Editing Continental Airlines (section)

===1980s===
In 1981, [[Texas Air Corporation]], an airline holding company controlled by U.S. aviation entrepreneur [[Frank Lorenzo]], acquired Continental after a contentious battle with Continental's management who were determined to resist Lorenzo. Management teamed with unions to create a planned Employee Stock Ownership Plan (ESOP) that would have doubled the number of outstanding shares without shareholder approval, thus diluting Texas Air's ownership stake and maintaining control of the airline. But management lost the legal battle to enact the ESOP without shareholder approval and with its 48.5 percent ownership stake, Texas Air could win any shareholder vote.<ref name=":2" /> During this struggle, in August 1981, Continental Airlines CEO [[Alvin Feldman]] died from suicide in his office and was succeeded by George Warde.<ref>{{Cite news|date=August 10, 1981|title=Continental Air Chief Dies, Apparent Suicide|work=[[The New York Times]]|agency=Associated Press|url=https://www.nytimes.com/1981/08/10/us/continental-air-chief-dies-apparent-suicide.html?&pagewanted=print|access-date=July 16, 2008|archive-date=September 20, 2011|archive-url=https://web.archive.org/web/20110920091747/http://www.nytimes.com/1981/08/10/us/continental-air-chief-dies-apparent-suicide.html?&pagewanted=print|url-status=live}}</ref><ref>{{Cite news|last=Hollie|first=Pamela|date=August 12, 1981|title=Continental Names New Chief|work=[[The New York Times]]|url=https://www.nytimes.com/1981/08/12/business/continental-names-new-chief.html|access-date=September 13, 2020|archive-date=April 21, 2022|archive-url=https://web.archive.org/web/20220421205912/https://www.nytimes.com/1981/08/12/business/continental-names-new-chief.html|url-status=live}}</ref> In three letters left to his children, Feldman said he had been depressed since the death of his wife the previous year.<ref>{{Cite news|last=Hollie|first=Pamela|date=August 11, 1981|title=Continental Without Its Chief|work=[[The New York Times]]|url=https://www.nytimes.com/1981/08/11/business/continental-without-its-chief.html|access-date=September 13, 2020|archive-date=August 13, 2020|archive-url=https://web.archive.org/web/20200813213121/https://www.nytimes.com/1981/08/11/business/continental-without-its-chief.html|url-status=live}}</ref>  Lorenzo became Continental Chairman and CEO in March 1982.  He and his team viewed the company as stuck in the pre-deregulation era and in need of serious changes to be competitive. Continental was experiencing significant financial challenges both before and after Texas Air's takeover, and management showed how Continental could not compete and survive with its cost structure.<ref name="Bamber, G.J., Gittell, J.H., Kochan, T.A. & von Nordenflytch, A. 2009">{{cite book |author=Bamber, G.J. |author2=Gittell, J.H. |author3=Kochan, T.A. |author4=von Nordenflytch, A. |year=2009 |title=Up in the Air: How Airlines Can Improve Performance by Engaging their Employees |publisher=Cornell University Press |location=Ithaca |chapter=Alternative Strategies for New Entrants: Southwest vs. Ryanair |isbn=978-0-8014-4747-1 |url=https://archive.org/details/isbn_9780801447471}}</ref> The pilots union agreed to some cost reductions in mid-1982, primarily through modest productivity improvements, but there was no progress with the other unions. On October 31, 1982, following approval by shareholders of both companies, Continental merged operations with [[Texas International]], retaining the Continental identity and offering service to four continents (North and South America, Asia and Australia) with a fleet of 112 aircraft. Continental launched its frequent flyer program, initially called Travel Bank, in September 1982, following that of Texas International Airlines in 1979,<ref>{{Cite web|last=Rowell|first=David|date=August 13, 2010|title=A History of US Airline Deregulation Part 4: 1970-2010: The Effects of Deregulation - Lower Fares, More Travel, Frequent Flier Programs|url=https://old.thetravelinsider.info/airlinemismanagement/airlinederegulation2.htm|access-date=September 13, 2020|website=The Travel Insider|archive-date=April 19, 2019|archive-url=https://web.archive.org/web/20190419013519/https://thetravelinsider.info/airlinemismanagement/airlinederegulation2.htm|url-status=live}}</ref> which was the industry's first frequent flyer program, and American Airlines [[AAdvantage]] program in 1981. In mid-1983, Continental relocated its headquarters to Texas International's base in Houston, Texas, which resulted in a large expansion of its hub at [[George Bush Intercontinental Airport|Houston Intercontinental Airport]] and extensive new routes to Mexico and the south central U.S.<ref name="Scott" />

[[File:AmericaTowerHoustonTX.JPG|thumb|The [[American General Center|America Tower]] in [[Neartown, Houston|Neartown Houston]], Continental's headquarters from 1983 to 1998]]
Even with the cost reductions from the pilots in 1982, Continental faced a major competitive threat in 1983 when American Airlines was able to implement two-tier wage structures with its unions.<ref>{{Cite news|last=Salpukas|first=Agis|date=October 30, 1985|title=The Two-Tier Wage Impact|work=[[The New York Times]]|url=https://www.nytimes.com/1985/10/30/business/the-two-tier-wage-impact.html|access-date=September 13, 2020|archive-date=April 21, 2022|archive-url=https://web.archive.org/web/20220421205912/https://www.nytimes.com/1985/10/30/business/the-two-tier-wage-impact.html|url-status=live}}</ref><ref>{{Cite journal|last=Jansonius|first=John|date=1984|title=Coping with Deregulation: Reduction of Labor Costs in the Airline Industry|url=https://scholar.smu.edu/cgi/viewcontent.cgi?article=2409&context=jalc|journal=Journal of Air Law and Commerce|volume=49|access-date=September 13, 2020|archive-date=September 24, 2021|archive-url=https://web.archive.org/web/20210924093801/https://scholar.smu.edu/cgi/viewcontent.cgi?article=2409&context=jalc|url-status=live}}</ref><ref>{{Cite news|last=Feaver|first=Douglas|date=December 4, 1983|title=Crandall 'Plays for Keeps'|newspaper=[[The Washington Post]]|url=https://www.washingtonpost.com/archive/business/1983/12/04/crandall-plays-for-keeps/d985ba1f-e1ed-4b43-81be-4c3f9fcd95be/|access-date=September 13, 2020|archive-date=August 28, 2017|archive-url=https://web.archive.org/web/20170828094933/https://www.washingtonpost.com/archive/business/1983/12/04/crandall-plays-for-keeps/d985ba1f-e1ed-4b43-81be-4c3f9fcd95be/|url-status=live}}</ref> American planned massive, rapid growth through new hires at starting pay 50 percent lower than existing contracts and equitable with low-cost, startup carriers and well below Continental's pay rates. American was already one of Continental's main competitors, operating a larger hub 250 miles north of Continental's southern hub in Houston and the growth that was funded by the lower pay rates was larger than all of Continental at the time.

