Continental traffic fell 6.5 percent in June

HOUSTON - Continental Airlines Inc. says its traffic fell 6.5 percent in June and a key revenue measurement tumbled by about one-fifth amid a continuing slump in business travel.

Continental said late Wednesday that paying passengers flew 8.07 billion miles in June, compared with 8.63 billion miles in the same month last year.

However, Continental reduced capacity even faster, meaning that flights were more full on average.

Capacity, measured in available seats times miles flown, contracted 7.8 percent to 9.51 billion miles compared with 10.32 billion miles a year earlier.

That led to an increase in load factor, or average occupancy, to 84.8 percent from 83.7 percent a year ago.

Houston-based Continental, the fourth-largest U.S. airline, said revenue per available seat mile, a closely watched performance number in the airline industry, fell in a range of 19.5 percent to 20.5 percent compared with a year ago.

Kevin Crissey, an analyst for UBS, said the decline in the revenue measurement was about what the market expected. He said July numbers would likely be better "and could give the impression that trends have turned. We are not sure this is a good assumption."

Crissey said August revenue looks weaker than July, and it will be even harder for Continental to match year-ago trends in September.

Excluding the company's regional operations, such as Continental Express and Continental Connection, traffic on the mainline Continental brand fell 6.3 percent. Domestic traffic dropped 6.5 percent, while international traffic dipped 6.1 percent.

Occupancy on mainline Continental flights only rose to 85.2 percent from 84.2 percent in June 2008.

For the first half of the year, mainline and regional traffic fell 8.7 percent and capacity was reduced 7.5 percent.

U.S. airlines have tried to raise fares in recent weeks to prop up their revenue and cover rising fuel prices. Continental estimated it paid $2.07 a gallon for fuel in the second quarter and $2.18 in June, up from $1.99 in May.

Shares of Continental rose 46 cents, or 5 percent, to $9.68 in morning trading Thursday.

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