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Continental Air posts $139 mln loss, revenues fall
Tuesday July 16, 9:11 AM EDT
(Adds analyst comment)
By Kathy Fieweger
CHICAGO, July 16 (Reuters) - Continental Airlines Inc. (CAL
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=CAL>
) on Tuesday posted a quarterly loss of $139 million, the first of many
shortfalls the nation's airlines are expected to report this week as the
industry remains mired in a downturn.
Revenue fell sharply at the No. 5 U.S. airline, down 15 percent to $2.1
billion. That figure presaged the kind of top line declines that other
carriers are also expected to announce. Airline traffic remains weak
following the Sept. 11 attacks and fares, cheap.
Continental's loss per share was $2.18 compared with earnings of $42
million, or 74 cents a share, a year earlier.
The loss occurred despite a slight profit of $16 million in June, the
Houston-based airline said, excluding special items.
<http://ae.excite.com/adclick/CID=000002397d9372bc00000000/acc_random=84
98291083/site=excite.reuters/area=money.news/aamsz=336x280>
"Although that was not enough to offset the losses in April and May, it
was an encouraging sign that profitability is achievable in this
environment," said Merrill Lynch analyst Michael Linenberg.
Excluding a $96 million charge to write down the value of MD-80 and
turboprop planes and leases, and a charge of $8 million to write down
the receivable from a final government grant, the loss was $35 million,
or 55 cents per share, Continental said. That beat the Thomson First
Call consensus estimate for a loss of 76 cents a share.
A SAD STORY?
But Continental Chief Executive Gordon Bethune was decidedly downbeat.
"Heavy fare discounting and a sluggish economy are bad enough, but when
coupled with the extraordinarily high security costs and the increasing
airport 'hassle factor,' we're in a no-win situation," Bethune said in a
statement.
The airline ended the quarter with $1.3 billion in cash and short-term
investments. During the quarter it received net proceeds of $447 million
from the initial public offering of regional carrier ExpressJet Holdings
Inc. (XJT
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=XJT>
), in which it still owns a 53 percent stake.
U.S. airlines were granted a total of $5 billion in direct cash aid from
a new government agency called the Air Transportation Stabilization
Board after the Sept. 11 attacks put the nation's airports at a
temporary standstill and traffic fell off sharply when they reopened.
The nation's top carriers are expected to post an aggregate loss of
around $1.4 billion in the second quarter, on top of a $2.4 billion net
loss in the first quarter and about $7 billion in 2001 losses as travel
remains sluggish. Traffic is off along with prices paid for air fares.
Continental said it took delivery of one Boeing (BA
<http://money.excite.com/jsp/qt/full.jsp?time=0&symbol_search_text=BA> )
777-200, one Boeing 737-900, and four Boeing 767-400 extended range
jets, the last planes scheduled for 2002.
Continental shares fell 44 percent in the second quarter, compared with
the American Stock Exchange airline index (XAL), which fell 33 percent
for the same period.
Shares closed Monday at $11.56.
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