In 1983, Continental went to its unions to restructure labor costs to compete with the startup carriers and American's Plan B labor costs. After 19 months of negotiations, the International Association of Mechanics and Aerospace Workers went on strike in August 1983, even though the company was offering 20 percent pay raises in return for substantial productivity improvements.<ref>{{Cite news|date=August 14, 1983|title=Continental Pilots Refuse to Back Strike By Airline Mechanics|newspaper=[[The Washington Post]]|url=https://www.washingtonpost.com/archive/politics/1983/08/15/continental-pilots-refuse-to-back-strike-by-airline-mechanics/4dbc0edd-948b-4bd4-b2b8-ab1cf499a953/|access-date=September 15, 2020|archive-date=September 17, 2020|archive-url=https://web.archive.org/web/20200917100813/https://www.washingtonpost.com/archive/politics/1983/08/15/continental-pilots-refuse-to-back-strike-by-airline-mechanics/4dbc0edd-948b-4bd4-b2b8-ab1cf499a953/|url-status=live}}</ref> Continental was able to operate through the strike because many mechanics crossed picket lines and Continental hired new mechanics.<ref>{{Cite news|date=1983-08-13|title=Machinists Union Strikes Continental Airlines; Carrier to Keep Operating|work=Los Angeles Times |agency=Associated Press}}</ref> The company continued to negotiate with the pilots and flight attendants and management gave a final proposal to its pilots in mid-September, which would have provided ownership by the pilots and other employees of 35 percent of the company's stock in return for meaningful wage and productivity changes.<ref>{{Cite news|date=September 15, 1983|title=Continental Offers a Stock Plan|work=[[The New York Times]]|url=https://www.nytimes.com/1983/09/15/business/continental-offers-a-stock-plan.html|access-date=September 13, 2020|archive-date=April 21, 2022|archive-url=https://web.archive.org/web/20220421205912/https://www.nytimes.com/1983/09/15/business/continental-offers-a-stock-plan.html|url-status=live}}</ref> With no agreement, Continental filed Chapter 11 bankruptcy on September 24, 1983, and shut down for three days.<ref>{{Cite news|last=Feaver|first=Douglas|date=September 25, 1983|title=Continental Airlines Files for Bankruptcy|newspaper=[[The Washington Post]]|url=https://www.washingtonpost.com/archive/politics/1983/09/25/continental-airlines-files-for-bankruptcy/f5feff3b-7eab-498c-9cdb-f8aaf9689c61/|access-date=September 13, 2020|archive-date=August 28, 2017|archive-url=https://web.archive.org/web/20170828083258/https://www.washingtonpost.com/archive/politics/1983/09/25/continental-airlines-files-for-bankruptcy/f5feff3b-7eab-498c-9cdb-f8aaf9689c61/|url-status=live}}</ref> Continental was the first airline to file for bankruptcy with a plan to continue operating as it did continuously starting September 27, 1983.

Airline unions fought Continental at every step. On October 1, 1983, the pilots and flight attendants joined the IAM, which was still on strike. When Continental resumed service three days after filing Chapter 11, it initially served 25 cities versus the more than 70 cities previously. In the initial stages of bankruptcy, with no legal agreement that would allow travel agents to book flights, passengers could only book directly with the airline. And, with no credit card agreements, Continental could only accept cash for travel. Continental began offering flights for only $49 for each nonstop segment, raising it later to $75 on any segment. In the federal courts, the unions unsuccessfully sued to stop the company's reorganization. They were later successful in working to persuade Congress to pass a new bankruptcy law preventing bankrupt companies from terminating contracts as Continental had successfully done, but the law was too late to affect Continental.<ref name="Buckley">{{Cite journal|last1=Buckley|first1=William F. Jr.|last2=Lorenzo|first2=Frank|date=September 17, 1990|journal=National Review|volume=5}}</ref><ref name="Delaney">{{Cite book|last=Delaney|first=Kevin J.|title=Strategic Bankruptcy: How Corporations and Creditors Use Chapter 11 to Their Advantage|isbn=0-520-07359-2|publisher=University of California Press|year=1999|url-access=registration|url=https://archive.org/details/strategicbankrup00kevi_0}}</ref>  Chapter 11 saved the company from liquidation, but required substantial reorganization, which began immediately. Following bankruptcy, Continental was freed of its contractual obligations and imposed a series of new labor agreements on its union workers, sharply reducing the airline's labor costs.