Continental cargo declines 37.9pc, Q2 hit with US$213 million net loss

CONTINENTAL Airlines has reported a second quarter net loss of US$213 million with cargo revenue declining 37.9 per cent ($50 million) year on year because of reduced demand and lower pricing.

Second quarter passenger results were hit by declines in high yield business class travel and in lower yield economy tickets sales due to the weakened economy, said a company statement.

Fear of swine flu contributed to reduced passenger revenue by a $50 million, the company said. But fuel expense declined $762 million (46.1 per cent) in the second quarter year on year, while revenue fell by $918 million, said the statement.

In response, Continental is laying off 1,700 staff from top to bottom in addition to the previously announced layoffs of 500 reservation clerks 700 flight attendants.

The company will also increase domestic check-baggage fees by $5 on August 19 for customers who do not prepay online. There will also be an immediate $5 increase on telephone reservation bookings.

"My co-workers are doing a great job to focus on customer service despite challenges facing our industry," said chairman and CEO Larry Kellner, 50, who leaves his post January 1 after five years as CEO, and 14 years with the company.

Mr Kellner will be replaced by Jeff Smisek, 54, Continental's president and chief operating officer, who will become chairman and CEO on January 1. Mr Smisek joined the airline in 1995 as vice president and general counsel, becoming president in 2004 and president and chief operating officer last September.

Said Mr Kellner: "While the unit revenue decline appears to be bottoming out, it is doing so at low levels and we must take aggressive steps to increase revenue and reduce costs. "

Revenue for the quarter was $3.1 billion, a decrease of 22.7 per cent compared to the same period in 2008. Passenger revenue for the quarter fell 24.2 per cent ($883 million) compared to the same period last year due to lower fares and passenger traffic declines.

Consolidated revenue passenger miles (RPMs) for the second quarter decreased 6.4 per cent year on year on a capacity decrease of 7.8 per cent, resulting in a second quarter consolidated load factor of 82.7 per cent - 1.3 points higher year on year.

Mainline load factor was 83.2 per cent, up 1.5 points year on year. Continental's mainline yield decreased 18.3 per cent, said the company.

Recently, the US Department of Transportation approved Continental's application to join the antitrust immunised Star Alliance, which includes United Airlines and eight other carriers, ensuring level competition with other antitrust immunised alliances.

Continental continued to improve fuel efficiency, adding fuel-efficient aircraft with winglets. Continental also took delivery of two new Boeing 737-900Ers, but mothballed four Boeing 737-500s.

Continental is expected to take delivery of seven Boeing 737 aircraft in the second half of 2009. The company expects to remove 29 additional Boeing 737-300 and 737-500 aircraft from service by January 2010.

Source: http://www.schednet.com