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Continental Airlines Inc. on Tuesday reported a smaller quarterly loss as higher revenue and cost reductions outweighed burgeoning fuel costs.
The No. 5 U.S. carrier said its net loss narrowed to $43 million, or 53 cents a share, from $208 million, or $3.16 a share, a year earlier.
Stripping a one time gain of $106 million from the sale of stock in Panamanian airline Copa and special charges of $21 million, the quarterly loss was $128 million, or $1.58 per share, better than Wall Street analysts' forecast of a loss of $1.85 a share.
Like other major U.S. airlines, Continental has been struggling with surging fuel costs. In March, most of its unions agreed to accept givebacks, worth a combined $418 million annually, in a step the Houston-based airline said was key to its survival.
Revenue in the quarter rose 16.7 percent to $2.8 billion, helped by rising fares and strong demand.
Full story from CAL.
CONTINENTAL AIRLINES ANNOUNCES 2005
FOURTH QUARTER AND FULL YEAR LOSS
HOUSTON, Jan. 17, 2006 – Continental Airlines (NYSE: CAL) today reported a fourth quarter 2005 net loss of $43 million ($0.53 diluted loss per share), including a gain of $106 million related to the sale of Copa stock and other special charges of $21 million. Excluding these special items, Continental recorded a net loss of $128 million for the quarter ($1.58 diluted loss per share).
Continental incurred a net loss of $68 million for the full year 2005 ($0.97 diluted loss per share), including all 2005 special items. Excluding those special items, Continental recorded a net loss of $205 million for the full year 2005 ($2.93 diluted loss per share). The 2005 loss was the result of increased competition from low-cost carriers and the inability to recover, through fare increases, the higher cost of fuel. In 2005, mainline fuel costs were $856 million higher than in 2004.
“We continue to face significant challenges,” said Chairman and Chief Executive Officer Larry Kellner. “The price of oil still hovers at record high prices, JetBlue has invaded our Newark hub, Delta is using its bankruptcy advantage to expand into our profitable international markets and United Airlines, flush with $3 billion in exit financing and greatly reduced costs, is coming out of bankruptcy.
“However, thanks to the personal sacrifice of my co-workers who took wage and benefit reductions in 2005, Continental has been able to avoid the path of bankrupt carriers and launch one of the largest international expansion plans in our company’s history,” Kellner added.
Fourth quarter passenger revenue increased to $2.6 billion on a 9.8-percent increase in consolidated revenue passenger miles (RPMs) and a consolidated yield increase of 6.8 percent compared to the fourth quarter of 2004. The increase in revenue was helped by continued international expansion and fare increases that partially offset the increased cost of fuel. International mainline capacity accounted for 45 percent of total mainline capacity in the fourth quarter.
Consolidated load factor was 77.9 percent for the fourth quarter 2005, a slight increase over the same period in 2004, on a capacity increase of 9.0 percent. Consolidated revenue per available seat mile (RASM) increased 7.6 percent year-over-year.
Mainline load factor was 78.1 percent for the fourth quarter 2005, a slight increase over the same period in 2004. Mainline traffic (RPMs) in the fourth quarter was up 8.7 percent on increased capacity of 8.4 percent versus the same period in 2004. Continental’s mainline yields during the quarter increased 6.0 percent year-over-year. However, mainline yields for the fourth quarter were still 13 percent lower than mainline yields in the fourth quarter of 2000.
Passenger revenue for the fourth quarter 2005 and period-to-period comparisons of related statistics by geographic region for the company’s mainline and regional operations are as follows:
Percentage Increase in PassengerFourth Quarter 2005 vs. Fourth Quarter 2004
Revenue Passenger (in millions) Revenue RASM ASMs
Domestic $ 1,217 10.5% 6.8% 3.4%
Transatlantic 424 28.2% 7.5% 19.2%
Latin America 248 10.8% 7.0% 3.5%
Pacific 192 28.2% 3.9% 23.3%
Total Mainline $ 2,081 15.2% 6.4% 8.4%
Regional $ 507 26.8% 11.2% 14.1%
Consolidated $ 2,588 17.3% 7.6% 9.0%
Continental and the entire airline industry continue to suffer the burden of excessive fees and non-income related taxes. Continental incurred $1.2 billion in these fees and non-income related taxes charged on passenger tickets by various governmental entities in 2005, with $292 million incurred in the fourth quarter.