<ref>Moss Kanter, Rosabeth, ''Confidence – How Winning Streaks and Losing Streaks Begin and End'' ({{ISBN|1-4000-5290-4}}), Crown Business, 2004</ref> Continental's senior management also reduced their salaries to those of the pilots.<ref>{{Cite news|date=September 30, 1983|title=Continental vows to stay in air despite strike|work=Houston Post}}</ref> The pilot strike was ultimately unsuccessful due to Continental pilots and new hires who crossed the picket line, and customers who voted with their pocketbook.<ref>[https://www.nytimes.com/1985/09/27/us/continental-s-pilots-suspend-picketing-but-continue-strike.html Continental's Pilots Suspend Picketing but Continue Strike] {{Webarchive|url=https://web.archive.org/web/20161229005206/http://www.nytimes.com/1985/09/27/us/continental-s-pilots-suspend-picketing-but-continue-strike.html |date=December 29, 2016 }}, ''The New York Times''. September 27, 1985.</ref><ref>{{Cite news|last=Nichols|first=Bruce|date=October 1, 1983|title=Continental Pilots defied a union strike order today|work=United Press International|url=https://www.upi.com/Archives/1983/10/01/Continental-Airlines-pilots-defied-a-union-strike-order-today/3594433828800/|access-date=September 13, 2020|archive-date=September 16, 2021|archive-url=https://web.archive.org/web/20210916170559/https://www.upi.com/Archives/1983/10/01/Continental-Airlines-pilots-defied-a-union-strike-order-today/3594433828800/|url-status=live}}</ref> Continental became vastly more competitive with the new airline startups then emerging and thriving in the southwestern U.S. By the end of 1984, Continental had grown back to be a larger airline than pre-bankruptcy and that year recorded a $50&nbsp;million profit.<ref>{{Cite news|date=February 5, 1985|title=Continental Earns $50.3 Million|work=Los Angeles Times|url=https://www.latimes.com/archives/la-xpm-1985-02-05-fi-5080-story.html|access-date=September 13, 2020|archive-date=April 21, 2022|archive-url=https://web.archive.org/web/20220421205912/https://www.latimes.com/archives/la-xpm-1985-02-05-fi-5080-story.html|url-status=live}}</ref><ref>{{Cite news|last=Salpukas|first=Agis|date=December 30, 1984|title=Continental's Chief: Frank Lorenzo; a Turnaround Artist for an Ailing Airline|work=[[The New York Times]]|url=https://www.nytimes.com/1984/12/30/business/continental-s-chief-frank-lorenzo-a-turnaround-artist-for-an-ailing-airline.html|access-date=September 13, 2020|archive-date=September 10, 2021|archive-url=https://web.archive.org/web/20210910000209/https://www.nytimes.com/1984/12/30/business/continental-s-chief-frank-lorenzo-a-turnaround-artist-for-an-ailing-airline.html|url-status=live}}</ref> Continental was the first airline to largely gradually replace a pilot workforce and the working pilots ultimately voted the union out.

On April 28, 1985, Continental inaugurated its first scheduled service to Europe with flights from Houston to London/Gatwick. Additional service from Newark to London and Paris started after the airline's merger with PeopleExpress Airlines in 1987. With that merger came significant customer service issues, especially in the Northeast, for a period of time. In October 1985, Texas Air Corp. made an offer for a Denver-based regional carrier, [[Frontier Airlines (1950–1986)|Frontier Airlines]], opening a bidding war with [[People Express|PeopleExpress]], which was headed by Lorenzo's former Texas International associate [[Don Burr]]. PeopleExpress paid a substantial premium for Frontier's high-cost operation. The acquisition, funded by debt, did not seem rational to industry observers from either the route integration or the operating philosophy points of view.<ref name="Scott" /><ref name="Delaney" /> On August 24, 1986, Frontier filed for bankruptcy and ceased operations. With PeopleExpress losing money, Texas Air announced the acquisition of PeopleExpress on September 15, 1986, at the same time gaining Frontier, whose strong network in the Great Plains and intermountain West reinforced Continental's already formidable Denver hub. The PeopleExpress acquisition also provided the option to acquire Terminal C at Newark Liberty International Airport and allow Continental to build a formidable hub in the New York market.

