government to gain a share of the AID contracts being awarded for the transport of goods into Laos—CAS is allowed by the CIA to receive, under public contract, AID airlift business.
The company, originally set up to operate aircraft and ground facilities in support of construction and engineering businesses and the energy industry, is now soon divided into two overseas divisions. The first, stationed at the old Bird facility at Vientiane, operates under contract to AID. The second division, based at Saigon, is chartered to Air Vietnam, S. A., flag carrier for the Republic of Vietnam. Airline employment will reach 800.
The inherited fleet includes 5 each Douglas DC-3s and Curtiss C-46s Commandos, 6 Dornier Do-28s, 3 Scottish Aviation Pioneers, 12 Pilatus Porters, plus a number of Cessnas and helicopters. Those operating from Laos are employed, sometimes with and sometimes in competition with, Air America, to fly supplies and men to provincial destinations.
Those supplementing the national carrier of South Vietnam undertake missions into the mountainous regions of the country as well as other nonmilitary and quasi-military delivery services in support of the government. Significant amounts of supply work are accomplished for the American RMK-BRJ construction group.
Flights continue apace for the next decade. An average of 4,000 hours per month is logged; upwards of 20,000 passengers and 6,000 tons of supplies are transported every 30 days. On September 30 of the inaugural year, the company takes delivery of the first production Lockheed L-100, a civilian derivative of the C-130 Hercules. It will be flown over Laos.
Flights continue over the next two years, during which two aircraft are lost in fatal accidents. A DC-3 with two crew crashes at Sam Neva, Laos, on April 17, 1966 while on a supply drop; there are no survivors. After suffering the loss of an engine, a C-46D with five crew crashes near Phu Cum, Laos, on August 13, 1967; there are no survivors.
On April 11, 1968, CAS provides support to Bangkok businessmen who form the air taxi operation Bira Air Transport, Ltd. at Don Muang Airport to provide passenger and cargo flights about Thailand. Thai citizens hold 70% shareholding with CAS the remainder. Price Bira, for whom the company is named, is elected president by the combined board of directors. Twin Beech and Pilatus Porter equipment is leased from CAS.
While making an emergency landing in northeast Thailand on January 6, 1969, a DC-3 overcrowded with 55 aboard, crashes; there are no survivors. In August, fearful of its neutral stance in the Vietnam War, the Swiss government embargoes the delivery of further Porters to Air America and CAS. Finally, by December, Continental Air Services is able to convince the Swiss that its Porters are employed only in refugee work and not as troop transports. A total of 73 CAS personnel are now present at Vientiane.
In October 1970, the Americans create Air Alliance, a CAS subsidiary designed specifically to assist in the organization and operation of Phnom Penh-based Khmer Akas (Cambodia Air). Initial DC-3 service from Battambang is inaugurated on October 21. Until the Khmer Rouge takes over the country, this is Cambodia’s single air carrier. Demilitarized, the prototype of the first Au-23A armed Pilatus PC-6C Porter, built in Maryland by Fairchild, is turned over to CAS in March 1971. It will crash before year’s end. During the year, three additional C-46s are received.
CAS, itself, is closed down in July 1972, at which point Continental Chairman Robert Six reports that, since 1965, CAS has generated $24,288,000 in AID contracts. Air Alliance, meanwhile, continues its southeast Asian operations until May 26, 1975 when its operations are halted in response to increased Pathet Lao activities and student demonstrations. Air Alliance is disbanded on December 19.
CONTINENTAL AIRLINES: P. O. Box 4607, 2929 Allen Parkway, Houston, Texas 77019, United States; Phone (713) 834-5000; Fax (713) 523-4085; Http://www. flycontinental. com; Code CO; Year Founded 1958. Robert Six’s steadily growing Continental Air Lines is
Renamed Continental Airlines during 1958. The Dallas-Albuquerque route award is officially confirmed on February 12, 1959 and in April the carrier inaugurates new nonstop routes between Dallas (DFW) and the other Texas and New Mexico cities authorized. When the CAB opens its Transpacific Route Case, Continental applies for flights to Honolulu.
Having meanwhile completed its premier flight on March 25, the first of 5 Boeing 707-124 Stratoliners is delivered on April 19, followed by a second on May 27. The aircraft are painted with a streamlined thun-derbird logo on the forward and aft fuselage atop a red, white, and blue color scheme completed with a gold upper tail. Inside, the first-class lounge features television.
These pure jets are employed to launch nonstop daily Golden Jet 707 service over the Chicago to Los Angeles route on June 8. The frequency is increased to thrice daily on June 22.
The Boeings begin stopping at Kansas City and Denver on August 15 with six daily frequencies offered from Illinois to California and back beginning on September 5. With five jetliners now available, the carrier is able to sell many of its piston-engine aircraft as well as two Viscount 812Ds.
During the fall, President/CEO Six accepts an invitation to address the Newcomen Society in New York concerning the history of his airline. As is the Society’s custom, Six’s remarks are published as a small pamphlet, Continental Airlines: A Story of Growth.
Revenues for the year allow record profits of $4 million (operating) and $1.7 million (net).
Early in 1960, President/CEO Six turns down a serious offer from Howard Hughes to take over leadership of financially distressed but larger Trans World Airlines (TWA). A Viscount 812D crashes while landing at Tulsa on February 9; although no one is injured, the plane is badly damaged. The fifth B-707-124 arrives on March 17.
While refueling a Viscount 812D at Lubbock, Texas, on June 8, an attendant inadvertently backs into a rotating propeller and is badly injured. Employing DC-7Bs retired from the Chicago-Los Angeles service, Continental, on July 1, doubles service on its interchange route with American Airlines between Houston and Los Angeles, adding a stop at San Antonio in the process. Between June 30 and October 10, the company’s flight engineers stage a job action, the first in the airline’s history.
Willing, in light of its growth, to withdraw from a number of local service routes, the carrier, on November 2, is allowed by the CAB to transfer its 10-city Denver to Tulsa route to Central Airlines. On November 17 in the Southwestern Area Local Service Case, a CAB examiner suggests that the company also surrender authority to 10 other destinations in Texas, Colorado, and New Mexico. Passenger boardings for the year are 1,337,000.
A B-707-124, with 24 aboard, suffers an in-flight engine fire over Rockford, Illinois, on January 9, 1961; the plane is able to land safely at Chicago. Although Continental is denied a Pacific route when the Transpacific Route Case is settled early in the year, it does receive a new domestic award when the CAB closes its Southern Transcontinental Service Case on March 13.
The American Airlines-Continental interchange agreement California-Texas, initiated in 1951, ends on June 11 when Six’s aircraft begin through flights from Los Angeles to Houston via Phoenix, Tucson, El Paso, and San Antonio. Also in June, orders are placed for 4 Boeing 720Bs.
