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Although Continental Airlines Inc. secured some breathing room late Wednesday when all but one of the company’s unions agreed to cuts in wages and benefits, the carrier must still negotiate a new deal with its flight attendants to avoid a liquidity crisis. The Houston-based airline won concessions from its pilots, mechanics and ground workers, securing about $418 million in annual pay and benefit savings. Continental said in a statement that the total is enough to avoid a near-term cash crunch, but falls short of the $500 million goal the airline had set in January. In return for those concessions, Continental has issued stock options for about 8.7 million shares to all domestic employees save the flight attendants. The options equate to about 13 percent of Continental’s current shares outstanding. It was not immediately clear what issues prompted the flight attendants to strike down the pact, which leaders with the International Association of Machinists and Aerospace Workers had negotiated with the airline. The deal would have provided a 2 percent wage increase in both 2007 and 2008, according to the IAMAW, as well as a pension increase, enhanced job security provisions and company stock options. Continental said it intends to immediately resume talks with the union but warned that the longer it takes to negotiate a new deal, the larger the pay and benefit reductions. Company CEO Larry Kellner sounded optimistic in a statement released early Thursday, saying he believes the flight attendants “recognize our need for cost reductions and want to support our co-workers, but were influenced by other factors.” Other union leaders appear to share Kellner’s belief that the sides will succeed in hammering out a new deal. The unions representing employees who ratified their agreements agreed to go forward and implement their contracts despite the flight attendants’ rejection, forgoing a clause that would have allowed them to reject their own deals if members of any other union failed to approve a deal. A labor source not involved with the flight attendant negotiations predicted that the group would reach a new agreement with Continental. “They are not going to stand alone,” the source said. Copyright �2005 TDD, LLC. All rights reserved.

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