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http://biz.yahoo.com/ap/080117/continental_results.html?.v=3
Continental Posts 4Q Pretax Profit
Thursday January 17, 2:29 pm ET
By David Koenig, AP Business Writer Continental Reports 4Q Pretax Profit, Delays Full Results While It Computes Accounting Charge
DALLAS (AP) -- Continental Airlines Inc. said Thursday that rising fares helped boost revenue as it swung to a pretax profit in the fourth quarter despite higher fuel costs.
The Houston-based airline said revenue climbed 11.6 percent and it reported a pretax profit of $71 million in contrast to a pretax loss of $26 million a year ago. Its pretax profit without some gains amounted to $24 million versus a pretax loss of $4 million a year earlier.
Continental didn't give a net income figure, however, and delayed reporting its final results until mid-February while it calculates an accounting charge due to a new federal law that lets pilots work longer before retirement.
Shares of Continental rose 58 cents, or 2.4 percent, to $24.83 in afternoon trading. They have traded in a 52-week range of $17.19 to $52.40.
The airline industry has been tossed the past two weeks by rumors of takeovers, with much of the speculation centering on Delta Air Lines Inc. exploring deals with UAL Corp.'s United Airlines or Northwest Airlines Corp.
Continental Chief Executive Lawrence Kellner repeated his position that Continental likes its current position -- among big carriers, only Southwest Airlines Co. has been more consistently profitable -- but he added that it could be forced to respond if rivals get bigger.
"We do pay attention to relative size and we would have some concern" if rivals make deals, he said. "If we see something or hear something, we won't hesitate to act aggressively."
Kellner also said that bookings in the past 10 days have been strong enough to dispel fears that a weakening economy could hurt air travel. He said a December slowdown might just as easily have been due to Christmas and New Year's Day falling on Tuesdays, pushing some travel into January.
Ray Neidl, an analyst for Calyon Securities, said by his calculations Continental will show that it earned a profit and beat Wall Street expectations.
"They did better than consensus, their guidance looks strong, demand looks strong," Neidl said. "Part of the reason is that the Newark (N.J.) airport is a powerhouse that's driving their growth."
Continental reported that fourth-quarter revenue rose to $3.52 billion from $3.16 billion a year ago. That was a tick better than the $3.51 billion forecast of analysts surveyed by Thomson Financial.
The sales bump came from trans-Atlantic flights -- where Continental faces less competition from low-fare rivals, and passenger revenue rose 27.5 percent -- and from a nearly 10 percent gain on domestic revenue, a weak spot for most U.S. airlines.
The major U.S. airlines raised fares and fuel surcharges several times in the fourth quarter, although a $50 per round trip fuel fee was rolled back this week. Continental executives said they had to drop the surcharge because other carriers were more selective where they added the fee, leaving Continental higher priced on some routes.
Continental said it used financial hedging transactions and better fuel efficiency to partly offset the cost of jet fuel, which has risen along with oil prices that topped $98 per barrel in the fourth quarter. Jet fuel is usually second only to labor among an airline's costs.
Continental is redoing the math on pension liabilities because of a December law that raised the mandatory retirement age for pilots from 60 to 65. The airline expects most of its pilots to keep working beyond 60.
The airline had said Wednesday that the law would lower its pension liabilities and it expected to record a non-cash tax charge of $70 million to $140 million in the fourth quarter to raise its tax-valuation allowance.
Before Wednesday, analysts surveyed by Thomson were expecting Continental to break even for the fourth quarter.
The company expects to record $47 million in other net one-time gains for the fourth quarter, most of it from the sale of its stake in aviation technology provider Arinc Inc. to private equity firm The Carlyle Group.
Because of the revised pension calculations, Continental didn't report net income for all of 2007 either. The company said pretax profit rose 53 percent to $566 million from $369 million in 2006. Excluding one-time gains and charges, pretax earnings would have been $542 million, up 78 percent from $304 million in 2006, it said.
Annual revenue rose 8 percent to $14.23 billion from $13.1 billion a year earlier. Continental said it would pay $158 million in profit sharing to employees next month, up from $111 million a year ago.
