Continental beats analysts' expectations with $43M loss
By Dan Reed, USA TODAY
Houston-based Continental Airlines (CAL) beat Wall Street expectations last quarter thanks to deep cost cutting, strong travel demand and rising fares.
But the USA's No. 5 carrier on Tuesday still reported a $43 million loss for the October-December quarter, equal to 53 cents a share.
Excluding one-time accounting items, Continental lost $128 million in the quarter, or $1.58 a share. (More on Continental: See additional coverage in Today in the Sky)
That beat the $1.68-a-share loss that analysts had been expecting, according to a survey by Thomson Financial.
Continental's performance fits the recent theme of rapidly improving airline operating fundamentals ? excluding jet fuel expenses.
But Continental executives, in a conference call, reined in some analysts' and investors' enthusiasm about the company's prospects for 2006. CEO Larry Kellner said he expects this to be a "tough year," and that he expects a "significant loss" in the current quarter.
The warning might have had an effect: Continental's share price dropped 11.5% to close at $17.24. Oil prices, which topped $66 a barrel, the highest price in more than 3 months, also took a toll as stocks declined across the board in Tuesday trading.
The Amex Airline index was down more than 6% Tuesday.
For the full year, Continental showed improvement over 2004. It lost $68 million in 2005, or 97 cents a share. In 2004, its net loss was $409 million, or $6.19 a share
That improvement, particularly late in the year, led to a surge in the prices of airline stocks, including that of Continental. The Amex Airline index rose 42% from Sept. 21 to the first week of this year before easing back.
But Kellner said Continental continues "to face significant challenges." It has trimmed $412 million in annual operating costs, thanks to labor deals in 2005, and expects soon to get another $72 million annually in savings from the carrier's flight attendants.
But he warned that "the price of oil still hovers at record high prices, (discounter) 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 financing and greatly reduced costs, is coming out of bankruptcy," likely next month.
Kellner said Continental, unlike most other big network airlines, last year increased its flying capacity, both internationally and domestically. He expects Continental's capacity, excluding its feeder airlines, to grow by 7.6% this year.
Continental, which now has 45% of its capacity in international markets, plans to continue it rapid international expansion in 2006, Kellner said.
Continental's report kicks off a series of quarterly performance reports by airlines. American Airlines and discount giant Southwest are scheduled to report today.
By Dan Reed, USA TODAY
Houston-based Continental Airlines (CAL) beat Wall Street expectations last quarter thanks to deep cost cutting, strong travel demand and rising fares.
But the USA's No. 5 carrier on Tuesday still reported a $43 million loss for the October-December quarter, equal to 53 cents a share.
Excluding one-time accounting items, Continental lost $128 million in the quarter, or $1.58 a share. (More on Continental: See additional coverage in Today in the Sky)
That beat the $1.68-a-share loss that analysts had been expecting, according to a survey by Thomson Financial.
Continental's performance fits the recent theme of rapidly improving airline operating fundamentals ? excluding jet fuel expenses.
But Continental executives, in a conference call, reined in some analysts' and investors' enthusiasm about the company's prospects for 2006. CEO Larry Kellner said he expects this to be a "tough year," and that he expects a "significant loss" in the current quarter.
The warning might have had an effect: Continental's share price dropped 11.5% to close at $17.24. Oil prices, which topped $66 a barrel, the highest price in more than 3 months, also took a toll as stocks declined across the board in Tuesday trading.
The Amex Airline index was down more than 6% Tuesday.
For the full year, Continental showed improvement over 2004. It lost $68 million in 2005, or 97 cents a share. In 2004, its net loss was $409 million, or $6.19 a share
That improvement, particularly late in the year, led to a surge in the prices of airline stocks, including that of Continental. The Amex Airline index rose 42% from Sept. 21 to the first week of this year before easing back.
But Kellner said Continental continues "to face significant challenges." It has trimmed $412 million in annual operating costs, thanks to labor deals in 2005, and expects soon to get another $72 million annually in savings from the carrier's flight attendants.
But he warned that "the price of oil still hovers at record high prices, (discounter) 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 financing and greatly reduced costs, is coming out of bankruptcy," likely next month.
Kellner said Continental, unlike most other big network airlines, last year increased its flying capacity, both internationally and domestically. He expects Continental's capacity, excluding its feeder airlines, to grow by 7.6% this year.
Continental, which now has 45% of its capacity in international markets, plans to continue it rapid international expansion in 2006, Kellner said.
Continental's report kicks off a series of quarterly performance reports by airlines. American Airlines and discount giant Southwest are scheduled to report today.