Continental Airlines reported a quarterly loss on Thursday, citing high fuel prices, a slumping economy and the weak dollar -- factors that have battered rivals and forced massive industry downsizing.
Continental's second-quarter net loss came to USD$3 million, compared with a year-earlier profit of USD$228 million.
Excluding special items, the loss was USD$25 million.
"Like American Airlines and Delta, Continental did slightly better than expected, mainly due to a bit stronger yield than expected. However, yield increases are not enough to offset skyrocketing fuel prices," said Ray Neidl, airline analyst at Calyon Securities.
Continental's average yield per passenger mile flown was 13.55 cents in the quarter, up 6 percent from a year earlier.
"Big capacity cuts in the second half of the year will hopefully lend some strength to ticket prices, even in a slow economy," Neidl said.
American Airlines parent AMR, and Delta Air Lines reported quarterly losses on Wednesday, blaming depressed results on record fuel prices that have forced widespread industry downsizing.
US airlines are cutting routes, capacity and thousands of jobs to survive unprecedented fuel prices. Oil prices have roughly doubled in the past year.
Continental said its average price per gallon of fuel in the second quarter, including fuel taxes, increased 66.2 percent year-over-year.
As well as downsizing, US airlines have been forced to raise fares, introduce fees for services that used to be free, and target more lucrative international routes.
Delta has agreed to buy Northwest Airlines amid the battle to survive, with rivals moving to forge alliances.
Last month, Continental and United Airlines announced a global cooperation plan, with Continental proposing to join United in the Star Alliance.
Second-quarter revenue at Continental rose 9 percent to USD$4 billion, helped by increases in fuel surcharges, fees and fares, as well as international growth.
Continental expects its capacity cuts will result in a 10 percent decline in domestic mainline capacity in the fourth quarter compared with the same period of 2007.
The company said it will accelerate the retirement of 67 Boeing 737-300 and 737-500 aircraft, a move designed to drive its recent decision to cut 3,000 jobs.
"We don't know if our planned capacity reduction for the fall is appropriate until we get more data indicating what fourth quarter RASM (revenue per available seat mile) will be," Continental Chief Executive Larry Kellner said.
"But to date we're seeing a significant year-over-year increase in average fare for fall bookings," he said.
Kellner said soaring fuel prices had created "the worst financial environment for US carriers since 9/11."
Continental said that as of July 16, it had hedged 63 percent of its projected fuel requirements for the third and fourth quarters, and 29 percent of its projected fuel needs for the first half of 2009.
It said it ended the second quarter with USD$3.4 billion in unrestricted cash and short-term investments.
(Reuters)
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