On August 3, Flight 54, a B-707-124 with 73 passengers en route to Houston from Los Angeles, is hijacked by ex-convict L. Bearden and his son Cody, 16, who board the craft at Phoenix and order the pilot at gunpoint to fly to Havana. Both are seized during an El Paso refueling stop after FBI and border patrol marksmen cripple the plane by shooting out its tires as it attempts takeoff.
The U. S. as yet does not have an air piracy law. Therefore, Bearden will be convicted of extortion and “intrastate transportation of a stolen aircraft” and sentenced to 20 years in prison; his son Cody will receive a three-year term in a juvenile facility.
Also in August, the carrier seeks route authority to the U. S. East Coast. The route exchange with Central Airlines takes effect on December 1, the same day Continental introduces economy-class service on its main routes. After six months of discussion, President/CEO Six joins George “Ted” Baker, CEO of National Airlines, on December 12 in announcing a merger. Frontier Airlines (1) owner Maytag secretly purchases National Airlines, however, and the merger possibility dissolves.
On May 22, 1962, just before boarding Flight 11, a B-707-124 with 8 crew and 36 other passengers, passenger T. G. Doty purchases dynamite and a $275,000 insurance policy. At 39,000 feet over a point approximately 5 mi. NNW of Unionville, Missouri, en route from Chicago (ORD) via Kansas City to Los Angeles, Doty sets off his bomb in a towel container in the right rear lavatory. The resulting blast destroys the jetliner in midair, killing almost everyone aboard. One passenger is actually found alive in the wreckage, but he will die within 2 hrs.
Doty’s suicide-for-insurance plot marks the first successful sabotage of a commercial jet airliner. The tragedy is also the first fatal accident in Continental’s 24-year history and, as a result, the carrier’s order for 4 Boeing 720Bs placed earlier in the year is increased to 5.
Equipped with fan-jet engines, the carrier’s first Boeing 720-24B (720B) enters service on June 3. The jetliner introduces the carrier’s new black, white, and gold livery. When the captain’s attention is diverted during the takeoff of a Viscount 812D, with 2 other crew and 13 passengers from Amarillo, Texas, on July 8, the plane, with 16 aboard, returns to the runway, where the propellers from Nos. 2 and 3 engines hit the pavement. The aircraft is returned to the gate, with no serious injuries reported.
The fourth B-720B is delivered the next day. The new plane inaugurates the company’s first pure jet service at Dallas, Midland, and Albuquerque on July 13.
A three-tier tariff schedule is introduced in August: first class, business class, and jet economy class. On September 8, the Continental Casualty Company sues to deny payment of benefits to the widow of bomber Doty. Slightly altered to change the names and provide a better ending, the entire episode will appear in Arthur Hailey’s 1968 novel Airport.
Coming in from Texas on January 28, 1963, a Viscount 812D with three crew and five passengers crashes while on initial approach to Kansas City; there are no survivors.
Following its February 1 finding in the Southwestern Area Local Service Case, the CAB orders Continental to divest itself of 14 unprofitable local feeder destinations in Texas, New Mexico, and Colorado and to give up its government subsidy for their maintenance. It is allowed to retain stops at Amarillo, Midland, and Odessa. Corporate headquarters are moved to Los Angeles on July 15.
Also in July, a deposit of $550,000 is made for 3 Anglo-French Concordes; no SSTs will be delivered and the money buys the carrier excellent publicity at the time. The CAB final order calling upon the carrier to divest itself of 14 southwestern destinations is made on October 11. By November 12, Continental has transferred 14 local southwestern destinations to Frontier Airlines (1) and Trans-Texas Airways.
The CAB concludes its Transpacific Route Case in November and denies all requests for California to Hawaii service.
Enplanements total 1,690,200 during the 12 months and the net profit is $2.41 million. Atotal of $389,771 is earned from charter and contract service flights.
Airline employment in 1964 stands at 3,632 and the fleet includes 26 aircraft. That number is reduced by one in March as the DC-7B City of Los Angeles is withdrawn. In May, Continental obtains a U. S.
Military Airlift Command (MAC) contract to ferry soldiers to and from the Orient.
A pair of Boeing 707-324Cs are acquired and employed to begin this service from California’s Travis AFB on September 4. Initial roundtrip routes extend from the Norton and El Toro military bases (near Los Angeles) to Honolulu or Anchorage and hence to Taipei, Okinawa, Tokyo, Clark AFB (Philippines), Saigon, Bangkok, Danang, and Cam Ranh Bay. The operations to and in the Far East will continue for a decade.
Domestically, a sixth Boeing 720B enters service. Executive Vice President Lawrence resigns at the end of the year and is succeeded by former Trans World Airlines (TWA) official Alexander Damm.
Passenger boardings jump 6.1% to 1.81 million. Overall revenues advance 12.5% to $88 million, including a $3.96-million increase in charter and contract service operations. Record net profits of $5.68 million are banked.
The workforce in 1965 is up to 4,143. In March, orders are placed for 12 DC-9-10Cs and Harding Lawrence becomes president of Braniff International Airways on April 5. Meanwhile, former presidential press secretary Pierre Salinger joins the board of directors for a two-year stint. The Nos. 1 and 2 engines of a B-720B, with 22 aboard, fail during the plane’s May 3 takeoff from Los Angeles; no one aboard is hurt.
Additional Boeing 707-324Cs begin to join the fleet as the Vietnam airlift is expanded from McGuire AFB, New Jersey, and Kelly AFB, Texas. The additional Boeing long-haul equipment allows the carrier to undertake 50 inclusive-tour flights to European destinations such as Copenhagen, Rome, Paris, Frankfurt, and London. As the result of Salinger’s assistance and Chairman Six’s persistence, the carrier now receives a military contract to provide air transport services within Southeast Asia.
Coming in from Los Angeles on July 1, Flight 12, a B-707-124 with 6 crew and 60 passengers, overshoots the runway while landing at Kansas City and strikes an earthen mound; there are no fatalities and injuries are minor.
While descending to Leavenworth, Kansas, on August 17, a B-720B with 110 aboard must take evasive action to avoid a midair collision.
On September 1, the subsidiary Continental Air Services is established at Vientiane, Laos, to take over the air transport division of William Bird & Son. CAS will operate in concert with the Air America, the CIA’s secretly operated airline, but will not, officially, engage in any CIA activities.
To continue its lure to businessmen travelers, the company joins others in promoting the sexiness of its stewardesses; it even runs a magazine ad showing a female flight attendant’s backside as an on-board attraction. On October 17, a B-707-324C with 114 aboard encounters clear air turbulence over Glenwood Springs, Colorado; injuries are minor.
On the last day of the year, the fleet includes 26 aircraft. Enplane-ments for the year total 1,992,000 and cargo also rises. Revenues swell 32% to $116,772,000, passing the million-mark in income for the first time in the company’s history. Net income doubles to $12.1 million.
