Continental Swings to 3Q Loss, Projects Big Loss for Year Tuesday October 19, 8:38 AM EDT HOUSTON -- Continental Airlines Inc. (CAL) reported a third-quarter net loss, hurt by the high cost of fuel, government fees and a charge related to the retirement of leased aircraft. The carrier also said Tuesday that it expects to report a significant loss for the full year and may post a loss for 2005 as well unless the business environment improves. For the third quarter, the carrier reported a net loss of $16 million, or 24 cents a share, in contrast to year-earlier net income of $133 million, or $1.83 a share. Revenue rose 8.4% to $2.56 billion from $2.37 billion. "With oil at stratospheric prices and the government siphoning off more than $ 1 billion annually in fees and nonincome-related taxes, it's amazing that we were able to produce these modest results for the quarter," Chairman and Chief Executive Gordon Bethune said in a prepared statement. Continental incurred $280 million in fees and taxes charged on passenger tickets in the quarter, and expects fees and taxes to total more than $1 billion for the full year. The latest results include a charge of $22 million, or 32 cents a share, for retirement of three leased MD-80 aircraft. Continental has been retiring these aircraft in recent quarters, and said Tuesday that seven remain to be retired over the next three months. That will result in a $17 million charge against fourth-quarter earnings, the carrier said. Excluding the charge, Continental said it would have had earnings of $6 million, or eight cents a share, in the third quarter. Continental also in the third quarter recorded a $15 million gain relating to its stake in Orbitz Inc. (ORBZ), the online travel company controlled by an alliance of airlines, and expects to receive about $80 million in the fourth quarter from the disposition of Orbitz holdings. Passenger revenue climbed 8.7% to $2.38 billion, thanks to revenue from international flights and more regional flying. Passenger revenue from domestic flights fell slightly. Revenue passenger miles, or one paying passenger flown one mile, increased 9%, while passenger revenue yield per revenue passenger mile fell 1.6% to 11 cents. Capacity, measured in available seat miles, rose 7%, and load factor improved to 81.5% from 80% a year earlier. Load factor is the percentage of seats filled on flights. Mainline yields fell 1.6% because of heavy competition with low-cost carriers in domestic and Caribbean markets, Continental said. Total operating expenses rose 16% to $2.54 billion amid a 24% jump in fuel costs. Last month, Continental identified ways it could save about $200 million before taxes, including staff reductions, to reduce the gap between revenue and expenses. Continental said Tuesday that it reduced its work force by 675 during the third quarter. Most of the positions were management, clerical and reservation agents, the company said. "Despite all our efforts, we remain in an uphill battle against a weak revenue environment and skyrocketing fuel prices," Chief Financial Officer Jeff Misner said. Roger EWROPS