Continental Moves to Cut Wages, Benefits for US Managerial and Clerical Workers

December 16, 2004 ( - In a move meant to cut costs after four consecutives years of losses, Continental Airlines has decided to implement changes to US-based management and clerical workers' wages work rules and benefits.

Nearly 5,200 American-based workers will see the company suspend its 401(k) matching contributions and launch an “enhanced” profit-sharing plan to replace an older, terminated plan, is reporting. Workers will also see unspecified wage cuts based on a progressive scale for the group, and senior management – including the future CEO and some Executive VPs – will see 20% to 25% cuts in their annual wages. President and COO (and future CEO) Larry Kellner and Executive VP Jeff Smisek have declined to accept their annual bonuses for 2004.

The airline will also terminate its FLEX credit program, which gave management and clerical workers an extra 2% of their salary, effective December 31.

Changes to vacation and sick day policies will also be implemented, with vacation accrual schedule for 2006 changing to a graduating scale. Sick day accrual rates will also decrease, and the company will only pay 70% of regular pay for the first three days of an employee’s illness, according to The company also eliminated four of its 10 paid holidays on the year.

These moves will result in $48 million in savings, according to the company, and are part of a plan to reduce annual labor costs by $500 million. The changes will take effect, unless otherwise noted, on February 28.