Continental Posts $80 Million Loss, Plans Fleet Reductions

Continental Airlines blamed record fuel costs for its $80 million first quarter loss and announced plans to reduce its fleet and flights. Excluding a $5 million after tax gain from the sale of aircraft, Continental recorded a net loss of $85 million ($0.86 diluted loss per share).

During the quarter, the company incurred additional fuel costs of $69 million year-over-year that were included as part of its regional capacity purchase cost. As a result, the total year-over-year impact of higher fuel costs on the company for the first quarter was $433 million.

Continental plans to remove from service an additional 14 older, less fuel-efficient 737-300 aircraft as leases expire on those aircraft from September 2008 to April 2009. It also expects to reduce regional jet capacity beginning in the fall 2008, but its plans are fluid as it attempts to negotiate better economics with Express Jet, and as the regional jets flown for Continental by Chautauqua come off lease.

Total revenue for the quarter of $3.6 billion increased 12.3 percent ($391 million) over the same period in 2007 as a result of increased fuel surcharges on passenger tickets and cargo, international growth and modest fare increases.

As a result of record high fuel prices, a weakening economy and a weak dollar, Continental plans to reduce domestic mainline capacity 5 percent on an annual run-rate basis beginning this fall.