Continental to Defer Boeing Order

The carrier will push out the delivery of 36 planes until at least 2008.
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Continental Airlines

(CAL) - Get Report

will defer deliveries of 36


(BA) - Get Report

737 aircraft that were originally planned for 2005, 2006 and 2007, citing the continued weakness that has been hampering the airline industry.

As a result, Continental's fleet size is expected to decline slightly through 2005 and remain flat through 2007. The carrier expects that the deferred aircraft will be delivered in 2008 and beyond. Several reports valued the deferred order at $2.5 billion.

"We can't determine our need for additional airplanes until we see some return on the capital we've invested in our existing fleet of new airplanes and are confident we have a competitive long-term cost structure," Continental Chairman and Chief Executive Gordon Bethune said in a press release. "We are not going to invest in aircraft that we cannot profitably fly in the current marketplace."

The airline will take the scheduled delivery of four 737-800 aircraft in the fourth quarter of this year and 12 737-800 aircraft in 2004, marking the completion of Continental's fleet replacement program, under which the airline has received 288 new Boeing aircraft.

In addition, Continental is in discussions with Boeing regarding the terms of delivery of the 11 remaining 757-300 aircraft that the carrier has on order.

Continental expects to retire 19 MD-80 and 737-300 aircraft in the fourth quarter and in 2004. The remaining MD-80 aircraft in Continental's fleet are expected to be retired from service in January 2005. Continental operated 358 aircraft in June 2003. The airline operated 374 planes in June 2002 and 377 aircraft in June 2001.

The company said it expects its fleet to shrink to 354 aircraft by June 2004 and 348 planes by June 2005.