Continental continued its international expansion during the quarter. The airline was the first carrier to inaugurate scheduled nonstop service between the United States and India, with the launch of daily flights between its New York hub at Newark Liberty International Airport and Delhi’s Indira Gandhi International Airport. In addition, the airline began daily nonstop service between Liberty and Liberia, Costa Rica; and Curacao, Netherlands Antilles; and between LaGuardia and the Caribbean island of Aruba.
From its Houston hub, Continental began daily nonstop flights between Bush Intercontinental Airport and Buenos Aires, Argentina; Bonaire, Netherlands Antilles and Punta Cana, Dominican Republic.
In addition, Continental announced that it will begin service in 2006 between Liberty and Barcelona, Spain; Copenhagen, Denmark and Cologne, Germany.
“We continued our international expansion in the fourth quarter, and our mainline international capacity is now approaching half of our total mainline capacity,” said Jeff Smisek, president. “Our co-workers chose the right path in 2005, and we are now growing and hiring new employees in stark contrast to most of our competitors.”
Driven largely by a 57.6-percent increase in the cost of fuel and related taxes, Continental’s operating costs in the fourth quarter increased 13.0 percent over the same period in 2004. The company’s mainline cost per available seat mile (CASM) increased 3.0 percent in the fourth quarter compared to the same period in 2004, due to high fuel prices. Excluding special items and holding fuel rate constant, CASM decreased 6.7 percent, primarily as a result of pay and benefit reductions and work rule changes that began in April, and other cost-saving initiatives.
In October, Continental completed a public offering of 18 million shares of its Class B common stock, raising $203 million of cash.
In December, Continental received $172 million from the sale of approximately nine million shares of common stock in the initial public offering of Copa Holdings, S.A., parent company of Copa Airlines. The sale decreased the company’s ownership percentage from 49 to 27 percent. Continental still holds approximately 12 million shares of Copa’s common stock.
With these financings, Continental ended the fourth quarter with approximately $1.96 billion in unrestricted cash and short-term investments.
In the fourth quarter, Continental contributed $115 million cash to its defined benefit pension plans. With this contribution, full year 2005 contributions totaled $354 million. Special charges of $21 million in the fourth quarter of 2005 consist primarily of a non-cash settlement charge related to lump-sum distributions from the pilot pension plans.
Continental took delivery of three 737-800s and three 757-300s during the fourth quarter of 2005. Continental expects to take delivery of two 757-300s during the first quarter of 2006 and six 737-800s in 2006.
The No. 5 U.S. carrier said its net loss narrowed to $43 million, or 53 cents a share, from $208 million, or $3.16 a share, a year earlier.
Stripping a one time gain of $106 million from the sale of stock in Panamanian airline Copa and special charges of $21 million, the quarterly loss was $128 million, or $1.58 per share, better than Wall Street analysts' forecast of a loss of $1.85 a share.
Like other major U.S. airlines, Continental has been struggling with surging fuel costs. In March, most of its unions agreed to accept givebacks, worth a combined $418 million annually, in a step the Houston-based airline said was key to its survival.
Revenue in the quarter rose 16.7 percent to $2.8 billion, helped by rising fares and strong demand.
Full story from CAL.
CONTINENTAL AIRLINES ANNOUNCES 2005
FOURTH QUARTER AND FULL YEAR LOSS
HOUSTON, Jan. 17, 2006 – Continental Airlines (NYSE: CAL) today reported a fourth quarter 2005 net loss of $43 million ($0.53 diluted loss per share), including a gain of $106 million related to the sale of Copa stock and other special charges of $21 million. Excluding these special items, Continental recorded a net loss of $128 million for the quarter ($1.58 diluted loss per share).
Continental incurred a net loss of $68 million for the full year 2005 ($0.97 diluted loss per share), including all 2005 special items. Excluding those special items, Continental recorded a net loss of $205 million for the full year 2005 ($2.93 diluted loss per share). The 2005 loss was the result of increased competition from low-cost carriers and the inability to recover, through fare increases, the higher cost of fuel. In 2005, mainline fuel costs were $856 million higher than in 2004.
“We continue to face significant challenges,” said Chairman and Chief Executive Officer Larry Kellner. “The price of oil still hovers at record high prices, JetBlue has invaded our Newark hub, Delta is using its bankruptcy advantage to expand into our profitable international markets and United Airlines, flush with $3 billion in exit financing and greatly reduced costs, is coming out of bankruptcy.
“However, thanks to the personal sacrifice of my co-workers who took wage and benefit reductions in 2005, Continental has been able to avoid the path of bankrupt carriers and launch one of the largest international expansion plans in our company’s history,” Kellner added.
