warned Tuesday that it would be forced to cancel and defer airplane orders and seek even larger labor savings should four key work groups fail to ratify wage and benefit concessions.
Continental is targeting about $500 million in annual labor savings, which depend in part on tentative agreements the airline recently reached with pilots, flight attendants, mechanics and dispatchers.
In its annual 10-K filing with the
Securities and Exchange Commission
, Continental noted that each of the agreements is contingent upon the approval of the others. Thus, failure of one group to ratify its tentative agreement could scuttle the other agreements.
If that were to happen, Continental would be forced to take alternate survival strategies, including asking employees for a total of $800 million in concessions later this year.
The airline also would cancel plans to lease eight 757-300 aircraft from
, postpone early delivery of six 737-800s, and cancel a recent order for 10 Boeing 787 Dreamliners, which are scheduled for delivery in 2009. The company also would try to defer all Boeing deliveries beyond 2005, representing a total of 40 planes.
Continental also would be forced to shrink its fleet by selling or leasing 24 737-500 jets.
In Tuesday's filing, Continental reiterated an earlier warning that failure to meet its $500 million goal would leave it with inadequate liquidity to meet obligations.
The airline also could face problems with a credit-card processing agreement.
"If the tentative agreements are not ratified and do not take effect, absent significant declines in fuel prices in the near future, we expect that we would fail to meet certain financial covenants in our bank-issued credit card processing agreement," Tuesday's filing said. "In that event, we would be required to post up to an additional $335 million cash collateral, which would adversely affect our liquidity needed for our operations and debt service."
Continental shares finished Tuesday down 77 cents, or $6.50, at $11.08.