Pioneer Louis H. Mueller resigns as board chairman on February 28, 1966 and, following its final shuttle run from Denver to Colorado Springs, the last DC-3 is withdrawn in April. The first DC-9-10C enters service on April 10; joined by others of its type, it will replace the carrier’s Viscount 812Ds, which are sold to Channel Airways, Ltd. of the U. K. in November.
Meanwhile, the DC-9-10s offer Golden Jet Service to communities losing their British-made turboprops. A $600,000 refundable deposit is made for Boeing’s SST. A net profit of $17 million is reported.
New liveries are introduced on company aircraft in March 1967, timed to coincide with a new Discover America service while, in April, Continental is awarded a new route to the Pacific Northwest. Simultaneously, as the result of the bankruptcy of the supplemental carrier Transocean Air Lines, the U. S. government is forced to find some other concern to provide air transport in the Marshall, Caroline, and Mariana Islands, collectively known as Micronesia.
In the spring, the U. S. Interior Department reviews bids and chooses to offer its contract to a new firm, Air Micronesia, which is a partnership between Aloha Airlines (20%), Continental Airlines (31%), and the United Micronesia Development Corporation (48%). The UMDC will eventually come to control 60% of “Air Mike,” but the carrier itself will remain, essentially, a shell with a profit-sharing arrangement with the major, its true parent. Within Continental, the operation is considered primarily as a division, Continental Air Micronesia, based on Honolulu. Although the mainland operator has not a single foreign route, it has considerable Pacific experience flying 8 Boeing 707-324Cs on contract service for the MAC to South Vietnam.
Employing a leased Boeing 727-100, New Orleans to Portland and Seattle flights begin on June 13 via Houston, Tulsa, and Wichita. The inauguration takes place a day following the end of the overall 1953 interchange agreement with United Air Lines. On July 1, the Continental-United interchange association Texas to the Northwest is ended. Two days later, the interchange service to St. Louis flown with Braniff International Airways is also suspended.
The fleet now includes 10 DC-9-10s and 10 B-707-324Cs; in December, a withdrawn B-707-124 is sold to Trans World Airlines (TWA). On the year, 1,323 roundtrip Vietnam airlift flights are made. The workforce at year’s end totals 6,000 and the fleet also includes 19 other aircraft. A total of 3,013,000 passengers are originated and freight ton-miles flown total 70.47 million.
A further $1.5-million refundable investment in the Boeing SST is made on January 12, 1968; no such aircraft will ever be developed, let alone delivered. With Aloha Airlines entering the picture later, Continental starts initial Air Micronesia service under contract, on May 16, as its B-727-024Cs fly eastward from Micronesia to Hawaii and westward to Okinawa. Attention is also focused on expanding the company’s Pacific hotels. Also in May, the first B-727-224s are placed into service on the New Orleans-Seattle run.
The world’s largest air cargo building is occupied at Chicago (ORD) in June and, during the year, Austin and Colorado Springs join the route network. A new modern orange, red and gold livery is introduced along with a new tail insignia; the SONIC 360 computerized reservations system is also placed on line.
While on final approach to Denver after a November 19 service from Los Angeles, Flight 18, a B-707-324C with 70 passengers is rocked over Gunnison by an explosion in its rear lavatory, which sets off a fire that is extinguished by the crew. No injuries are reported and after the plane lands a passenger, seen exiting the lavatory just before the blast, is detained by the FBI.
On December 19, President Johnson overturns the CAB Pacific Route Case findings and makes a substantial route award to Continental. Three additional B-707-324Cs, 3 DC-9-10s, and 13 B-727-224s augment the fleet throughout the year. The employee population numbers 6,928.
Passenger boardings climb 13% to 3,855,000 and freight traffic accelerates by 26.5%. Revenues surpass 2 million for the first time— $208,195,100 — and the operating profit is $43.32 million; net gain is $4.13 million.
All of Continental’s transpacific service stands Robert Six’s company in good stead in Washington, D. C. and, as a result of the CAB’s Transpacific Route Case findings, Continental is awarded a route to Honolulu on January 4, 1969, from Chicago, Kansas City, Phoenix, and three California cities. Authority is also granted to Australia and New Zealand and delivery is accepted on 4 B-747-124s. At first deferring the Hawaii award on January 24, President Nixon orders the CAB on February 11 to vacate all Pacific certificates awarded by Johnson, including Six’s.
The Hawaii route is, however, confirmed by Nixon on April 14 and made official by a CAB order of July 22. Unable to immediately employ the Jumbojets, Continental is forced to place them in storage at a New Mexico hangar for $13 million per year.
Just after takeoff from El Paso on July 26, Flight 156, a DC-9-10 with 30 passengers is taken over by a knife-wielding hijacker, who orders the aircraft flown to Cuba. The passengers are allowed to deplane at the Midland, Texas, refueling point, before the Douglas flies on to Havana. The pirate will return to the U. S. before the end of the year, but will quickly be caught by police; he will be tried in 1970 and sentenced to a prison term of 50 years.
B-707-324C flights to Honolulu commence on September 9 as an extension of the Chicago-Los Angeles run while direct Chicago to Honolulu service begins on November 1.
Enplanements for the year are 4,172,000. Operating revenues are $255.66 million and with expenses low, profits are made: $48.81 (operating) and $3.21 million (net).
Airline employment in 1970 is 8,329 and the fleet includes 63 aircraft. Mutual Computer Services is acquired in April and its computer reservation system is subleased to Hughes Airwest, Ozark Airlines, and Piedmont Airlines.
The first Jumbojet is received on May 18 and Continental’s new B-747-124, known as a “Proud Bird of Paradise,” is introduced on its Chicago-Hawaii route on June 26. With a cabin interior decorated by CEO Six’s third wife actress Audrey Meadows, the Boeing’s seating arrangement will prove unusual in that it has the lowest (290 passengers) for any Jumbojet employed to date.
The second B-747-124 arrives on July 13 and, also in July, orders are placed for 8 DC-10-10s. While on approach to Los Angeles (LAX) from Hilo, Hawaii, on August 4, a B-707-324C with 91 aboard collides with a Cessna 150; the jetliner is able to land safely, but the occupants of the lightplane are killed. The third B-747-124 is delivered on August 12 and the first Los Angeles to Chicago all-jet, all-cargo service is inaugurated in September via Denver and Kansas City.
In October, Air Alliance is created as a Continental Air Services subsidiary designed specifically to assist in the organization and operation of Phnom Penh-based Khmer Akas (Cambodia Air).
An unarmed hijacker unsuccessfully attempts to take over Flight 144, a DC-9-10 with 30 passengers en route from Albuquerque to Tulsa on December 19. He is subdued by his fellow passengers and will later receive a five-year prison term.
