On April 9, 1999, Gordon Bethune, chairman and chief executive officer of Continental Airlines (CAL) reviewed a memorandum to the company’s board of directors recommending a repurchase (stock buyback) of up to $500 million of common stock. The announcement of the buyback, assuming board approval, would accompany notification to the investment community of Continental’s 16th consecutive profitable quarter with first quarter net income of $78 million. The airline, based in Houston Texas, was the fifth largest U.S. airline based on revenue passenger miles and had just logged yet another year of record revenue and earnings. At the April 9, 1999 closing market price of $40.88, the $500 million repurchase would reduce the number of shares outstanding by 12.2 million shares or 16% (on a fully diluted basis). Bethune believed the best signal of management’s current expectations for Continental’s continued strong financial performance was to announce a major stock buyback program.