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Continental 3Q Profit Up 2 Percent

Posted on: Thursday, 18 October 2007, 12:00 CDT

By DAVID KOENIG

DALLAS - Continental Airlines Inc. said Thursday its profits rose 1.7 percent in the third quarter as it recorded a double-digit increase in revenue from international travel.

Houston-based Continental reported a net profit of $241 million, or $2.15 per share. That compared with $237 million, or $2.17 per share, a year earlier.

Excluding a special charge for a settlement related to its pilots' pension plan, Continental earned $2.25 per share. Analysts, who usually exclude charges from their forecasts, expected profits of $2.17 per share, according to a survey by Thomson Financial.

Shares fell $1.43 cents, nearly 4 percent, to $34.80 in midday trading, as oil prices surged. Airline stocks are particularly sensitive to changes in oil prices.

Continental said revenue rose nearly 9 percent, to $3.82 billion, slightly below analyst forecasts of $3.52 billion.

Passenger revenue rose more than 22 percent on trans-Atlantic flights, more than 11 percent on flights to Latin America and more than 10 percent on flights to the Pacific region. Continental has moved aggressively to expand flights and seats on international routes where it faces less competition than in the United States.

Continental's U.S. passenger revenue rose about 7 percent, helping counter high fuel prices.

"I never thought we would use the terms 'record oil' and 'record operating results' in the same quarter," said Chief Executive Larry Kellner.

Continental officials said demand for air travel seemed to be holding up well despite weakness in the housing and credit markets.

Kellner said the strong global economy boosted international travel.

Continental increased its capacity by 5.4 percent, but miles flown by paying passengers increased even more, by 7.4 percent.

The average flight was 84.3 percent full, 1.6 percentage points higher than a year earlier.

Costs as a ratio of capacity also rose, however, increasing 3.1 percent from a year ago. Fuel costs rose 4.3 percent.

Chief Financial Officer Jeff Misner said the airline is working on changes in two major supplier contracts and other moves that will save about $100 million a year, although he declined to release details.

Officials said they intend to push for further growth, including expansion of its hub at Cleveland, from about 250 daily flights now to more than 300 by early next year. They said reductions by other carriers at nearby Pittsburgh and Cincinnati had opened the door for Continental to grow in Cleveland.

The company's earnings per share fell despite the profit increase because there was an increase in outstanding shares.

Source: Associated Press/AP Online

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