Customer bookings advance by 12.5% to 4,768,000 and freight traffic swells by 48.2%. Revenues of $289.37 million are produced, an increase of 13.2%. The operating profit increases slightly to $51.53 million, but the net profit falls to $3.74 million.
Beginning on May 5, 1971, a special $10 ticket is offered for round-trips between 20 selected cities on the route network; the fare is designed to provide flight experience for those who have never flown before. Capitalization is increased by $125 million in June, acquired as loans from investment banks. The last of 4 B-747-124s enters service on June 24.
In the first of four consecutive triumphs, a contestant representing Continental is chosen “Miss Airlines International.” A new advertising slogan, “We Really Move Our Tails for You,” meets with mixed reactions.
On August 4, a B-707-324C is involved in an accident with a Cessna 150J owned by Floyd Flying Service at Compton, California.
Enplanements are 5,735,157. Revenues total $331.55 million and the operating profit is $64.75 million; net gain doubles to $7.48 million.
M. B. Davenport, a 56-year-old resident of Vancouver, Washington, is arrested by the FBI at Portland, Oregon, on April 11, 1972 after he attempts to hijack a B-707-324C and demands a $500,000 ransom. On April 24, options are taken on 4 additional DC-10-10s.
One of the older wide-bodies is involved in an accident at Tucson, Arizona, on May 2. The first Douglas DC-10-10s, with cabin decor again by Audrey Meadows, are delivered in late spring and enter service over the Chicago to Los Angeles via Denver route on June 1.
Continental Air Services is closed down in July, at which point Continental Chairman Six reports that, since 1965, it has generated $24,288,000 in U. S. Agency for International Development (AID) contacts. Air Alliance, meanwhile, continues to help Khmer Akas run its DC-3 service.
The tail engine of a DC-10-10 falls off shortly after takeoff from Los Angeles on July 28; debris falls on Hollywood and Beverly Hills.
Despite this, the DC-10 options are converted into firm orders on September 20, bringing the total number to 16 machines requested, including 8 Dash-10CFs. A total of 29 older jetliners are sold to other carriers throughout the year, bringing in a $90-million profit.
The 116 persons aboard a B-727-224 en route from Phoenix to Los Angeles on November 27, escape injury after the craft’s tires blow out on landing, causing a fire in the affected wheel well. A group of ten DC-9-10s are purchased by Hughes Airwest, also in November.
Passenger boardings ascend 6.7% to 6,147,000 and cargo advances by 18%. Revenues are $365,904,000 and the net profit, the 34th in 35 reporting periods, is $9.18 million and comes atop an operating gain of $76.63 million.
The workforce in 1973 is 9,109. Continental joins with Western Airlines in July to seek a new interchange route from Texas to Alaska. A B-747-124 is removed on September 15 and retired to temporary storage at Roswell, New Mexico. Also in September, new transatlantic route authority is sought.
During the year, it is decided to standardize the fleet on two aircraft types, the DC-10 and B-727. A total of 35 aircraft are consequently withdrawn—all of the B-707-324Cs, 18 DC-9-10s, and the majority of the B-720Bs. MAC transpacific airlift contracts now also end.
Customer bookings accelerate 5.6% to 6,493,000, but freight is down by 25.5%. Record revenues of $387.33 million are chalked up, but expenses associated with the fuel crisis soar. Consequently, a $61.94-million operating profit is secured while the net profit declines to $100,000
A total of 329 new employees are hired in 1974. To conserve fuel, the 4 B-747-124s are withdrawn on January 10 and put up for sale. After a long dispute with the CAB, Continental finally reaches the East Coast on February 1, as B-720B service is opened between Houston and Miami.
On June 1, the carrier begins its interchange frequency with Western Airlines to Anchorage, Alaska, from Houston and Dallas (DFW) via Seattle. The Houston to Anchorage route is operated by a Continental DC-10, while that from Dallas (DFW) to Anchorage is flown by a Western B-727-247.
The National Organization for Women (NOW) awards Continental its “Hall of Shame” award for its “Fly Me” ads. A B 720B is sold to Ethiopian Airlines, S. C. on September 16 and is delivered in November.
The fleet at year’s end comprises 12 DC-10-10s and DC-10-10CFs, 33 B-727-224s, 2 B-720Bs, and 3 DC-9-10s, plus two B-727-024Cs leased to Air Micronesia. The special relationship with Air Vietnam ends late in the year and a B-747-124 is sold to Wardair Canada, Ltd. in December.
Enplanements grow 2.9% to 6,679,000 and the total FTKs flown increases to 246.69 million, a rise of 16%. Income moves ahead to $457.27 million and expenses are held in check. The operating profit is $98.97 million and the net income skyrockets to $8.11 million.
The workforce in 1975 grows to 9,709. When President/Chief Operating Officer Six becomes Chairman/CEO, he is replaced by Executive Vice President Damm. The last 4 of 16 ordered DC-10-10s are received in March, with 8 being converted to all-cargo configuration.
The operations of Air Alliance are halted on May 26 in response to increased Pathet Lao activities and student demonstrations that force American interests out of the country. Major capital investment programs begun earlier are completed and an automated dispatch and flight following system called SAFE (System for Automated Flight Efficiency) is placed in service.
Flight 426, a B-727-224 with 7 crew and 124 passengers, encounters severe windshear in a thunderstorm as it takes off from Denver on August 7 and is forced to crash into a wheat field near the departure end of the runway. There are no fatalities, but 38 aboard are injured; the plane, itself, must be written off.
On September 15, Fred Salomon, who has already collected five hostages on a crime spree begun earlier in the day, commandeers a
B-727-224 on the ground at San Jose, California. Two of the hostages, maintenance workers, are ordered to start the engines and taxi out on to the runway, but police shoot out the tires. The pirate kills physician Dr. Frank I. Weifels in the exterior doorway. In sight of the police after the shooting, Salomon is shot dead by marksmen.
Later in the month and in October, the 3 remaining Jumbojets are sold to the Iranian Air Force. Air Alliance is disbanded on December 19.
Passenger boardings jump 8.6% to 7,256,000 while FTKs flown increase a substantial 41.6% to 324.54 million. Despite operating income of $86.38 million, the company loses $9.72 million net on total income of $515.4 million.
The number of employees is reduced by 1% in 1976 to 9,608. Pub lounges and condensed double feature movies are introduced on DC-10 flights. Nonstop Denver to San Diego service is inaugurated on May 21. Petitions for new route authorities are filed with the CAB and an award of a Saipan to Japan route is made.
The Air Line Pilots Association (ALPA) grounds the carrier during a job action lasting from October 23 to November 17. Still, the striking pilots volunteer, six days into the work stoppage, to fly two flights weekly on the routes to Micronesia since air service is the lifeline of those islands.
The strike impacts on the year’s total customer bookings, which decline 3% to 7,077,000. Cargo is down 1% to 321.15 million FTKs. Revenues advance to $551.46 million while expenses are kept in check at $508.72 million. As a result, the operating profit is $91.13 million and net gain improves by $19 million to $9.21 million.
