Print Preview : Continental Airlines announces 2009 full-year and fourth-quarter results

Continental Airlines announces 2009 full-year and fourth-quarter results
Continental Airlines announced a 2009 full-year net loss of $282 million ($2.18 diluted loss per share). Excluding $145 million of previously announced special charges, and a $158 million non-cash income tax benefit, Continental recorded a net loss of $295 million ($2.28 diluted loss per share) for the year.

For the fourth quarter of 2009, Continental reported a fourth quarter net income of $85 million ($0.60 diluted earnings per share). Excluding $77 million of previously announced special charges, and a $158 million non-cash income tax benefit, Continental recorded a fourth quarter net income of $4 million ($0.03 diluted earnings per share).

Full-year 2009 and fourth-quarter results continued to be adversely affected by declines in high yield traffic due to the global recession. "My co-workers have done a superb job working through enormous challenges in 2009, while providing the best customer service and product in the business," said Jeff Smisek, Continental's chairman, president and chief executive officer. "While we are seeing some business traffic increasing, we likely have a long and slow road to recovery. We remain focused on achieving and maintaining profitability."

Fourth Quarter Revenue and Capacity
Total revenue for the fourth quarter of 2009 was $3.2 billion, a decrease of 8.3 percent compared to the same period in 2008. Passenger revenue for the fourth quarter fell 9.5 percent ($296 million) compared to the same period in 2008 due to lower yields.

Consolidated revenue passenger miles (RPMs) for the fourth quarter of 2009 increased 3.5 percent on a capacity (available seat mile, ASM) decrease of 0.6 percent year-over-year.

Consolidated load factor was a fourth quarter record 82.0 percent, 3.3 points higher than the fourth quarter of 2008. Consolidated yield for the quarter decreased 12.6 percent year-over-year. As a result, fourth quarter 2009 consolidated passenger revenue per available seat mile (RASM) decreased 9.0 percent year-over-year.

Mainline RPMs in the fourth quarter of 2009 increased 3.7 percent on a mainline capacity decrease of 0.5 percent year-over-year.

Mainline load factor of 82.6 percent was also a fourth quarter record, up 3.3 points year-over-year. Continental's mainline yield decreased 13.6 percent in the fourth quarter over the same period in 2008. As a result, fourth quarter 2009 mainline RASM was down 9.9 percent compared to the fourth quarter of 2008.

Passenger revenue for the fourth quarter of 2009 and period-to-period comparisons of related statistics by geographic region for the company's mainline operations and regional operations are as follows:

Cargo revenue in the fourth quarter of 2009 decreased 6.1 percent ($7 million) compared to the same period in 2008, principally due to lower year-over-year fuel surcharges. Other revenue during the fourth quarter of 2009 was $14 million higher than the prior year due primarily to higher bag fee revenue.

Fourth Quarter Operations
Continental's employees earned a total of $3 million in cash incentives for on-time performance during the quarter. The company recorded a U.S. Department of Transportation (DOT) on-time arrival rate of 77.2 percent and a systemwide mainline segment completion factor of 99.4 percent during the quarter.

Global Reach with Star Alliance
Continental Airlines joined Star Alliance in the fourth quarter of 2009, providing significantly improved benefits to customers including access to the world's largest airline network and reciprocal frequent flier and airport lounge benefits with Star Alliance's 25 other member airlines around the world. "Thanks to the focus and hard work of my co-workers, we successfully transitioned to Star Alliance," said Jim Compton, Continental's executive vice president and chief marketing officer. "Our hubs are a perfect fit for Star Alliance and our customers now enjoy a network second to none."

To enhance connectivity with Star Alliance member carriers, Continental launched nonstop service between Houston and Frankfurt, Germany on Nov. 1, 2009 and announced that it will launch daily nonstop service between its New York hub at Newark Liberty International Airport and Munich beginning March 27, 2010. Also in connection with joining Star Alliance, the company began service to several new destinations during the quarter, including nonstop service between Houston and Edmonton, Canada, and daily nonstop service from Houston and Cleveland to Washington Dulles International Airport. In addition, Continental began new service from Guam and Honolulu to Nadi, Fiji on Dec. 18, 2009.

To facilitate easy connections between Continental's flights and those of other Star Alliance airlines, Continental successfully relocated its operations at several key airports, including Chicago, Frankfurt, Narita, Honolulu and Beijing.

Continental, United and All Nippon Airways (ANA) filed an application with the DOT for antitrust immunity to enable the three carriers to create a more efficient and comprehensive trans-Pacific network, generating substantial service and pricing benefits for consumers. The trans-Pacific joint venture - the first of its kind between the U.S. and Asia - will also enable Continental, United and ANA to compete more effectively with other global alliances, each of which has a significant presence in Tokyo.

2009 in Review
During 2009, Continental took a number of steps to strengthen its cash balance and competitive position, and continued to distinguish itself from competitors. Continental:
- Raised approximately $1.7 billion through the issuance of enhanced equipment trust certificates, other new secured borrowings, convertible debt and common stock.
- Inaugurated daily nonstop service between New York and Shanghai, linking the world's leading financial center and top business and tourism destination with China's center for finance and trade. In addition, Continental began daily nonstop service between its Houston hub and Frankfurt and between Houston and Rio de Janeiro.
- Took delivery of 13 Boeing 737-900ER and three leased Boeing 757-300 aircraft. In addition, the company removed from service 20 Boeing 737-300 aircraft and eight Boeing 737-500 aircraft.
- Delivered solid operational performance, operating 101 days without a single mainline flight cancellation. The company recorded a DOT mainline segment completion factor of 99.5 percent and a systemwide on-time arrival rate of 78.8 percent for the year.
- Rated as the top airline on FORTUNE magazine's World's Most Admired Airline on its 2009 list of World's Most Admired Companies for the sixth consecutive year.
- Became the first commercial carrier to successfully demonstrate the use of sustainable biofuel to power an aircraft in North America.
- Paid employees $25 million ($595 per employee) in cash incentive payments for monthly on-time performance.
- Contributed $176 million to its defined benefit pension plans. In addition, the company contributed $34 million to its defined benefit pension plans in January 2010. Since the beginning of 2002, Continental has contributed approximately $1.8 billion to its defined benefit pension plans.
- Provided scholarships to 210 employees and dependents through the Continental Scholarship Fund, which is the largest number of awards ever made by the fund. Since 2002, the scholarship fund has assisted 1,235 employees or their dependents. Scholarship funds are donated by employees and raised by the Continental Management Association.
- Donated nearly $1 million through Continental's WE CARE Employee Fund, which assisted 437 employees in times of need.