Continental's losses less than expected
By Lynne Marek
Bloomberg News
HOUSTON — Continental Airlines Inc., the fifth-largest U.S. carrier, said its fourth-quarter loss narrowed as sales rose more than expected.
The loss was trimmed to $109 million, or $1.67 a share, in the quarter from $149 million, or $2.58, a year earlier. Passenger revenue rose 16 percent to $1.89 billion, the Houston-based company said in a statement.
Continental contributed to what is estimated to be a record $9 billion loss for the industry last year, according to the Air Transport Association. Chief Executive Officer Gordon Bethune said in November that he didn't expect airlines to return to profitability this year.
"It was a reasonably solid quarter all things considered, although against a backdrop of a miserable airline environment," said JP Morgan analyst Jamie Baker, who has an "overweight" rating on the stock.
Continental, the first major U.S. airline to report fourth- quarter and 2002 results, said it responded to lower travel demand by tailoring capacity. Expenses rose 11 percent to $2.1 billion mainly on higher fuel, maintenance and labor costs.
The results were better than the $1.94 loss per share, expected based on the average estimate of analysts in a Thomson First Call survey. Shares of Houston-based Continental rose 41 cents, or 4.6 percent, to $9.31 in New York Stock Exchange trading at 9:50 a.m. The stock has gained 28 percent this year after a 72 percent decline last year.
"The quarter ended with stronger revenues than anticipated, while unit costs were down," Chief Financial Officer Jeff Misner said in a statement. Unit costs are measured relative to each mile the carriers' seats are flown.
Outlook
The company expects a loss in the first quarter of this year and for the full year, Misner said on a conference call with analysts.
Continental has been trying to boost sales through a three-way alliance with Delta Air Lines Inc., the third-biggest U.S. carrier, and No. 4 Northwest Airlines Corp., with which it already has a partnership. Such joint ventures let the partners boost revenue by linking flights and selling tickets for each other's flights.
So far, the U.S. Transportation Department has extended the review of the proposed partnership three times. A decision could come as early as this week.
U.S. airlines have been trying to cut costs enough to offset a drop in revenue triggered by the U.S. economic slowdown and the Sept. 11 attacks. UAL Corp., the owner of the world's second-biggest carrier, United Airlines, is in a bankruptcy reorganization. AMR Corp.'s American Airlines is the global leader.
Savings
The company said that it has planned revenue-generating and cost-saving initiatives that will improve annual operating results by more than $400 million. Continental ended 2002 with $1.34 billion in cash and short-term investments, up from $1.13 billion at the end of 2001.
"Today's results give us confidence that Continental will be one of a select few carriers to flirt with quarterly profitability this year," said Baker, who expects the company to post a loss for the full year.
ExpressJet Holdings Inc., the commuter unit of Continental Airlines that sold shares to the public in April, said fourth- quarter net income more than doubled to $22.5 million, or 35 cents a share, from $10.6 million, or 20 cents, a year earlier. It was expected to earn 33 cents, according to First Call.
The commuter carrier's revenue rose 26 percent to $284 million from $224.9 million. The company said it plans $92.8 million in capital spending this year.
Shares of ExpressJet rose 40 cents to $11.95 yesterday on the New York Stock Exchange. The stock has dropped 25 percent in the past year.