Peoria joins the route network on February 28, 1977. As a result of CAB findings in the Denver-Southeast Route Case, Continental receives access to the Florida cities of Miami, Ft. Lauderdale, Tampa, and St. Petersburg from Denver, Tulsa, and Wichita. The Saipan-Japan route is inaugurated on behalf of Air Micronesia. A B-727-224 is involved in an accident at Tucson, Arizona, on June 3.
Enplanements for the year total 8,134,000 and, on revenues of $657.07 million, the operating profit is $97.49 and net gain is $25.64 million. Following a lapse begun during the 1973 fuel crisis, the carrier is now able to resume dividend payments.
The number of employees is increased a dramatic 74.2% in 1978 to 11,502.
Capt. Gene Hersche of Flight 603, a DC-10-10 with 14 crew and 186 passengers, attempts to reject takeoff from Los Angeles (LAX) on February 1, after suffering three blown tires while on his takeoff roll. The wide-body goes off the right corner of the runway, catches fire, and comes to rest 664 feet away (2 dead). His last trip before mandatory retirement, Capt. Hersche is credited with saving many other lives by keeping the plane from plunging into a gasoline storage area and car rental parking lot.
In early spring, with airline deregulation becoming U. S. government policy, officials of Western Airlines and Continental discuss joining forces and announce plans for a merger on June 1. The same day, the two carriers launch an interchange route from Houston to Calgary (Alberta) via Denver.
The exact plans of the airline merger are made public on July 12. Also in July, President Carter approves transpacific service to Australia and New Zealand. A formal and joint merger application is filed with the CAB on September 19.
Phoenix to Las Vegas direct service is initiated on October 1 and, two weeks later on October 13, Continental launches its longest route as DC-10 service from Los Angeles to Taipei via Honolulu and Guam is inaugurated.
During the fall, frequencies are increased from El Paso and San Antonio. Australian-U. S. relations become increasingly strained on November 12 as the result of a U. S. threat to ban or curtail Qantas Airways (Pty.), Ltd. flights to the West Coast unless Australia allows Continental to join Pan American World Airways (1) as the second American carrier on the South Pacific route.
Australia rejects the threat on November 3 and indicates that Continental can enter the route only if Pan American World Airways (1) agrees to cut its flights by 50%. After a month of further negotiations, American and Australian diplomats agree on December 15 to let Continental fly between the West Coast and Sydney. The CAB turns down the Western merger request at year’s end.
Passenger boardings jump 14% to a record 9,458,000, while cargo moves ahead by 4.5% to 385.53 million FTKs. Operating income advances 17.9% to a record $771.9 million while expenses are held down to $729.27 million. The operating profit is $42.69 million and a record net profit of $49.19 million is reported.
The workforce is increased by 1.7% in 1979 to 11,700. Houston to Washington, D. C. (lAD) flights commence on January 2 and two long-range DC-10-30s are ordered on February 8.
John Carleton Kivlen commandeers Flight 62, a B-727-224 with 94 passengers en route from Los Angeles to Miami on March 16, soon after its scheduled stopover at Phoenix. There, the pirate demands $200,000 in ransom and passage to Cuba. However, he becomes isolated after the flight attendant he holds as hostage escapes and must surrender to FBI agents to save his life. Kivlen will be found mentally unstable and will be sent to a psychiatric institution.
On April 29, the carrier receives British permission for service from Los Angeles to Hong Kong via Honolulu and Guam. As the result of the previous fall’s negotiations, the older, golden DC-10-10s begin, on May 1, multistop flights to Australia and New Zealand. As the result of the American Airlines crash at Chicago on June 9, Continental’s DC-10-10 fleet (42% of its aircraft) is grounded for 38 days.
On July 18, the new passenger service to Taiwan is suspended and replaced by an all-cargo service to Taipei. Denver is now elevated to major hub status and from it Continental initiates new or expanded services, beginning on September 1, to the Mexican communities of La Paz, Los Cabos, Acapulco, and Puerto Vallarta and Manzanillo via El Paso and Albuquerque.
Denver to Newark service is inaugurated on October 1, the same day a branch all-freight line is opened from Guam to Hong Kong, while service to Okinawa is ended. Houston to New York flights are launched on October 28. Other markets entered include Las Vegas, San Francisco, San Jose, San Antonio, Phoenix, Peoria, and Washington, D. C. In December, the routes to Taipei and Hong Kong are shut down.
Passenger boardings climb 4.5% to 9,880,000 and cargo ascends 2.7% to 395.8 million FTKs. Coupled to this activity are increased costs (led by surging fuel prices) which get out of hand by rising 29.29% to $942.85 million on operating income of $922.33 million, itself a 19.48% rise. The result is an operating loss of $20.52 million and a net loss of $13,185,000.
The employee population is cut by 18.7% in 1980 to 10,614. In January, 4 DC-10-10CFs are sold to Federal Express; three aircraft will be delivered to the freight line by year’s end, bringing in $28 million.
When President Damm and his executives cannot stem the flow of red ink, Chairman/CEO Six and his board put a new management team into place on February 1. It is led by ex-Frontier Airlines (1) President A. L. “Al” Feldman.
On April 14, upon hearing of a possible mechanical defect, the air pirate that has taken over Flight 11, a B-727-224 on the ground at Denver demanding that it depart for California, now elects not to take any chances — and surrenders. He will be tried and sentenced to prison for 20 years.
As the financial crisis worsens and losses exceed $20 million, a number of routes are closed or altered. The route structure is now changed from a linear network to one employing the hub-and-spoke system, in this case centered on Denver, Houston, and El Paso. Flights from San Jose to Portland and Seattle end on June 1.
New flights are initiated on July 1 from Denver to Casper and Grand Junction. Alexander Damm, former president and current board vice chairman, retires the same day.
Continental and Western Airlines again file a joint merger application with the CAB on August 8, but it, too, comes to naught. However, the Alaskan interchange service ends. Significantly, the hard-won Chicago to Los Angeles service, which cannot now be operated at a profit, is cancelled on September 8.
Cuban refugee Rafael A. Castando Reys threatens to set fire to Flight 67, a B-727-224 with 132 passengers en route from Miami to San Antonio on October 25, unless he is taken to Havana. Before he can act, he is seized by crew members, who hold him prisoner until the plane can land and he is arrested. Castando Reys will be indicted on charges of air piracy, tried, convicted, and sentenced to prison for 30 years.
The 2 new DC-10-30s are introduced on the transpacific route on October 26. Two more B-727-224s arrive in November. Flight attendants, members of the Union of Flight Attendants Local No. 1, go on strike from December 5 to 20; despite a mediated agreement first tentatively reached on December 16, the job action will have a morale-busting effect, to say nothing of an impact on holiday traffic. In a further effort to cut losses, two hotels on the islands of Truk and Palau are sold.
