HOUSTON, Texas -- Continental Airlines said Tuesday it will emerge from a bankruptcy court's protective wing Wednesday, leaving Chapter 11 after 29 months.
The entity emerging from Chapter 11 bankruptcy protection will called Continental Airlines Inc. and will own three subsidiaries: Continental Express (commuter-airline operations); System One Corp. (which provides computer reservations services to travel agents); and Continental Micronesia, a 91-percent Continental-owned, independently certified airline that will continue Continental's existing operations in the mid- Pacific area, particularly air service between Japan and Hawaii and U.S. Pacific territories.
A $450 million cash investment by Air Canada and Air Partners, a Dallas investment group, represented the cornerstone of Continental's reorganization plan.
Under the plan, Air Partners will invest $215 million in Continental, while Air Canada will put in $235 million -- $30 million of that for non- voting, preferred stock.
In exchange for their investments, Air Partners and Air Canada will each also receive 27.5 percent of the total equity of the reorganized Continental.
But Air Canada will have only 24 percent of the voting stock, while Air Partners will hold 41 percent of voting stock.
Under the agreement, Air Partners and Air Canada will each select six members of Continental's 18-member board of directors.
Continental filed for Chapter 11 in December 1990.
The carrier submitted a reorganization plan in February1992, but withdrew it as several potential investors made competing bids for a stake in the reorganized airline.
The proposed investment by Air Canada and Air Partners was selected in a final round of bidding in November.
Some large U.S. airlines complained to the Transportation Department that Air Canada's role in Continental would be improper.
But the Transportation Department approved Air Canada's participation in the deal early this year after Air Canada agreed to provisions that would ensure it could not exercise any control over the U.S. carrier.
Continental President Robert R. Ferguson III, Air Canada Chairman Hollis L. Harris, and Air Partners principals David Bonderman and Jim Coulter will appear at the New York news conference Wednesday morning to discuss the investment and the future of the reorganized airline.
The airline's emergence from Chapter 11 comes less than a week after Continental Airlines Holdings Inc., its parent company -- which will cease to exist when the reorganized company comes out of Chapter 11 -- reported a $109.5 million first-quarter loss. Continental Air Holdings earned $17.4 million, or 36 cents a share, in the year-ago quarter.
The holding company's results for the 1993 quarter included $7.3 million in foreign exchange losses and $11.8 million on non-recurring charges, most of them related to Chapter 11 proceedings.
First-quarter 1992 results included non-recurring gains of $48.9 million -- mostly from the sale of slots, gates and interests in a terminal facility under construction at New York's LaGuardia Airport.
Continental Airlines itself reported a $134.4 million first-quarter loss, compared to $7.1 million in red ink during 1992's first quarter.
The airline's operating loss for first-quarter 1993 totaled $81.4 million, compared to a $15.8 million loss a year earlier.
Revenues for the latest quarter totaled $1.4 billion, matching year- ago levels.
