Even with the cost reductions from the pilots in 1982, Continental faced a major competitive threat in 1983 when American Airlines was able to implement two-tier wage structures with its unions. American planned massive, rapid growth through new hires at starting pay 50 percent lower than existing contracts and equitable with low-cost, startup carriers and well below Continental's pay rates. American was already one of Continental's main competitors, operating a larger hub 250 miles north of Continental's southern hub in Houston and the growth that was funded by the lower pay rates was larger than all of Continental at the time.