Still, customer bookings plunge 18% to 7,420,000 and cargo drops by 35% to 318.5 million FTKs. Expenses rise 11.4% to $1.05 billion, dwarfing the 7.16% boost in operating income to $988.32 million. A net loss of $20.7 million is reported, along with an operating loss of $61.92 million.
The number of employees grows a scant 1% in 1981 to 10,722. Houston becomes the carrier’s main international hub in January and from it, beginning on January 10, the carrier launches scheduled frequencies to the Yucatan peninsula holiday cities of Merida, Cozumel, and Cancun. The CAB’s administrative law judge approves the merger plans of Continental and Western Airlines on February 6.
Gunman Victor Malassauskas seizes Flight 72, a B-727-224 at Los Angeles on March 5, and demands a $3-million ransom, but peacefully surrenders to authorities after an 11-hour standoff.
The Western Airlines merger plan collapses in March; however, Texas Air Corporation (TAC), parent of Texas International Airlines, led by its Chairman Frank Lorenzo, begins buying up Continental stock, initially seeking 48.5% shareholding, up from 4.54%. In response to the Lorenzo announcement, two Continental pilots, Paul Eckel and Charles “Chuck” Cheeld organize a plan for an employee buyout. Company workers vote 8,932 to 359 in favor of the idea and a total of 9 banks are lined up to help with the $185 million takeover.
The Denver hub is further strengthened and from it many new spokes soon radiate, beginning with service to Tucson on April 1, Indianapolis and Omaha on April 28, Boston and Lincoln on June 1, Philadelphia and Milwaukee on June 1, and Minneapolis on August 1.
The PATCO air traffic controller’s job action, which begins on August 3, and a fight for control of the floundering one-time local service carrier darkens the picture significantly.
Tragedy occurs on August 9 when President Feldman, despondent over the recent death of his wife, takes his own life. He is succeeded on August 11 by George Warde as the banks withdraw their support from Eckel and Cheeld’s initiative. A DC-10-10 is outfitted with winglets and begins six months of trials on August 31.
Additional markets are opened during the fall, including Salt Lake City on September 15, Pensacola on October 1, Melbourne, Australia, on October 23, and New York (LGA), Green Bay and Louisville on October 25.
On November 25, TAC wins control of 50.8% of Continental’s stock while service to Orlando and Tampa begins on December 1. During the year, Patricia Burr, hired two years earlier, becomes the first woman appointed to a managerial position within the carrier’s finance department.
Passenger boardings dip 0.4% to 8,407,000 and cargo is up 0.9% to 249.12 million FTKs. The percentages on operating income are higher than on expenses, but the actual figures are reversed. Revenues ascend 8.78% to $1.07 billion while costs climb 8.05% to $1.13 billion. As a result, a $59.71 million (operating) loss is taken and the year’s $95,299,000 net decline is the largest fiscal reversal in company history to date.
Announced as a “prosperity plan,” a new cost cutting and staff reduction program is introduced on January 25, 1982. A new board is elected in March made up of TAC nominees, including Lorenzo and duplicate time tables for TIA and Continental are published on June 1. On July 13, Texas International and Continental merge under the TAC umbrella; Bob Six retires. A whole new airline, cleared of overlap and built around the former Continental’s name and route structure, takes to the air on the effective operational date of October 31.
New destinations taken over from TIA include Cleveland, St. Louis, Jacksonville, Hartford, Monterrey, and Guadalajara. New slots are now taken at Great Falls, Billings, and Rapid City while the Venezuelan cities of Maracaibo and Caracas join the Latin route network. A new Alaskan interchange arrangement is worked out with Alaska Airlines; service is undertaken to Anchorage, Fairbanks, and Prudhoe Bay via Portland.
Houston (lAH) becomes the principal hub, from whence departures rise to 240 per day, and once the 13-year-old interline partnership with Metro Airlines is terminated, the major reenters the Houston-Beaumont and Port Arthur market that the large regional had previously served on Continental’s behalf.
The combined workforce of 13,800 is 1.9% smaller than that for the two carriers when they were independent. The amalgamated 110-aircraft fleet comprises 11 DC-10-10s, 2 DC-10-30s, 45 B-727-200s, 15 B-727-100s, 22 DC-9-30s, and 17 DC-9-10s.
Former Pan American World Airways (1) Vice President Stephen M. Wolf is named president/CEO on December 1, with ex-president Warde sent to Hawaii to oversee Air Micronesia. Company executives Michael Conway and Al Frei now depart to participate in the founding of America West Airlines.
Traffic and financial results for Continental and TIA are now combined. Overall passenger boardings accelerate 7.4% to 13,181,000 and freight climbs 10.2% to 280.82 million FTKs. Operating income jumps 2.95% to $1.42 billion, but expenses balloon to $1.46 billion, including $90 million to meet interest payments on debt. Losses, though down, continue: $34.6 million (operating) and $41.8 million (net). The company’s long-term debt is now $642 million against $142 million in shareholders’ equity.
Financial loss, low production, additional layoffs, cost cutting, and traffic declines continue in 1983, with the fiscal red ink eventually reaching $218.5 million. In March, the wholly owned subsidiary Airline Development Corporation is formed to acquire Continental Computer Systems. Also during the spring, Patricia Burr departs the company’s finance department for America West Airlines, where she will rise to become corporate treasurer a decade later.
Company headquarters are moved from Los Angeles to Houston and the carrier’s unions spar with management continuously. The International Association of Machinists and Aerospace Workers (IAM) walks out on strike on August 13. Late in the month, pilots and flight attendants reject a request for $100 million in temporary concessions.
Nonstop service is begun between Houston and Pensacola on September 1 while additional flights are added between Houston and Midland and Odessa.
On September 14, Chairman Lorenzo offers employees the opportunity to purchase 35% of the carrier’s stock in exchange for $150 million in benefit cuts and productivity increases spread over several years. The local chapters of the pilots’ and flight attendants’ unions join the IAM in rejecting this plan.
President/CEO Wolf resigns on September 21 and Philip J. Bakes is named as his successor; the same day, the board learns that the airline has only a nine-day cash supply. Lorenzo makes one final appeal for concessions to the pilots, but receives no union response. On September 24 the carrier ceases operations to its 78 domestic cities, lays off 12,000 employees (65% of the workforce), and files for Chapter XI bankruptcy.
Within 56 hours, under court protection, Continental resumes flights to 25 domestic markets while its international routes are maintained as they were before the bankruptcy filing. All of the DC-10-10s and 30 B-727s are grounded and the remainder undertake low-cost, $49, one-way fares between city pairings.