Continental Posts 4Q Pretax Profit
Thursday January 17, 2:29 pm ET
By David Koenig, AP Business Writer Continental Reports 4Q Pretax Profit, Delays Full Results While It Computes Accounting Charge
DALLAS (AP) -- Continental Airlines Inc. said Thursday that rising fares helped boost revenue as it swung to a pretax profit in the fourth quarter despite higher fuel costs.
The Houston-based airline said revenue climbed 11.6 percent and it reported a pretax profit of $71 million in contrast to a pretax loss of $26 million a year ago. Its pretax profit without some gains amounted to $24 million versus a pretax loss of $4 million a year earlier.
Continental didn't give a net income figure, however, and delayed reporting its final results until mid-February while it calculates an accounting charge due to a new federal law that lets pilots work longer before retirement.
Shares of Continental rose 58 cents, or 2.4 percent, to $24.83 in afternoon trading. They have traded in a 52-week range of $17.19 to $52.40.
The airline industry has been tossed the past two weeks by rumors of takeovers, with much of the speculation centering on Delta Air Lines Inc. exploring deals with UAL Corp.'s United Airlines or Northwest Airlines Corp.
Continental Chief Executive Lawrence Kellner repeated his position that Continental likes its current position -- among big carriers, only Southwest Airlines Co. has been more consistently profitable -- but he added that it could be forced to respond if rivals get bigger.
"We do pay attention to relative size and we would have some concern" if rivals make deals, he said. "If we see something or hear something, we won't hesitate to act aggressively."
Kellner also said that bookings in the past 10 days have been strong enough to dispel fears that a weakening economy could hurt air travel. He said a December slowdown might just as easily have been due to Christmas and New Year's Day falling on Tuesdays, pushing some travel into January.
Ray Neidl, an analyst for Calyon Securities, said by his calculations Continental will show that it earned a profit and beat Wall Street expectations.
"They did better than consensus, their guidance looks strong, demand looks strong," Neidl said. "Part of the reason is that the Newark (N.J.) airport is a powerhouse that's driving their growth."
Continental reported that fourth-quarter revenue rose to $3.52 billion from $3.16 billion a year ago. That was a tick better than the $3.51 billion forecast of analysts surveyed by Thomson Financial.
The sales bump came from trans-Atlantic flights -- where Continental faces less competition from low-fare rivals, and passenger revenue rose 27.5 percent -- and from a nearly 10 percent gain on domestic revenue, a weak spot for most U.S. airlines.
The major U.S. airlines raised fares and fuel surcharges several times in the fourth quarter, although a $50 per round trip fuel fee was rolled back this week. Continental executives said they had to drop the surcharge because other carriers were more selective where they added the fee, leaving Continental higher priced on some routes.
Continental said it used financial hedging transactions and better fuel efficiency to partly offset the cost of jet fuel, which has risen along with oil prices that topped $98 per barrel in the fourth quarter. Jet fuel is usually second only to labor among an airline's costs.
Continental is redoing the math on pension liabilities because of a December law that raised the mandatory retirement age for pilots from 60 to 65. The airline expects most of its pilots to keep working beyond 60.
The airline had said Wednesday that the law would lower its pension liabilities and it expected to record a non-cash tax charge of $70 million to $140 million in the fourth quarter to raise its tax-valuation allowance.
Before Wednesday, analysts surveyed by Thomson were expecting Continental to break even for the fourth quarter.
The company expects to record $47 million in other net one-time gains for the fourth quarter, most of it from the sale of its stake in aviation technology provider Arinc Inc. to private equity firm The Carlyle Group.
Because of the revised pension calculations, Continental didn't report net income for all of 2007 either. The company said pretax profit rose 53 percent to $566 million from $369 million in 2006. Excluding one-time gains and charges, pretax earnings would have been $542 million, up 78 percent from $304 million in 2006, it said.
Annual revenue rose 8 percent to $14.23 billion from $13.1 billion a year earlier. Continental said it would pay $158 million in profit sharing to employees next month, up from $111 million a year ago.
