As the first hijacked airliner smashed into the World Trade Center on Sept. 11, Gordon Bethune, the chief executive of Continental Airlines, was at home in Houston, getting dressed for a routine board meeting. Minutes after the attack, his chief operating officer, CD McLean, called him with the news. Bethune ran to the television, only to remember that a contractor working in the backyard had accidentally cut the cable the night before. Bethune sped to work, where he joined some board members already massed in front of a television in horror. A former aircraft mechanic for the Navy and a commercial passenger jet pilot, Bethune, 60, knew the crashes had to be terrorist acts. "There is no way a 767 could inadvertently run into the World Trade Center," he said later. As the meeting continued, he scrambled to confirm that no Continental airplanes had been involved and that three employees who worked at the World Trade Center were safe.
Continental and its workers were spared, but Bethune's relief was brief. By commandeering and crashing four commercial jets in one day, the terrorists had hijacked the business models of not only the companies that lost aircraft -- American, a unit of AMR, and United, a unit of UAL -- but also of Continental and every other airline in the US. The outlook for much lower sales and significantly higher security costs looked certain to turn a cyclical slowdown into a catastrophe.
Bethune, a plain-spoken Texas native, has long been famous for saying what others are thinking. So many people were not surprised when, four days after the attacks, he was the first airline executive to speak out about the pressures on the industry. But they were shocked by what he said.
He announced that Continental, one of only two profitable major airlines this year (the other was Southwest), would lay off about 12,000 employees, more than one fifth of its work force, and cut 20 percent of its flights. He warned that new security requirements, along with the two-day shutdown of air travel after the attacks, could bankrupt Continental and other big airlines unless the government stepped in with a major aid package. The shutdown cost his company US$90 million and the overall industry an estimated US$1 billion.
"We're not going to be the first ones" to reorganize, Bethune said, "but we may decide to go as early as October." Last Monday, he chose not to make US$69.4 million in aircraft financing payments, raising fears of default and leading to a downgrade of Continental's debt. The stock has lost more than 60 percent of its value since Sept. 10, closing Friday at US$14.66. Bethune said he would make the payment before the grace period was up.
In addition to using lobbyists and layoffs to pressure Congress, Continental tried to enlist its frequent fliers. In an e-mail message last Wednesday, the company encouraged members of its OnePass program to "immediately call or e-mail your Congressman and urge them to pass vital relief legislation for the airline industry."
To drive home the point, the message added: "Time is running out."
"This is not a handout," Bethune said in an interview, adding that airlines were unique because the government grounded all flights after the attacks. "No other industry was denied access to the market," he said. Airlines are vital to the economy, he said, and to everyday life. "You won't have an economy that works without us," he said. "If you were coming down here to the cancer treatment center, you weren't coming. If you ordered anything from Amazon.com, you didn't get it. Nobody went to visit their grandmother."
RSS