Continental posts profit, helped by government aid=20 =20 Thursday July 17, 9:39 AM EDT=20 (Adds analyst comment) By Kathy Fieweger CHICAGO, July 17 (Reuters) - Continental Airlines Inc. (CAL) on Thursday posted its first quarterly net profit in more than a year and a half, boosted by reimbursement from the U.S. government for security fees. Excluding special items, Continental, the fifth-largest U.S. airline, said it posted a loss, with results "adversely affected" by a drop in travel from the war in Iraq and the outbreak of SARS and by higher fuel costs. Continental said second-quarter net profit was $79 million, or $1.10 per share, including a $111 million after-tax security fee reimbursement. In the year-earlier quarter the airline reported a net loss of $139 million, or $2.18 a share. The results also included an $8 million charge for the recently announced deferred delivery of 36 narrow-body 737s made by Boeing Co. (BA) that had been scheduled for 2005 through 2007. "As expected, Continental continued the trend begun by American yesterday of beating consensus estimates for the second quarter," said Gary Chase, analyst at Lehman Brothers. "While we still caution investors not to get overexcited about these results, we are pleased with Continental's cost performance. ...Continental is managing costs well, but the revenue environment for the industry at large is obviously weak," he said. Shares of Continental rose 0.8 percent in early trade. Without the special items, Continental posted a loss of 37 cents per share, according to a footnote in the press release. A company spokesman was not available for further details. Passenger revenue fell 2 percent to $2.0 billion but overall revenue, including cargo, rose slightly to $2.2 billion. PACIFIC TRAFFIC PLUNGED Total traffic in the second-quarter for Continental's mainline fleet, measured by revenue passenger miles, fell 6.3 percent with the Pacific region dropping 31 percent as fears of SARS spread. Revenue passenger miles equal the number of paying passengers times the distance flown. "We've improved our operating income compared to last year in spite of higher fuel costs and lower passenger revenue," said Chief Executive Gordon Bethune in a statement. "I believe we're doing the right things to be a survivor." According to Reuters Research, a unit of Reuters Group Plc, analysts on average had been expecting Continental to lose 88 cents a share, with a range of a loss of 70 cents to a loss of $1.24. Continental said that adjusting for the reimbursement and a special charge, analysts had expected it to earn 69 cents per share. Continental's shares rose 13 cents to $15.60 in early trade on the New York Stock Exchange. The shares had risen 192 percent in the second quarter, outperforming the American Stock Exchange's Airline Index (XAL) for the same period, which rose 85 percent.=20 =A92003 Reuters Limited.=20