As of midnight on June 14 Aircraft Service International Group will begin ground-handling services for Northwest Airlines in Guam.

The change of contract means 50 Continental Micronesia employees will be let go. Daniel "Dan" Morgan managing director for Continental told the Journal that the furloughs are "solely related to the loss of this contract business." Staff would be let go according to a seniority system he said.

Continental has been providing ground handling for Northwest since the latter part of the 90s Morgan said.

"We’re sorry to see our handling relationship end like this " he said. While Morgan said the end of the contract was not a significant revenue loss for Continental he said the furloughs were caused by the loss of those duties for staff. "You have a certain amount of staff and a certain amount of flights that you operate." Providing ground services to other airlines was he said a way to offset some of the cost of the employees.

Continental had been officially advised on April 7 after it had declined to offer the services to Northwest at a reduced cost. "We were given that opportunity " Morgan said. "I was unable to reduce my price to a level that was acceptable to Northwest. Our employees are nicely compensated and there does come a time when we don’t have the ability to compete with companies that pay less benefits and less wages."

Richard A. Parsons general manager for Guam and Saipan for Northwest told the Journal "While we appreciate the support that the Continental team in Guam has provided over the years this business decision was made for economic reasons." He said the decision was in response to local needs. "This decision affects local operations only and is not part of a nationwide policy or broader change."

Morgan said ASIG employees would require training as the company took over the contract. "The new ground handler will need all the time available "" usually it’s about six weeks "" that’s why they gave us a 60-day notice."

Japan Airlines and All Nippon Airways both use Continental ground handling services. "It’s been common for many many years for a large airline in a hub to provide those services " he said. Japan Airlines provides ground-handling services for Continental throughout Japan he said. However the trend was away from aviation companies providing the service he said. "Over the last 10 years or so more and more of the independent ground handling companies have sprung up. Those companies offer lower wage packets and benefits."

Continental had also ceased providing ground services for Northwest in Saipan which Morgan attributed to the Japan Airlines pullout from Saipan on Oct. 1 2005. "We were forced to furlough a number of people. It was a smaller staff with a higher cost per employee." Continental advised Northwest that Saipan ground handling charges would be increased he said. "Northwest understandably chose to look elsewhere."

Morgan said Continental does not perform ground handling for other airlines in other locations. MBJ