Thursday April 21, 2005
Continental Airlines cited continuing weak domestic yields and historically high fuel costs as it reported that its first-quarter loss grew to $184 million from $124 million in the year-ago period.Excluding an $8 million special gain related to the company's defined benefit pension plan, the current-period loss was $192 million.
Operating revenue rose 8.6% to $2.51 billion on an 8% increase in passenger revenue to $2.27 billion and a 14.9% jump in cargo, mail and other revenue to $239 million. Continental estimated that Delta Air Lines' SimpliFares domestic pricing reform reduced revenue by $25-$30 million in the quarter.
Operating expenses climbed 9.6% to $2.68 billion, propelled by a 41% surge in jet fuel expense to $470 million as well as an 11.4% hike in the cost of its capacity purchase agreement with ExpressJet for the Continental Express feeder network. As a result, operating loss rose to $171 million from $135 million in 2004. Current-period results include a $43 million charge related to a change to pilot pensions, while in the year-ago period the company recorded a $55 million charge related to termination of a services agreement and retirement of MD-80s.
At the unit level, mainline yield per RPM declined 2.4% to 11.59 cents on a 9.8% rise in RPMs, while passenger revenue per ASM was up 4.3% on a 4.9-point gain in load factor to 77.5%. Cost per ASM climbed 6.1% to 10.56 cents but dipped 0.3% excluding the impact of higher fuel prices in 2005. Holding fuel rate constant and excluding special items, CASM inched up 0.4% to 9.72 cents.
Commenting on the outlook for the rest of the year, Executive VP and CFO Jeff Misner said Continental expects a "substantial loss" in 2005. The airline noted that it has achieved agreements covering $418 million of the $500 million in annual savings it sought from its employee groups, with all but the Assn. of Flight Attendants ratifying concessionary agreements. The attendants rejected a tentative agreement at the end of March (ATWOnline, April 1). The company will resume negotiations with AFA next week.
During a conference call with media and analysts, Chairman and CEO Larry Kellner acknowledged that the $500 million target was established before Delta's SimpliFares were rolled out--which Continental estimated will knock $200 million off revenues this year. The target also does not take into account today's near-record fuel prices. Nevertheless, Kellner said the airline will not seek additional givebacks from workers.
by Perry Flint
ATW-Online
Continental Airlines cited continuing weak domestic yields and historically high fuel costs as it reported that its first-quarter loss grew to $184 million from $124 million in the year-ago period.Excluding an $8 million special gain related to the company's defined benefit pension plan, the current-period loss was $192 million.
Operating revenue rose 8.6% to $2.51 billion on an 8% increase in passenger revenue to $2.27 billion and a 14.9% jump in cargo, mail and other revenue to $239 million. Continental estimated that Delta Air Lines' SimpliFares domestic pricing reform reduced revenue by $25-$30 million in the quarter.
Operating expenses climbed 9.6% to $2.68 billion, propelled by a 41% surge in jet fuel expense to $470 million as well as an 11.4% hike in the cost of its capacity purchase agreement with ExpressJet for the Continental Express feeder network. As a result, operating loss rose to $171 million from $135 million in 2004. Current-period results include a $43 million charge related to a change to pilot pensions, while in the year-ago period the company recorded a $55 million charge related to termination of a services agreement and retirement of MD-80s.
At the unit level, mainline yield per RPM declined 2.4% to 11.59 cents on a 9.8% rise in RPMs, while passenger revenue per ASM was up 4.3% on a 4.9-point gain in load factor to 77.5%. Cost per ASM climbed 6.1% to 10.56 cents but dipped 0.3% excluding the impact of higher fuel prices in 2005. Holding fuel rate constant and excluding special items, CASM inched up 0.4% to 9.72 cents.
Commenting on the outlook for the rest of the year, Executive VP and CFO Jeff Misner said Continental expects a "substantial loss" in 2005. The airline noted that it has achieved agreements covering $418 million of the $500 million in annual savings it sought from its employee groups, with all but the Assn. of Flight Attendants ratifying concessionary agreements. The attendants rejected a tentative agreement at the end of March (ATWOnline, April 1). The company will resume negotiations with AFA next week.
During a conference call with media and analysts, Chairman and CEO Larry Kellner acknowledged that the $500 million target was established before Delta's SimpliFares were rolled out--which Continental estimated will knock $200 million off revenues this year. The target also does not take into account today's near-record fuel prices. Nevertheless, Kellner said the airline will not seek additional givebacks from workers.
by Perry Flint
ATW-Online