Continental Airlines

By: Mark Odintz

Type: General Entry

Published: July 1, 1995

Continental Airlines, the fourth-largest air carrier in the United States in 2009, traces its roots back to Varney Speed Lanes. Varney began service in El Paso in 1934 with six employees, including two pilots. Its headquarters moved back and forth between El Paso and Albuquerque for the next few years. In 1937 the company moved its main offices to Denver. Robert F. Six became president in 1938 and held the position for more than twenty years. The airline changed its name to Continental and slowly increased its service to a growing number of cities in the 1940s and 1950s. By 1957 the airline served thirty-six cities in Texas, New Mexico, Colorado, Oklahoma, Kansas, and Missouri. Continental dramatically expanded its position in the Southwest by purchasing Pioneer Airlines in 1957. Pioneer started operations in 1945 with its headquarters in Dallas, and by 1957 it flew to twenty-two cities in Texas and New Mexico. Continental purchased its first jets in 1958.

Continental Airlines remained prosperous through the 1960s and 1970s, then went into a major slump in the late 1970s. Between 1978 and 1983 the company had a series of bad years, with losses of over $500 million. In 1981 Francisco D. (Frank) Lorenzo and his Texas Air Corporation began to take over the debt-ridden Continental. With their labor agreements about to expire, Continental's employees opposed the takeover bid. When the takeover was completed the following year, Lorenzo merged Texas International, another Texas Air affiliate, with Continental. Labor problems threatened the new airline, and Continental shortly filed for reorganization under Chapter 11 of the bankruptcy code. Lorenzo resumed operations with the workers still on strike and succeeded in defeating the unions. Continental moved its corporate headquarters to Houston in 1983 and, pursuing a strategy of low fares and hiring nonunion employees, worked its way out of bankruptcy by 1986.

Texas Air purchased three further airlines in 1986-Eastern, Frontier, and People's Express. Continental Airlines absorbed People's Express along with New York Air, another Texas Air affiliate, in the same year. In 1987 Continental made 1,500 flights daily, and served 141 cities as the nation's third-largest carrier. In spite of their dramatic expansion, Texas Air and Continental once again faced hard times in the late 1980s. Rising fuel prices and declining passenger traffic led to heavy losses in 1988 and 1989. Part of Eastern Airlines was sold to Donald Trump in 1988, and the remainder of Eastern went into bankruptcy in 1990 and liquidation in 1991. Frank Lorenzo left Texas Air in 1990. When Eastern airlines went into bankruptcy and was removed from the control of Texas Air, Texas Air was renamed Continental Airlines Holdings in 1990, to reflect its primary remaining air operation. Continental once again declared bankruptcy in 1990, a year in which it lost a further $340 million. Continental was purchased by Air Canada in 1992 and emerged from bankruptcy the following year. In 1993 Continental's 319 airplanes served 136 United States cities and fifty-seven foreign cities.

In 1994 Texas native and former Boeing executive Gordon Bethune became the new CEO of Continental. By this time the airline was once again facing bankruptcy along with a disgruntled workforce and poor ratings for customer service. Bethune initiated his "Go Forward" plan that created incentives for employee performance in the effort to improve work efficiency and customer satisfaction. During his ten-years' tenure, Bethune was credited with the dramatic turnaround of Continental Airlines, which garnered the new reputation as a top-ranking carrier in customer service as well as employee morale. In 2004 Larry Kellner succeeded Bethune as CEO. By the late 2000s Continental offered flights to destinations in Asia, Europe, and the Middle East. After Kellner left the position to go into private business, company president Jeff Smisek assumed the role of CEO for Continental on January 1, 2010.

Ted Oehmke, "Plane Spoken," Texas Monthly (June 1998). Dalila J. Paul, "Continental Airlines CEO Larry Kellner will step down, successor is President Jeff Smisek,", New Jersey Business News (, accessed April 20, 2010. The Texas 500: Hoover's Guide to the Top Texas Companies (Austin: Reference Press, 1994). Vertical Files, Dolph Briscoe Center for American History, University of Texas at Austin.
Time Periods:
  • Texas Post World War II

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this entry.

Mark Odintz, “Continental Airlines,” Handbook of Texas Online, accessed May 16, 2022,

Published by the Texas State Historical Association.

July 1, 1995