Continental Airlines

» see continental.com as it lived, on the wayback machine

~ the eulogy ~

Varney Speed Lines started flying in the summer of 1934, carrying mail and a few passengers between El Paso and Pueblo, Colorado. Robert Six bought into it two years later with money borrowed from his father-in-law, renamed it Continental Air Lines on 8 July 1937, and then ran the company for more than forty years, which is a length of tenure nobody in the industry has matched since. Under Six it was a small, well-liked western carrier that moved its headquarters from Denver to Los Angeles and picked up an odd Pacific empire through Air Micronesia, which is the reason a Houston airline still had a hub in Guam fifty years later.

Frank Lorenzo took the company in 1981 through Texas Air Corporation and used it as the instrument for the most consequential piece of labor strategy in American aviation. On 24 September 1983 he put a solvent airline into Chapter 11 in order to void its union contracts, and reopened three days later flying to 25 cities instead of 78 with roughly a third of the staff and a $49 fare. It worked well enough that the model spread. It also left Continental with a reputation it spent the next fifteen years paying off, and with a balance sheet that came apart again in the Gulf War fuel spike. The second Chapter 11 landed on 3 December 1990 with $2.2 billion of debt behind it, by which point Lorenzo had already been pushed out and had sold his stake to Scandinavian Airlines.

Gordon Bethune arrived in 1994 from Boeing and ran what is still the most cited turnaround in the business. He paid every employee $65 a month when the airline finished in the top half of the on-time rankings, which converted a thirty thousand person argument into a single shared number, and he repainted the fleet in the blue globe that became the airline's whole visual identity. By the 2000s Continental was the American carrier the trade press held up as evidence that a legacy airline could be run well.

United announced the merger on 2 May 2010 and closed it on 1 October. The FAA granted a single operating certificate on 30 November 2011 and the Continental callsign went off the air the same day. The last flight sold under the Continental code left Phoenix on 3 March 2012 as Continental 1267 and landed in Cleveland as United 1267, because the two reservation systems were merged overnight while it was in the air.

~ the dossier ~

~ the lorenzo years ~

The 1983 filing is worth being precise about, because it was not a company running out of money. Continental had cash. Lorenzo's lawyers had read the Bankruptcy Code and concluded that a filing let a debtor reject a collective bargaining agreement as an executory contract, and the Supreme Court agreed with that reading in early 1984. Congress amended the code later that year to require a court finding first, which is a law that exists because of this airline.

What Continental looked like on the other side was a carrier with young non-union pilots and no institutional memory left in the building. Lorenzo then spent the back half of the decade buying more airlines with borrowed money, taking in People Express and New York Air in February 1987 and merging their fleets and cultures badly enough that the summer that followed produced record complaint numbers. The Department of Transportation eventually found him unfit to run an airline as a condition of the 1990 Scandinavian deal.

~ worst to first ~

Bethune's book is called From Worst to First and the title is not marketing. When he took over, Continental sat last in the Department of Transportation rankings for on-time arrival and for complaints, and had been through two bankruptcies in seven years. The fix was unfashionably plain. Stop flying the routes that lose money, then pay every employee a bonus tied to one public number that the whole company can see.

The employee manual came out of that. Bethune had managers take the thick book of rules into the parking lot and burn it, and replaced it with a short set of guidelines. It is the sort of gesture that reads as theater until you notice the complaint numbers moved. Continental finished first in on-time performance within a year and stayed near the top for a decade.

~ the name that won ~

The merger has a detail that most coverage skipped. Continental was not absorbed in the legal sense. The combined company operates under Continental's certificate, and for a long stretch the corporate paperwork underneath United's airplanes said Continental Airlines Inc. The name that vanished belonged to the entity that technically survived, and the name on the fuselage belonged to the one that did not.

From where I was watching, none of that was visible. An American domestic carrier has almost no presence outside its own country beyond a code on someone else's ticket, and by 2010 I was reading about this merger the way you read about a foreign election, with the outcome mattering and the stakes not reaching you. Continental to me was a logo I had seen in films and a two-letter code on booking pages. The globe survived the merger and is still on United's tails today, which means the only part of this airline that reached me is the only part that never died.

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