Continental 2Q Profit Almost Doubles

Continental Airlines Inc., the world's fifth-largest airline, Thursday reported its second-quarter net income almost doubled, as a 23 percent boost in passenger revenue helped offset higher fuel prices and a hefty accrual for employee profit sharing.

Net income rose 98 percent to $198 million (euro158.63 million), or $1.84 per share, from $100 million (euro80.12 million), or $1.26 per share, a year ago. Excluding special charges, Continental recorded net income of $208 million (euro166.64 million), or $1.93 per share, in the latest period.

Total revenue rose 22.8 percent to $3.51 billion (euro2.81 billion) from $2.86 billion (euro2.29 billion) last year.

The results beat analysts' consensus estimate of $1.90 per share on sales of $3.49 billion (euro2.8 billion), according to a poll by Thomson Financial.

Operating income totaled $244 million (euro195.48 million), more than double that of the year-ago quarter, in spite of fuel price increases costing more than $200 million (euro160.23 million) and a $60 million (euro48.07 million) accrual for employee profit sharing.

Passenger revenue increased 23.1 percent to $3.2 billion (euro2.56 billion). Additional traffic, both domestic and international, and several fare increases produced significantly higher revenue, Continental said.

Total quarterly traffic increased 15.2 percent year-over-year on a capacity increase of 10.9 percent, resulting in a consolidated load factor, or percentage of available seats filled, of 82.7 percent for the quarter, 3.1 percentage points above the same period in 2005.

The company said it had an on-time arrival rate of 71.5 percent during the quarter, hurt by weather as well as air traffic control ground delay programs and record load factors.

The airline also noted that sales at continental.com continued to be strong in the second quarter, up 55 percent year-over-year, and said it is "on target" to achieve $3 billion (euro2.4 billion) of sales on continental.com this year.

"After five years of challenges and hard work, it's great to see a pay-off for everyone's efforts," said Jeff Misner, chief financial officer. "But, even with all the progress made, we must continue our focus on eliminating unnecessary costs."

Continental said mainline fuel costs increased $216 million (euro173.05 million) over the second quarter of 2005, primarily due to a 26.4 percent increase in fuel prices compared with the same period last year. Continental hedged about 25 percent of its expected fuel requirements for the second quarter of 2006, resulting in an $11 million (euro8.81 million) benefit.

Also, using crude oil swaps, the company said it has hedged about 33 percent of fuel requirements for the third quarter and 13 percent for the fourth quarter.

During the second quarter, wages, salaries and related costs increased 14.6 percent - 5.4 percent excluding employee profit sharing - over the second quarter 2005.


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