EX-99.1 2 h81814ex99-1.txt PRESENTATION DATA 1 SALOMON SMITH BARNEY TRANSPORTATION CONFERENCE NOVEMBER 14, 2000 CONTINENTAL AIRLINES 2 Please note that the discussion today may contain forward looking statements. Actual results could differ materially from those described in the forward looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements are contained in the company's Form 10-K and other securities filings with the Securities and Exchange Commission. 3 STRATEGIC OVERVIEW CONTINENTAL AIRLINES 4 GLOBALLY WELL-BALANCED MAJOR U.S. CARRIERS % CAPACITY
CONTINENTAL NORTHWEST AMERICAN DELTA UNITED US AIRWAYS ----------- --------- -------- ----- ------ ---------- US DOMESTIC 63% 61% 69% 78% 65% 89% ATLANTIC 18% 12% 13% 16% 13% 10% LATIN 11% 0% 16% 3% 5% 2% PACIFIC 8% 27% 3% 3% 17% 0%
Source: US Dept. of Transportation Form 41, Last Twelve Months 1Q00 5 ENHANCING A GLOBAL BRAND [MAP] 6 NORTHWEST ALLIANCE EXPANDS NETWORK [MAP] 7 BENEFITS OF CLASS A/NORTHWEST TRANSACTION o 1st time in 7 years - no controlling shareholder o Long-term security for Continental employees o Provides long-term alignment of financial incentives between management and shareholders o Future control premium is split equally among all shareholders o Retain benefits of Northwest Alliance through 2025 o Simplifies ownership structure 8 MODERATE 4.8% GROWTH PLAN FOR 2001 [GRAPH] SYSTEM DOMESTIC TRANSATLANTIC LATIN TRANSPAC/ AMERICA MICRONESIA % INCREASE/ DECREASE 4.8% 4.6% 0.5% 0.5% 23.0% % OF SYSTEM 100.0% 62.0% 17.0% 12.0% 9.0%
9 TOTAL NEWARK DEPARTURES UP LESS THAN 6% WHILE CO ASMs INCREASED 100% Number of Daily Departures
1994 2000 ---- ---- CO Jet 172 305 OA Jet 212 210 Props 198 101
Total Newark Departures ----------------------- 1994 582 2000 616
CO Newark ASMs
1994 2000 ---- ---- ASMs (Millions) 32 64.2
July 1994 SSIM Data, 2000 OAG Data 10 NEW YORK SERVES AS CO's EUROPEAN HUB [MAP OF NEW YORK AS CO's EUROPEAN HUB] Source - SSIM Database, December 1999 11 NEW YORK DOMESTIC MARKET SHARE LEADER 1999 NEW YORK CITY REVENUE % [GRAPH]
CO AA DL UA US NW -- -- -- -- -- -- 1999 NEW YORK CITY REVENUE % 24.3% 17.9% 14.7% 14.1% 8.2% 4.7%
Source: O&D Plus database, Top 6 Major U.S. Carriers Shown 12 NEW YORK - GLOBAL GATEWAY AHEAD OF SCHEDULE CARRIER AA AA UA NW DL US CO HUB JFK MIA SFO DTW BOS PHL EWR BUDGET $1.3B $1.3B $2.4B $1.2B $0.4B $0.4B $1.0B DURATION (YEARS) 11 8 6-8 5-7 5 5 4, 3*
* Revised Schedule 13 DIRECT RAIL SERVICE TO NEWARK [MAP] 14 ON-TIME CONTINUES TO IMPROVE THIRD QUARTER
1999 2000 ---- ---- 74% 79%
1999 2000 CHANGE ---- ---- ------ Load Factor 76.0% 77.5% 1.5 pts ASMs (Millions) 21,573 22,356 3.6%
15 EXCELLENT EMPLOYEE RELATIONS o Employee Agreements in Place
LABOR GROUP AMENDABLE DATE ----------- -------------- Mechanics 01/02 Pilots 10/02 Dispatchers 10/03 Flight Attendants 09/04
o Above Industry Average Employee Productivity 16 POOR EMPLOYEE RELATIONS ARE EXPENSIVE
NW PILOT UA PILOT AA/RENO AA PILOT US FLIGHT US STRIKE OT ISSUE PILOT ACTION ATTENDANTS MECHANICS 3Q98 2Q00 1Q99 1Q97 2Q00 3Q99 -------- -------- ------- -------- ---------- --------- PRE-TAX IMPACT ($ MILLIONS) $1,000 $350 $225 $70 $40 $25
Source: Wall Street Analyst Reports 17 RECENT ACHIEVEMENTS [PICTURES] 18 FINANCIAL PERFORMANCE CONTINENTAL AIRLINES 19 STRONG GROWTH WITH ABOVE AVERAGE MARGINS LAST TWELVE MONTHS ENDING 3Q00