Only 4,000 employees remain when, on October 1, both pilots and flight attendants strike the company. All union contracts are now cancelled and new, lower wage rates are imposed. While the unions continue their job actions and discussions are held, the carrier begins to rebuild its domestic network and introduces a new round of low-cost fares—$49 on any nonstop flight—on October 23.
Unions representing Australia’s airline employees vote on November 4 to deny support service for the carrier’s daily flight from Los Angeles to Sydney and Melbourne, an action designed to halt the flights in sympathy for their Continental comrades.
A DC-9-30, with Frank Lorenzo among its passengers, lands by mistake on a taxiway between two runways at Denver on November 10. Service to Portland is resumed on November 15, at which point just under half of the former capacity is flown. A new two-tier pricing structure is introduced on December 16 and service is resumed by year’s end from Denver to Minneapolis, Salt Lake City, and Colorado Springs.
The year’s traffic reflects the turmoil as enplanements fall 24.3% to 9,978,000 and cargo plunges 28% to 202.33 million FTKs. Although revenues are down 5.10% to $1.1 billion, costs jump 2.25% to $1.24 billion. The operating loss deepens to $145.1 million and the net loss is, as noted above, a huge $218.5 million—the largest suffered by any U. S. carrier this year.
The 10,614-employee carrier gradually expands its markets in 1984. Houston-Miami and Denver-Phoenix flights begin on January 15 followed by service to Omaha in February. Detroit and Philadelphia provide slots on March 1. New Pacific routes are also opened from Guam to Tokyo nonstop on March 18 and Honolulu to Guam nonstop on March 31.
Meanwhile, on March 24, the rear stairway of a B-727-224 comes open in flight, forcing the plane’s pilot to make an emergency landing at Denver; the inner door had remained closed and no injuries are reported.
McAllen, Texas becomes a stop on April 1. Frequencies are launched to Albuquerque and Ontario, California in May and to San Jose, Dallas (DFW), and Boston in July.
Continental now makes an attempt to take over controlling interest of the UMDA, 60% owner of Air Micronesia. As the 4 B-727-024Cs operated under “Air Mike” colors continue to service their routes, negotiations with the Pacific Ocean islands involved continue. Simultaneously, the mainland major combines its south and mid-Pacific operations under George Warde’s Continental Air Micronesia division, based in Honolulu.
Two new DC-10-30s are now placed on the transpacific service, beginning with a July 1 routing from Guam to Taipei and Hong Kong. Pensacola resumes its previous network position on August 1 and service to Milwaukee and Cincinnati starts on September 5.
In the fall, 3 McDonnell Douglas MD-80s are leased to assist with the domestic load and President Bakes promises a plan of reorganization and repayment will be presented to the bankruptcy court during the following June. TAC in October orders 24 B-737-3T0s, announcing that half will be leased to an expanding Continental. When creditors object, the court rules that the first 4 be delivered on schedule and that the arrival of the remainder be pegged to the company’s first-half success.
Before the month is over, the holding company also announces creation of a joint-marketing airline to be owned with Continental and known as Continental West Airlines. Based at Los Angeles, it will be TAC’s agent to receive and employ the B-737-3T0s ordered for Continental but blocked from delivery by the court. Late in the year, orders are placed for 3 new and 3 used Airbus Industrie A300B4s.
Assisted by a suspension of various economies, including payments on debts incurred before Chapter XI, Continental increases its passenger boardings by 9.45% to 11,100,000 and freight traffic by 3.5% to 215.17 million FTK. Revenues grow by 6.2% to $1.19 billion and costs (led by gains made through the cancellation of all union contracts and imposition of lower wage rates) drop 14.9% to $1.08 billion. Operating income turns around to post a $109.54-million gain and a net profit of $50.3 million (largely assisted by a suspension of debt payment) is posted, the first gain enjoyed since 1978.
The payroll grows 20.6% in 1985 to 12,800. In May, the company reaches agreement with Garuda Indonesian Airways for the start of joint operations to the holiday island of Bali. Simultaneously, the carrier closes down Continental Air Micronesia and all routes to the Pacific are now operated as full Continental services. The reorganization plan promised for June is pushed later into the summer, and then beyond. Meanwhile, in late July, frequencies are begun to Reno, Nevada, bringing to 48 the number of domestic cities served.
Weekly service begins in cooperation with the Indonesian flag carrier on August 18. Employing a Garuda Indonesian Airways DC-10-30 painted with its own colors on one side and Continental’s on the other, Garuda crews operate the Bali-Guam sector and Continental flies on from Guam to Los Angeles via Honolulu. The same segments are handled in reverse on the return. Minority interest in New York Air is purchased on August 28 for $32.5 million. On August 29, Continental West Airlines begins low fare services on the West Coast, from Los Angeles to San Jose and Seattle.
In the fall, a new subsidiary, Cargo Development Group, is established to control company freight operations and a suit is filed against American Airlines charging that its SABRE computerized reservations system demonstrates bias against Continental flights. The joint Garuda Indonesian Airways service to Bali becomes twice-weekly in November. During the year, the fleet is increased by 26 airliners, including the first of 3 new and 3 used A300B4-203s.
Customer bookings increase 45.2% to 16,165,000 and cargo climbs 26.9% to 272.98 million FTKs. Revenues jump a huge 45.9% to $1.73 billion and expenses are up 44.6% to $1.57 billion. The operating profit is $156.7 million. Despite outlays of $15.7 million in reorganization expenses, $17.5 million for employee profit sharing, and $17.8 million as severance pay for former striking pilots, Continental earns, while in bankruptcy, record net profits of $64.28 million.
Airline employment is increased by 1.9% in 1986 to 13,000. During the first quarter, the long-awaited Continental reorganization plan is unveiled. Under its terms, TAC proposes buying all 20% of the available Continental common shares and completing the merger with Texas International Airlines. This approach, received well by creditors, facilitates the financial assistance the carrier requires. Continental, which had delayed its reorganization plan and even its West Coast subsidiary Continental West Airlines, is instructed by the court to raise its initial offer by 25% per share, now receives favorable court review, and emerges from Chapter XI.
The block on further B-737-3T0 deliveries to the major is lifted and quickly leads to Continental West’s absorption into the major. The entire ploy has an ironic ending—the B-737-3T0s received for employment on the routes of the “complementary” carrier are immediately shifted elsewhere, being replaced by older DC-9-30s.
The joint service with Garuda Indonesian Airways to Bali becomes thrice-weekly in April, while additional Airbus Industrie A300B4-203s join the fleet. On May 1, the carrier begins flying in and out of Dallas (DAL) and it is decided to inaugurate a shuttle service between the two airports in Houston.
Ailing competitor PEOPLExpress, launched by former Frank Lorenzo associate Donald Burr, is purchased in early spring, but is allowed to maintain its separate identity during a period of integration. The takeover also brings PEOPLExpress’ recent Britt Airways and Provincetown-Boston Airlines (PBA) acquisitions into the Continental fold. Additionally, the assets of Frontier Airlines (1), recently purchased by PEOPLExpress, also become available, including the significant Denver hub.
