Continental explains US$145 million year's 'special charges'

CONTINENTAL Airlines expects to incur US$77 million in special costs for the fourth quarter of 2009 and $145 million for the whole of last year.

Special items for the three months ending December 31 come from aircraft-related costs of $36 million, pension plan settlement charges of $29 million, while route impairment and other charges amount to $12 million, said a statement from the carrier.

Special items for the full year comprise aircraft-related charges of $89 million, pension plan settlement charges of $29 million, severance charges of $5 million, and route impairment and other charges amounting to $22 million.

For the full year, the aircraft-related special charges consist of $31 million of non-cash impairments of owned Boeing 737-300 and 737-500 aircraft and related assets, $39 million of other charges related to the grounding and sale of 737-300 and 737-500 aircraft and the write-off of certain obsolete spare parts, and $19 million of losses related to subleasing regional jets.

The pension plan settlement charges relate to lump-sum distributions from Continental's pilot-only frozen defined benefit plan.

The special charge of $12 million in the fourth quarter represents the write-off of the net book value associated with certain routes to countries that are subject to "open skies" agreements.

Prior to the fourth quarter, Continental recorded an additional $10 million of other special charges that related primarily to an adjustment to the company's reserve for unused facilities due to reductions in expected sublease income for a maintenance hangar in Denver.

The company will also record a tax benefit on the loss from continuing operations for the year, which will be exactly offset by income tax expense on other comprehensive income.

(Source: www.schednet.com)