Case Study: Continental Airline's Tech Strategy Takes Off - ' Final Destination '

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Final Destination
Despite the kinks, executives are confident that Continental is on the right path. In the first quarter of 2006, it narrowed its losses to $66 million, compared with $186 million a year earlier. And profitability is in sight. Continental Chairman and Chief Executive Larry Kellner ordered 34 new Boeing Co. airliners in June, at a cost of $3 billion, in a move to upgrade the fleet and launch even more new long-haul routes. And taking a page from Southwest Airlines Co.'s book, Continental will buy an increasing percentage of its fuel on the futures market in a hedge against rising oil prices.

But Continental's technology push may soon be matched by competitors, which have recently made staffing changes that indicate a new focus on IT across the industry. In March, United expanded CIO Gary Kelly's role to include strategic sourcing, industrial and process engineering, and operations research. Delta named its former COO, Shirley Bridges, as president and CEO of the airline's IT subsidiary, Delta Technology, and named her the company's CIO. "Technology is fungible," says Ray Neidl, an analyst at Calyon Securities Inc. "When someone does it, it's easy to copy."

For the moment, at least, Continental is best positioned to take the lead when the famine era is over—whenever that may be. "Every airline out there is walking on eggshells, but Continental has more breathing room than the other airlines because their operations are very efficient," says Tom Parsons of BestFares.com. "If fuel prices ever drop, they'll be sitting pretty."

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