CONTINENTAL INDUSTRY ----------- -------- EBITDAR MARGIN* 19.5% 17.1% ASM GROWTH 7.2% 2.8%
*Excludes special gains and charges Industry = Top 6 Major U.S. Carriers (American, Continental, Delta, Northwest, United, US Airways) 20 FOCUSED ON THE BUSINESS TRAVELER THIRD QUARTER
1996 1998 2000 GOAL ---- ---- ---- ---- HIGH YIELD REVENUE AS % OF DOMESTIC REVENUE 40.5% 43.2% 46.2% 50-55.0%
21 STRONG DOMESTIC RASM
1994 1996 1998 2000E ---- ---- ---- ----- RASM VS. INDUSTRY 80% 101% 105% 111%
Length of Haul Adjusted 22 DISTRIBUTION COSTS DECLINE DISTRIBUTION COSTS AS A % OF SALES [GRAPH]
1998 1999 2000E 2004E ---- ---- ----- ----- DISTRIBUTION COSTS AS A % OF SALES 16.4% 15.8% 14.0% 8.5% E TICKET AS % OF SALES 29% 41% 56% 100%
23 RAPID GROWTH OF INTERNET SALES
1997 1998 1999 2000E ---- ---- ---- ----- $MILLIONS ON-LINE TRAVEL AGENCY SALES $ 15 $ 45 $ 139 $ 360 CONTINENTAL WEBSITE SALES $ 12 $ 62 $ 170 $ 320 % OF SYSTEM SALES 0.4% 1.3% 3.3% 7.0%
24 YOUNG FLEET IS FUEL EFFICIENT
YEAR-OVER-YEAR % INCREASE 1997 1998 1999 2000E ---- ---- ---- ----- ASMs 9.9% 10.6% 9.7% 5.3% GALLONS CONSUMED 10.5% 9.6% 3.7% 0.0%
25 MARKET DRIVEN FLEET PLAN [GRAPH]
TOTAL JET AIRCRAFT 1999 2000 2001 2002 2003 2004 2005 ---- ---- ---- ---- ---- ---- ---- Minimum = Committed fleet less lease expirations 363 371 389 399 382 369 362 Maximum = Committed fleet and all options are exercised 398 443 489 522 540 Fleet Types: 6 5 5 5 4 4 3
26 2000 FLEET FINANCING SUBSTANTIALLY COMPLETE o 2000 Fleet Financing 25 Boeing Aircraft o Amount Financed: $994 Million o Average Interest Rate: 7.95% o New Aircraft: 15 Boeing 737 3 Boeing 757 5 Boeing 767 2 Boeing 777 o 3 Boeing Aircraft being financed in Bank Market 27 RETURNING VALUE TO STAKEHOLDERS YEAR-TO-DATE 11/6/00
SHARE REPURCHASES ----------------- $ 449 DEBT PAYMENTS --------------- Scheduled $134 Prepaid $402 ---------------- Total $536
28 REDUCED DILUTED SHARE COUNT BY 27% AT AVERAGE PRICE OF $42.65 CUMULATIVE SHARE REPURCHASES
1998 1999 11/6/00 ---- ---- ------- $MILLIONS $223 $751 $ 1,201 SHARES PURCHASED (MILLIONS): 28.1
[GRAPHIC OF CONTINENTAL LOGO] 29 NORTHWEST TRANSACTION OVERVIEW o Repurchase 6.7 Million shares for $450 Million ($67.31/share) o 1.32 Class B shares for each Class A share o Issuance of $250M 6% Convertible Preferred Securities of Trust (convertible at $60/share) o Alliance agreement extended through 2025 o Limited right preferred issued to Northwest as part of alliance extension 30 CONTINENTAL CLASS A SHARES PREMIUM PAID [GRAPH] NW TO AIR PARTNERS CO TO NW ------------------ -------- 28% 29% Premium figured on cash portion of transaction 31 TRANSACTION INCREASES EXISTING CLASS B SHAREHOLDER EQUITY STAKE [GRAPH]
PRIOR TO AFTER TRANSACTION AFTER TRANSACTION TRANSACTION PRIOR TO CONVERT AND CONVERT ----------- ----------------- ----------------- EXISTING B SHAREHOLDER OWNERSHIP % 81.2% 89.4% 82.9%
32 REDUCED SHARES 30% SINCE ALLIANCE ANNOUNCED [GRAPH]
Avg Diluted Share Count LTM 1Q98 LTM 3Q00 (Millions) 81.6 57.3
Revenue LTM 1Q98 LTM 3Q00 ($Millions) $ 7,363 $ 9,622
33 CONTINENTAL'S HIGH RETURN LOW RISK OPPORTUNITIES
---GOAL--- ANNUAL TODAY 2005 PRETAX BENEFITS ----- ---- --------------- o Dist. Cost % of Revenue 14.5% 7-10% $275 Million o Alliance Partners 18 20 $175 Million o Low Risk Growth 2,448 3,400 $175 Million (Daily Departures) o Fleet Types 5 3 $125 Million o Business Mix 47.5% 50-55% $100 Million --------------- $850 Million