NYTimes.com Article: Continental Posts Loss as Fuel Costs Rise

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Continental Posts Loss as Fuel Costs Rise

July 20, 2004
 By REUTERS





Filed at 7:41 a.m. ET

DALLAS (Reuters) - Continental Airlines (CAL.N) on Tuesday
sank into a quarterly loss burdened by high fuel prices and
lower fares against a year-ago profit boosted by a hefty
U.S. government payment.

The airline posted a loss of $17 million, or 26 cents per
share, compared with a profit of $79 million, or $1.10 a
share, last year. In second-quarter 2003, Continental
received a one-time government payment of $111 million,
after taxes, for security costs.

The Houston-based company said it had an expense of $19
million, after taxes, in the latest quarter due to the
retirement of leased MD-80 aircraft. Excluding the aircraft
retirement charge, Continental reported a profit of $2
million, or 3 cents a share.

Wall Street analysts were expecting a loss of 9 cents a
share, according to Reuters Estimates.

``These results remain disappointing in a year where we
hoped to break even,'' said Gordon Bethune, Continental's
chief executive.

The airline said revenue in the quarter was up 15.1 percent
to $2.3 billion from the same period in 2003. But due to
intense competition with low-cost carriers, yields were
weak, dropping 1.6 percent from the year-ago quarter.

RECORD HIGH FUEL PRICES

Its costs rose by 8.7 percent in
the quarter due to record high fuel prices that are
expected to increase the airline's fuel expense by several
hundred million dollars this year.

The average price per gallon it paid for jet fuel, one of
the larger expenses for any airline, increased by about 30
percent in the quarter from what it paid a year ago.

The airline ended the second quarter with $1.9 billion in
cash and short-term investments.

Also in the quarter, it took delivery of one Boeing757-300
aircraft and three Boeing 737-800s. It expects to take
delivery of five additional Boeing 737-800s in the second
half of 2004.

The airline said it may reduce pension contributions due in
2004. It said it expects to make a decision regarding the
funding by mid-September of this year.

Jeff Misner, Continental's chief financial officer said
cost-cutting remains a top priority for the airline.

``While we are making good progress on our initiatives, it
is clear that we have much more work to do to become
profitable in this weak domestic fare environment,'' Misner
said.

http://www.nytimes.com/reuters/business/business-airlines-continental-earns.html?ex=1091328215&ei=1&en=67ead56814084515


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