Continental Airlines suffers loss of $266 million in fourth quarter, fall in international bookings

Continental Airlines, based in Houston, Texas, the United States, has said that it suffered a loss of $266 million in the fourth quarter because of the worldwide economic recession as well the increase in fuel and labour costs.

It said that fuel and labour, the airline’s two biggest expenses, increased by 4% and 5.1%, respectively.
In a regulatory filing, Continental Airlines, the fourth largest United States-based airline, also said that forward bookings on all its international segments for the next six weeks were down from 2008 and that it would cut capacity again. This fall was led by a 6 to 7 percentage-point drop on trans-Atlantic routes.

Continental Airlines’ load factor is expected to go down by 3.5% in the first quarter – “indicating that traffic is falling faster than capacity as the carrier cuts flights and parks aircraft,” the airline said.

Bookings for the next six weeks are down by 1 to 2 points, compared with 2008 on Continental’s large network to Latin America. Bookings for the Pacific region are down by 2 to 3 points.

Continental Airlines – which operates flights to destinations throughout the United States, Canada, Latin America, Europe and the Asia-Pacific regions – said it expected to end the March 2009 quarter with $2.6 million in cash.

The carrier said that its first-quarter occupancy on its main airline was likely to be 3.5 to 4.5 percentage points lower than a year ago – down by 6 to 7 points in the United States. This was a sign, according to Continental Airlines, that “traffic was going down faster than the airlines can cut flights.”

Capacity on Continental Airlines and feeder subsidiaries will dwindle by 6.9% in the first quarter and by 3.5% to 4.5% for all of 2009, compared with the figures a year before, the airline said in the regulatory filing.

Continental Airlines had reduced capacity in the fall of 2008 with a view to saving costs on fuel.
A statement from Continental Airlines said that, for all of 2008, the carrier lost $585 million, compared with a profit of $459 million in 2007. Though the airline’s revenue rose by a little over $1 billion – or 7.1% – to $15.24 billion, that increase was beaten by a $1.9-billion spurt in the spending on fuel.

AMR Corporation, the parent company of American Airlines, had warned a week ago of a 4.5% fall in its first-quarter business.

Continental Airlines and many other United States-based carriers have been cutting capacity to get rid of unprofitable flights after consumers started spending less, especially on vacations and travel.

American Airlines, United Airlines, Delta Air Lines and Southwest Airlines have already indicated that they would cut capacity in 2009. The cutting of capacity, aviation analysts say, could give the airlines more ability to jack up fares or at least stop the fares from going down during the economic recession.