Fourth Quarter Revenue and Capacity
Fourth quarter passenger revenue increased to $2.6 billion on a 9.8-percent increase in consolidated revenue passenger miles (RPMs) and a consolidated yield increase of 6.8 percent compared to the fourth quarter of 2004. The increase in revenue was helped by continued international expansion and fare increases that partially offset the increased cost of fuel. International mainline capacity accounted for 45 percent of total mainline capacity in the fourth quarter.
Consolidated load factor was 77.9 percent for the fourth quarter 2005, a slight increase over the same period in 2004, on a capacity increase of 9.0 percent. Consolidated revenue per available seat mile (RASM) increased 7.6 percent year-over-year.
Mainline load factor was 78.1 percent for the fourth quarter 2005, a slight increase over the same period in 2004. Mainline traffic (RPMs) in the fourth quarter was up 8.7 percent on increased capacity of 8.4 percent versus the same period in 2004. Continental’s mainline yields during the quarter increased 6.0 percent year-over-year. However, mainline yields for the fourth quarter were still 13 percent lower than mainline yields in the fourth quarter of 2000.
Passenger revenue for the fourth quarter 2005 and period-to-period comparisons of related statistics by geographic region for the company’s mainline and regional operations are as follows:
Percentage Increase in PassengerFourth Quarter 2005 vs. Fourth Quarter 2004
Revenue Passenger (in millions) Revenue RASM ASMs
Domestic $ 1,217 10.5% 6.8% 3.4%
Transatlantic 424 28.2% 7.5% 19.2%
Latin America 248 10.8% 7.0% 3.5%
Pacific 192 28.2% 3.9% 23.3%
Total Mainline $ 2,081 15.2% 6.4% 8.4%
Regional $ 507 26.8% 11.2% 14.1%
Consolidated $ 2,588 17.3% 7.6% 9.0%
Continental and the entire airline industry continue to suffer the burden of excessive fees and non-income related taxes. Continental incurred $1.2 billion in these fees and non-income related taxes charged on passenger tickets by various governmental entities in 2005, with $292 million incurred in the fourth quarter.
Operational Accomplishments
Continental continued its international expansion during the quarter. The airline was the first carrier to inaugurate scheduled nonstop service between the United States and India, with the launch of daily flights between its New York hub at Newark Liberty International Airport and Delhi’s Indira Gandhi International Airport. In addition, the airline began daily nonstop service between Liberty and Liberia, Costa Rica; and Curacao, Netherlands Antilles; and between LaGuardia and the Caribbean island of Aruba.
From its Houston hub, Continental began daily nonstop flights between Bush Intercontinental Airport and Buenos Aires, Argentina; Bonaire, Netherlands Antilles and Punta Cana, Dominican Republic.
In addition, Continental announced that it will begin service in 2006 between Liberty and Barcelona, Spain; Copenhagen, Denmark and Cologne, Germany.
“We continued our international expansion in the fourth quarter, and our mainline international capacity is now approaching half of our total mainline capacity,” said Jeff Smisek, president. “Our co-workers chose the right path in 2005, and we are now growing and hiring new employees in stark contrast to most of our competitors.”
Fourth Quarter Financial Results
Driven largely by a 57.6-percent increase in the cost of fuel and related taxes, Continental’s operating costs in the fourth quarter increased 13.0 percent over the same period in 2004. The company’s mainline cost per available seat mile (CASM) increased 3.0 percent in the fourth quarter compared to the same period in 2004, due to high fuel prices. Excluding special items and holding fuel rate constant, CASM decreased 6.7 percent, primarily as a result of pay and benefit reductions and work rule changes that began in April, and other cost-saving initiatives.
In October, Continental completed a public offering of 18 million shares of its Class B common stock, raising $203 million of cash.
In December, Continental received $172 million from the sale of approximately nine million shares of common stock in the initial public offering of Copa Holdings, S.A., parent company of Copa Airlines. The sale decreased the company’s ownership percentage from 49 to 27 percent. Continental still holds approximately 12 million shares of Copa’s common stock.
With these financings, Continental ended the fourth quarter with approximately $1.96 billion in unrestricted cash and short-term investments.
In the fourth quarter, Continental contributed $115 million cash to its defined benefit pension plans. With this contribution, full year 2005 contributions totaled $354 million. Special charges of $21 million in the fourth quarter of 2005 consist primarily of a non-cash settlement charge related to lump-sum distributions from the pilot pension plans.
Continental took delivery of three 737-800s and three 757-300s during the fourth quarter of 2005. Continental expects to take delivery of two 757-300s during the first quarter of 2006 and six 737-800s in 2006.
