Continental Airlines

Continental: An Unfolding Success Story

Continental Airlines has experienced both tremendous success and extreme difficulties during its colorful 64-year history. As the fifth-largest carrier in the United States and the eleventh largest in the world, with 84 domestic and 53 international destinations served by 2,000 daily departures, it is poised once again to build a proud future.

Continental Airlines began its history in 1934, when Varney Speed Lines began its Southwestern division with a route from El Paso, Texas, to Pueblo, Colorado. During its first month of operations, the fledgling airline carried 859 pounds of U.S. mail and nine passengers. The airline changed its name to Continental Airlines in 1937.

Continental acquired Lockheed Model 12 airplanes in the years preceding World War II, and it flew to destinations that included El Paso; Albuquerque, Las Vegas, and Raton, New Mexico; and cities within Colorado. As the war approached an end, Continental expanded its regional route structure with service between Denver, Colorado, and Kansas City, Missouri, and between El Paso and San Antonio, Texas. The airline acquired two Lockheed Lodestars and two DC-3s to service the routes. By 1945, Continental had 400 employees and 6 DC-3s along routes that served 26 cities. In 1946, it ordered 5 Convair 240s, the largest single purchase in its history to that point.

Determined to expand its role as a regional airline, the carrier took a big step in its quest for growth when in 1951 it agreed to share service across the connecting routes of Braniff and American. The agreement soon produced Continental's longest route of the time, from Houston to El Paso.

Continental merged with Pioneer Airlines in 1953, brought the total number of cities on its route structure to 46, and provided service to every city in Texas with a population of more than 100,000. Two years later, the airline added nonstop service between Los Angeles and Chicago. By the end of the year, the airline ordered 4 Boeing 707s, 15 Vickers Viscounts, and 5 DC-7Bs.

Introduction of the Boeing 707 into the fleet set the airline apart from its competitors, who were just then joining the jet age. The airline reported record profits in 1960, its first full year of jet operations. By 1962, Continental had acquired four Boeing 727Bs to help service the growing long-haul route structure.

Continental doubled its route structure during the 1960s. In 1964, the company added four Boeing 707-320Cs to its fleet to service routes into Southeast Asia as the war in Vietnam expanded. In 1967 and 1968, the company launched charter service to such European cities as Frankfurt, London, Paris, and Rome. DC-9s replaced the Viscounts, and Boeing 727s joined the fleet. Record profits were reported every year from 1964 to 1967.

In 1967, Continental won a five-year contract for routes to Micronesia. It created a new enterprise, Air Micronesia, to fly the routes. Informally known as "Air Mike," the new airline acquired a 727-100. The five-year contract eventually became a permanent operation that celebrated 30 years of success in 1998.

Continental began flying from Los Angeles to Honolulu in 1969 using Boeing 320Cs, airplanes that were replaced in 1970 by Boeing 747s. DC-10s joined the fleet beginning in 1972, and they were eventually used on all long-range routes, including those to Hawaii.

Deregulation allowed Continental to add 18 new routes in 1979, but it also brought about an end to the airline's long stretch of sustained profitability. In 1980 the airline experienced a major reduction in its workforce, the first in 46 years. Help came in the form of a merger with Texas International in 1982. The new company offered service to four continents and operated a fleet of 112 airplanes.

Continental was forced to file for bankruptcy in 1983. During 1984, its 50th anniversary, the airline began to rebuild itself. By year's end, while continuing to operate under bankruptcy court protection, the company regained its competitive position. This allowed Continental to acquire 737s, DC-10s, and MD-80s to bring the fleet count to 14 727s, 10 737s, 6 Airbus A300s, 30 DC-9s, 15 DC-10s, and 11 MD-80s in 1985.

In 1986, Continental reported the largest profit in the airline's 51-year history. In a bold move, Texas Air Corporation, Continental's parent company, purchased Eastern Airlines. The combined routes created the largest airline system in the United States. As the airline emerged from bankruptcy operations in the same year, it purchased People Express and most of the assets of Frontier Airlines, including a majority of Frontier's 4,700 employees.

To remain competitive in the era of deregulation, Continental needed a steady flow of passengers to and from its hub cities. To accomplish this, the airline launched the "Continental Express" program in 1987. The program ultimately included cooperation with 10 carriers serving 97 cities with 713 daily departures in areas lying outside Continental's hubs.

Continental officially folded New York Air and People Express into the company in 1987, adding 101 airplanes to the fleet, 5,000 employees to the payroll, 31 airports to the route system, and 541 flights to the daily departure total. The logistics of this change were extremely demanding, and Continental was not prepared for it. The airline did not report a profit for the next eight years.

In 1989, SAS purchased 18.4 percent of Texas Air Corporation during the year to create the first truly global airline system. Nonstop service from Houston, Texas, to Managua, Nicaragua, and Panama City, Panama and San Jose, Costa Rica, was inaugurated in 1990, making the airline the only U.S. carrier serving all seven Central American countries. It was in this year that Texas Air Corporation changed its name to Continental Airlines Holdings, Inc.

Though a need for fleet modernization prompted the order of 50 Boeing 757 airplanes, escalating fuel costs combined with other diffcuties in 1990 forced Continental into bankruptcy for the second time in seven years. The company survived through the tremendous efforts of employees, who responded to the fuel crisis by reducing fuel use significantly.

Continental declared that a prosperous new era had begun for the airline, and in 1994 began receiving the first of 92 new Boeing 737, 757, 767, and 777 airplanes. This was made possible by the huge success of the "Go Forward Plan," a strategy that focused on improving profit margins and encouraged employees to seek creative ways to enhance customer satisfaction. The plan quickly catapulted Continental back to the top of the industry in such key performance areas as on-time departures and record profits.

Boeing Commercial Airplane Group is proud to present the history of Continental Airlines, an industry partner whose profitable and safe operations continue with the Boeing 727, 737, 747, 757, 767, 777, DC-9, DC-10, and MD-80. All content is provided by Continental Airlines.
- Editor