Tags: US | Earns | Continental

Continental Air Turns Profit on Big Jump in Revenue

Thursday, 22 Jul 2010 12:15 PM

Continental Airlines Inc. is adding to the evidence that U.S. airlines are making a strong recovery from huge losses, but business travel still hasn't returned to levels seen before the recession.

Continental said Thursday it earned $233 million in the second quarter, nearly an exact reversal of its $213 million loss a year ago, and its per-share earnings beat analysts' expectations. Revenue jumped by nearly one-fifth compared with a year ago.

Continental, which is combining with United's UAL Corp. to form the world's biggest airline, also raised doubts about what will happen once the summer vacation-travel season is over. It said advanced bookings for the next six weeks are running 1 to 2 percentage points behind last year's pace.

Continental CEO Jeffery Smisek, who will also lead the combined United and Continental, said lucrative business travel is coming back slowly. However, the airline said the number of business travelers in June was still 20 percent less than a year ago, and revenue from those valued customers — who tend to pay higher fares — was down 10 percent.

U.S. airlines are reporting their strongest quarterly results in three years. After huge losses during the recession, Delta, United and US Airways combined to post $1 billion in earnings for the second quarter.

The rebound came with brutal cost-cutting that included the elimination of hundreds of flights each day by the major carriers. That reduced the supply of seats, helping to drive up fares. Continental said it would keep its supply of seats flat to up slightly in the third quarter. Airlines are also making money by charging extra fees for checking bags and other services.

Continental said it earned $1.46 per share last quarter. Excluding charges such as money spent preparing for the United merger, the company said it would have earned $1.60 per share. Analysts expected $1.51 per share excluding special items.

A year ago, the company lost $1.72 per share.

Revenue rose 19 percent to $3.71 billion, which matched the forecast of analysts surveyed by Thomson Reuters. Traffic rose just 2 percent, but higher fares and extra fees helped Continental make 17 percent more money for each mile that passengers flew.

Fuel spending rose 8.6 percent from a year ago, but Continental did a much better job than rival American Airlines at managing fuel costs.

Continental slightly raised its estimated costs for the second half of the year. Executives said they will pay more in sales commissions, redeem more frequent-flier awards and, now that the company is making money, pay profit-sharing to employees, which analyst Jamie Baker of JP Morgan called "a high-grade problem to have." Baker said the cost creep wasn't significant.

Standard & Poor's analyst Jim Corridore said he expects Continental to enjoy strong passenger demand and stable fuel prices. He more than doubled his forecast for Continental earnings in 2010 and 2011.

Continental ended the quarter June 30 with $3.5 billion in cash and short-term investments, up from $2.9 billion at the end of March.

Continental shares rose 75 cents, or 3.2 percent, to $24.03 in midday trading.

© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

   
1Like our page
2Share
Companies
Continental Airlines Inc. is adding to the evidence that U.S. airlines are making a strong recovery from huge losses, but business travel still hasn't returned to levels seen before the recession.Continental said Thursday it earned $233 million in the second quarter, nearly...
US,Earns,Continental
510
2010-15-22
Thursday, 22 Jul 2010 12:15 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved