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Current DateTime: 01:46:16 07 Oct 2008
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Current DateTime: 01:46:16 07 Oct 2008
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Continental Airlines Posts Loss as Oil, Economy Drag
By Reuters | 17 Jul 2008 | 07:27 AM ET
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Continental Airlines on Thursday reported a quarterly loss, citing high fuel prices, a weakening economy and a weak U.S. dollar.

Continental's second-quarter net loss came to $3 million, or 3 cents per share, compared with a year-earlier profit of $228 million, or $2.03 per share.

Continental Airlines
CNBC.com

Excluding special items, the loss was $25 million, or 25 cents per share, beating the estimates of analysts, who on that basis had expected an average quarterly loss of 49 cents a share, according to Reuters Estimates.

In pre-market trade, Continental shares rose to $9.70 from a Wednesday close of $9.19.

"Like American Airlines and Delta, Continental did slightly better than expected mainly due to a bit stronger yield than expected -- however yield increase are not enough to offset skyrocketing fuel prices," said Ray Neidl, airline analyst at Calyon Securities.

"Big capacity cuts in the second half of the year will hopefully lend some strength to ticket prices, even in a slow economy," added Neidl.

AMR [CAL  Loading...      ()   ], parent of American Airlines, and Delta Air Lines [DAL  Loading...      ()   ] reported quarterly net losses on Wednesday, blaming depressed results on record fuel prices that have forced widespread industry downsizing.

U.S. airlines are cutting routes, capacity and thousands of jobs to survive unprecedented fuel prices. Oil prices have roughly doubled in the past year.

Continental said on Thursday its average price per gallon of fuel, including fuel taxes, increased 66.2 percent year-over-year.

Revenue Rises

As well as downsizing, U.S. airlines have been forced to raise fares, introduce fees and target more lucrative international routes.

Delta Air Lines has agreed to buy Northwest Airlines Corp <NWA.N> amid the battle to survive, with rivals moving to forge alliances.

Last month, Continental and UAL's [UAUA  Loading...      ()   ] United Airlines announced a global cooperation plan, with Continental proposing to join United in the Star Alliance system.

Quarterly revenue at Continental rose 9 percent to $4 billion, helped by increases in fuel surcharges, fees and fares, as well as international growth.

Continental [CAL  Loading...      ()   ] expects its capacity cuts will result in a 10 percent decline in domestic mainline capacity in the fourth quarter of 2008 compared with the same period of 2007.

The company said it will accelerate the retirement of 67 Boeing 737-300 and 737-500 aircraft, a move designed to drive its recent decision to cut 3,000 jobs.

Continental said that as of July 16, it had hedged 63 percent of its projected fuel requirements for the third and fourth quarters of 2008, and 29 percent of its projected fuel needs for the first half of 2009.

The company said it ended the second quarter with $3.4 billion in unrestricted cash and short-term investments.

Copyright 2008 Reuters. Click for restrictions.

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