Incorrect and old news as of yesterday. Here's the new info;
Continental Airlines getting credit card payment
Thursday June 12, 4:22 pm ET
By Adam Schreck, AP Business Writer Continental Airlines to receive $413 million for extended credit card deal with Chase
NEW YORK (AP) -- Continental Airlines Inc. said Thursday it will get a $413 million initial payment under its cobranded credit card deal with Chase Bank USA, adding to the carrier's cash cushion as it prepares to book severance and other charges in the coming months.
The agreement with Chase extends the credit card deal through the end of 2016, Houston-based Continental said in a filing with the Securities and Exchange Commission. Of the initial payment, $235 million covers the advance purchase of frequent flyer mileage credits.
Continental said it expects to have between $3.2 billion and $3.3 billion on hand at the end of the second quarter.
Including fuel taxes and hedges, the carrier predicted it will spend an average of $3.45 per gallon on fuel this year, and a penny more per gallon during the second quarter.
Airlines try to enter into hedging contracts ahead of time to lock in more favorable rates for the future, but doing so has grown increasingly difficult as the cost of fuel has soared in recent months.
For this quarter, Continental said it has about 20 percent of its fuel needs hedged. The airline has about 43 percent of its fuel needs hedged in the third quarter, and 48 percent in the fourth quarter. Those hedges could be valuable if oil prices rise sharply in the second half of the year -- the biggest bets are on crude oil trading between about $120 and $140 a barrel in the second half of the year.
Early Thursday, light sweet, crude for July delivery was down $1.75 in electronic trading on the New York Mercantile Exchange to trade at $134.45.
The carrier reiterated plans to cut 3,000 jobs, but did not spell out which positions would be lost. The expected job cuts represent about 6.5 percent of the company's work force of 45,000.
Continental last week said it would slash capacity by 11 percent, and retire 67 Boeing 737-300 and 737-500 planes by the end of 2009.
The downsizing is expected to result in potentially large accounting charges related to planes and spare parts, severance costs, contract termination costs and other expenses. Continental said Thursday it "is not able at this time to estimate the amount and timing of these charges."
For the next six weeks, Continental said it is "comfortable" with its forward bookings and expects demand will "remain solid throughout the summer."
While domestic and Latin American bookings over the next six weeks are running higher than at this time last year, trans-Atlantic bookings are down 2 to 3 percentage points and bookings to Asia are running 4 to 5 points behind last year. Profit margins are typically wider on international routes than on domestic ones. Continental Airlines shares rose 39 cents, or 3.2 percent, to $12.49.
