Continental posts surprising 4Q profit
(AP) — Continental Airlines Inc. earned a surprising profit in the fourth quarter thanks to higher traffic and lower fuel spending.
Chairman and CEO Jeff Smisek said Thursday the airline is "seeing some signs that business travel is beginning to head in the right direction."
But Smisek added that his company and the long-battered airline industry "are a long way from being out of the woods." He said he expected a long and slow recovery.
Continental said Thursday that it earned $85 million, or 60 cents per share, in the fourth quarter.
Without some special items, including an income tax gain, the company would have earned $4 million, or 3 cents per share. Analysts expected a loss of 7 cents per share.
The biggest difference from a year ago was spending on fuel, which plunged by about one-third, as prices were much lower than they were in late 2008. The airline spent $388 million less on fuel than it did a year earlier.
Houston-based Continental, the nation's fourth-largest airline, boosted passenger traffic by 3.5 percent in the quarter, including its commuter airline affiliates.
But revenue fell 8.3 percent, to $3.18 billion, because of a decline in high-paying customers, including business travelers, sidelined by the recession.
Passenger revenue per available seat mile, a closely watched indicator for airlines, fell 9 percent. Still, that was much better than the 17.9 percent and 17.7 percent declines of the previous two quarters, and a sign that deep discounting of fares may be slowing.
Continental officials also said corporate travel departments that had barred employees from buying first-class tickets or from traveling for internal meetings are easing off on those restrictions.
Big U.S. airlines have been hit hard by the recession, which led to a slump in traffic in the U.S. and on trans-Atlantic routes. Continental's surprising profit comes a day after American Airlines said international bookings were running ahead of last year's pace and high-paying customers may be returning, raising hopes for a recovery in travel.
Continental and other airlines have also been helped by fees for checking baggage and other services, which made up for some of the decline in ticket revenue. This month, Continental raised its checked-bag fees.
The fourth-quarter profit provided an upbeat ending to Continental's second straight money-losing year.
For all of 2009, Continental lost $282 million, or $2.18 per share, as revenue plunged 17.4 percent, to $12.59 billion.
The company includes Continental Express and Continental Connection commuter airlines.
Continental shares fell 63 cents, or 3.1 percent, to $19.99 in afternoon trading.
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