While en route over the Gulf of Mexico on August 5, a B-727-224 with 103 passengers encounters turbulence; a passenger, who has disregarded warnings to fasten his seatbelt, is seriously injured.
Continental, later in the year, begins to employ the ex-Frontier and People equipment and facilities at Denver and purchases Rocky Mountain Airways and interlines with Trans-Colorado Airlines to provide guaranteed “Continental Express” feed.
With the purchase of Eastern Air Lines on November 26, Texas Air Corporation now becomes the largest airline holding company in the U. S. While operations of the pioneer member of the “Big Four” are separately maintained, TAC integrates sales into Continental-Eastern Sales, Inc.; freight comes to be handled by the Cargo Development Group. Employing a DC-9-10 under contract, Conroe, Texas-based Emerald Airways initiates Continental’s Houston Proud Express shuttle flights on August 18 between International and Hobby Airports. In September, the company is $925 million in debt.
Former chairman Bob Six dies at his home in Beverly Hills, California, on October 6 at age 79. American Airlines executive Thomas Plas-kett becomes president in October, at which time TAC Chairman Lorenzo and Eastern Airline’s new president, Philip Bakes, begin to employ the threat of further intersubsidiary amalgamations or outright divisional and asset sales in negotiating with Eastern’s unions.
Also in October, thrice-weekly nonstop DC-10-30 service is initiated from New York to Honolulu, continuing on to Sydney, and twice-weekly DC-10-30 flights originate from Los Angeles to Tahiti, Auckland, Sydney, and Melbourne. The purchase of PEOPLExpress/Frontier Airlines (1) is completed on December 30.
Enplanements for the year accelerate 26.4% to 20,409,000 while freight advances 39.6% to 378.67 million FTKs. Revenues jump 18.55% to $2.05 billion and costs climb 21.16% to $1.9 billion. Operating profit declines to $143.21 million and net gain falls by $47 million to $17.94 million.
Airline employment stands at 35,000 in 1987. Police seize Norwood Emmanuel at Washington, D. C., on January 10. Emmanuel had demanded to speak to the leader of the Black Muslim group after passing a threatening note aboard a jetliner en route to the nation’s capital from Newark.
Also in January, the route system is expanded by 19 daily roundtrip flights out of New Orleans to Houston (HOU), New York (LGA), Mexico City, Cancun, Los Angeles, Miami, Newark, Orlando, and Las Vegas. During the same month, TAC completes the buyout of minority stockholders at the court-required share price and Continental becomes a wholly owned subsidiary.
On February 1, operations and assets of the TAC subsidiaries New York Air and PEOPLExpress are integrated with those of Frontier
Airlines (1) into Continental in a “big bang” merger. Lorenzo now controls 20% of all U. S. airline seats and, at his height, is labeled “master of the skies” by Fortune magazine. Even after the older names are removed from the schedule board, however, they are retained to label corporate divisions and to segregate employment populations and fleets. With 72% of Continental’s common stock in hand, TAC moves, on February 6, to acquire the remainder, paying $16.50 per share.
A twin-engine private plane crossing the runway at Los Angeles on February 25 is clipped by a B-727-224A with 91 aboard during its takeoff; no injuries are reported and the flight is not aborted.
The corporate reorganization causes significant difficulty for passengers, who flood the government and media with complaints concerning hundreds of cancelled flights and much lost baggage. In April, System One Direct Access and EAL Automation Systems are acquired from Eastern Air Lines and merged.
As a result of the perceived turmoil and during the spring, the U. S. Congress holds hearings on ways to improve airline service quality. Simultaneously, the DOT begins a massive safety examination of Continental and Eastern Air Lines and a financial review of TAC itself. Meanwhile, the threat of further cuts into Eastern Air Lines is demonstrated by the transfer of 6 A300B4-203s to Continental, along with various airport gates and traditional Eastern Air Lines routes.
Work is begun on building up the former New York Air Newark hub and continues on the PEOPLExpress center at Denver; new efforts are made to build hubs at New Orleans, Cleveland, and Washington, D. C. (IAD) . Presidential Airways becomes the “Continental Express” feeder at the latter point, with the major purchasing the large regional’s terminal, located in a choice midfield location. At Cleveland, a major marketing campaign is fought with the airline’s rival from Pittsburgh, during which Continental employs the slogan “Nuts to USAir.”
A Delta Air Lines Jumbojet and a Continental DC-10-30 come extremely close to colliding over the Atlantic Ocean on July 8, missing each other by as little as 100 feet.
During October President Plaskett is forced out, due largely to the operational glitches occurring after February 1.
Also in October, the FAA launches an intensive program of airport screening. Over the next 18 months, FAA agents will be able to slip 734 test weapons or explosives through airline-run screening points and will, in turn, impose $5.21 million in fines against some 50 airlines that fail the unannounced tests.
Flight 1713, a DC-9-14 with 5 crew and 77 passengers, crashes while taking off for Boise in a snowstorm from Denver on November 15 (28 dead). The accident is attributed to icing and pilot error, the captain and copilot having only 203 hours of experience in DC-9 operations between them. An account by surviving Capt. Robert Linck will appear in the December 21 issue of People Weekly. Henry Hurt will expand on the incident in his “Miracle in the Blizzard,” Reader's Digest 106 (February 1990): 101-132.
Late in the year, Continental abandons its Dulles initiative, driving Presidential Airways to depart its “Continental Express” affiliation and become a code-sharing partner of United Airlines. Orders are now placed for new equipment for the remaining “Continental Express” feeders, Bar Harbor Airlines, Britt Airways, Provincetown-Boston Airline, and Rocky Mountain Airways. The orders include 20 EMB-120s, 10 Beech 1900s, and 16 (later 50) Avions de Transport Regional ATR42-300s.
Customer bookings decline by 5% during the 12 months to 40,294,000 while cargo climbs 13.8% to 596.3 million FTKs. Revenues swell 18.19% to $3.97 billion, costs jump 15.49% to $3.94 billion, and the operating profit is a slight $26.51 million. Integration of the subsidiaries results in a net $258.08-million loss.
The workforce grows by 1.9% in 1988 to 35,649. Early in January, former Pan American World Airways (1) Vice Chairman Martin R. Shugrue Jr. becomes president, succeeding Thomas Plaskett, who now wins Juan Trippe’s old chair. Shugrue immediately puts into place both operational and financial monitoring and control systems previously lacking. Continental’s Houston Proud Express contract is concluded with Emerald Airways on January 15, the same day that Britt Airways steps forward to assume, with less expensive Fairchild Hiller FH-227B turboprops, the route, now relabeled Hobby Shuttle. Also in January, the One Pass frequent flyer program is initiated.
World History
