Eagle757shark
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Continental reports first-quarter loss, redeems golden share, considers leaving SkyTeam
Friday April 18, 2008
Continental Airlines reported a first-quarter net loss of $80 million, reversed from a $22 million profit in the year-ago period, and confirmed yesterday that it has redeemed Northwest Airlines' "golden share" that prevented CO from entering into merger agreements.
NWA's golden share was contingent on the former not entering into any merger agreement. Its tie-up pact with Delta Air Lines earlier this week (ATWOnline, April 16) allowed CO to buy back the share for $100, leaving the Houston-based carrier free to explore a merger of its own. Chairman and CEO Larry Kellner said that an approved NWA-DL merger "will change the competitive landscape" of the US industry, adding that the proposed combination has caused CO to consider its "strategic" options. "We're reviewing our continued participation" in the SkyTeam alliance, he said, but emphasized that it remained "important that we're a major player in one of the three alliances." He declined further comment on any merger possibilities but said, "We have flexibility."
Kellner insisted the first-quarter loss was a "solid" result given high fuel costs, "excess capacity" in the domestic market, the US credit crisis and a weakening economy. To contend with the difficult environment, CO will cut domestic mainline capacity by 5% on an annual run-rate basis beginning this fall. It said yesterday it will remove from service an additional 14 737-300s as their leases expire from September 2008 to April 2009. It already had planned to remove 34 -300s/-500s from service this year and next.
First-quarter revenue increased 12.3% to $3.57 billion but expenses jumped 16.7% to $3.64 billion led by a 53.2% leap in fuel costs to $1.05 billion, producing an operating loss of $66 million, reversed from a $64 million profit last year. Mainline traffic grew 4.4% to 19.92 billion RPMs on a 4.8% rise in capacity to 25.28 billion ASMs, resulting in a load factor of 78.8%, down 1.1 points. Yield increased 7.2% 13.45 cents as RASM lifted 7.1% to 11.93 cents and CASM climbed 11.6% to 11.79 cents.
by Aaron Karp
Friday April 18, 2008
Continental Airlines reported a first-quarter net loss of $80 million, reversed from a $22 million profit in the year-ago period, and confirmed yesterday that it has redeemed Northwest Airlines' "golden share" that prevented CO from entering into merger agreements.
NWA's golden share was contingent on the former not entering into any merger agreement. Its tie-up pact with Delta Air Lines earlier this week (ATWOnline, April 16) allowed CO to buy back the share for $100, leaving the Houston-based carrier free to explore a merger of its own. Chairman and CEO Larry Kellner said that an approved NWA-DL merger "will change the competitive landscape" of the US industry, adding that the proposed combination has caused CO to consider its "strategic" options. "We're reviewing our continued participation" in the SkyTeam alliance, he said, but emphasized that it remained "important that we're a major player in one of the three alliances." He declined further comment on any merger possibilities but said, "We have flexibility."
Kellner insisted the first-quarter loss was a "solid" result given high fuel costs, "excess capacity" in the domestic market, the US credit crisis and a weakening economy. To contend with the difficult environment, CO will cut domestic mainline capacity by 5% on an annual run-rate basis beginning this fall. It said yesterday it will remove from service an additional 14 737-300s as their leases expire from September 2008 to April 2009. It already had planned to remove 34 -300s/-500s from service this year and next.
First-quarter revenue increased 12.3% to $3.57 billion but expenses jumped 16.7% to $3.64 billion led by a 53.2% leap in fuel costs to $1.05 billion, producing an operating loss of $66 million, reversed from a $64 million profit last year. Mainline traffic grew 4.4% to 19.92 billion RPMs on a 4.8% rise in capacity to 25.28 billion ASMs, resulting in a load factor of 78.8%, down 1.1 points. Yield increased 7.2% 13.45 cents as RASM lifted 7.1% to 11.93 cents and CASM climbed 11.6% to 11.79 cents.
by Aaron Karp