With a reorganization plan that repaid creditors 100 percent, Continental emerged from bankruptcy on June 30, 1986,<ref>{{Cite news|last=Rendon|first=Ruth|date=June 30, 1986|title=Judge Approves Plan Bringing Continental Out of Bankruptcy|work=Associated Press News|url=https://apnews.com/4fc300a943df4554aed441d52887754d#:~:text=HOUSTON%20(AP)%20_%20A%20federal,bankruptcy%20protection%20in%2060%20days.&text=Continental%20filed%20for%20reorganization%20under,U.S.%20Bankruptcy%20Code%20on%20Sept.|access-date=September 14, 2020|archive-date=September 28, 2021|archive-url=https://web.archive.org/web/20210928024731/https://apnews.com/4fc300a943df4554aed441d52887754d#:~:text=HOUSTON%20(AP)%20_%20A%20federal,bankruptcy%20protection%20in%2060%20days.&text=Continental%20filed%20for%20reorganization%20under,U.S.%20Bankruptcy%20Code%20on%20Sept.|url-status=live}}</ref> with improved asset and cash flow positions and a more competitive route structure with routes radiating to every large U.S. city from major hubs at Denver and Houston.<ref name="Scott" /><ref name="Delaney" /> Continental also began developing its Midwest hub at [[Cleveland Hopkins International Airport]] in 1986, just as United Airlines began to transfer its Cleveland hub operations to [[Washington Dulles International Airport]] in Fairfax County, Virginia. In October 1986, [[American Airlines]] senior vice president [[Thomas G. Plaskett]] became the president and CEO of Continental Airlines.<ref>{{cite news|title=AMR's American Air Names 2 Executives To Succeed Plaskett|work=The Wall Street Journal|date=November 12, 1986}}</ref> On February 1, 1987, [[People Express]], [[Frontier Airlines (1950–1986)|Frontier]], [[New York Air]], and several commuter carriers were merged into Continental Airlines to create the  sixth largest airline in the world and became the largest low-fare airline by introducing the industry's first non-refundable airfares, initially called MaxSavers. The mergers and the aggressive marketing led to Continental becoming an even larger player in the northeastern markets.<ref name="Scott" /> In July 1987, Plaskett resigned and Lorenzo returned to the position of CEO.<ref>{{cite web |url=https://www.nytimes.com/1987/07/22/business/chief-at-continental-yields-to-lorenzo.html |last=Hayes |first=Thomas C |date=July 22, 1987 |title=Chief at Continental Yields to Lorenzo |work=[[The New York Times]] |access-date=September 14, 2020 |archive-date=April 21, 2022 |archive-url=https://web.archive.org/web/20220421205912/https://www.nytimes.com/1987/07/22/business/chief-at-continental-yields-to-lorenzo.html |url-status=live }}</ref> 1987 saw the creation of Continental's OnePass frequent flier program (jointly with [[Eastern Airlines]]); and, in 1988, Continental formed its first strategic partnership (and the first international [[airline alliance]] of its kind) with [[Scandinavian Airlines|Scandinavian Airlines System (SAS)]].<ref name="Scott" /> Continental also made a major image change with a blue and gray livery and the "globe" logo that was adopted by the post-merger United Airlines.<ref name=":3">{{Cite news|date=April 1, 1991|title=Article: Strategy, not failure. (Continental Airlines' bankruptcy) (editorial) &#124; AccessMyLibrary – Promoting library advocacy|publisher=AccessMyLibrary|url=http://www.accessmylibrary.com/coms2/summary_0286-5469475_ITM|access-date=May 4, 2010|archive-date=March 7, 2012|archive-url=https://web.archive.org/web/20120307204810/http://www.accessmylibrary.com/coms2/summary_0286-5469475_ITM|url-status=live}}</ref><ref name=":4">{{cite news|last=Cohen|first=Aubrey|date=August 11, 2010|title=Continental and United update post-merger logo, livery|newspaper=Seattle Post-Intelligencer|url=http://blog.seattlepi.com/aerospace/2010/08/11/continental-and-united-update-post-merger-logo-livery/|access-date=July 2, 2011|archive-date=December 16, 2013|archive-url=https://web.archive.org/web/20131216190552/http://blog.seattlepi.com/aerospace/2010/08/11/continental-and-united-update-post-merger-logo-livery/|url-status=live}}</ref> The airline also eliminated first class service—and only the second global carrier to take that action—giving business class passengers the same first class seats, a service change later to be marketed as Business First.