Continental Blames Fuel, Fares for Loss

Continental Airlines Inc. (CAL), the nation's fifth biggest carrier, reported a $206 million loss for the fourth quarter, citing continued high fuel costs, fare erosion from competitive pressures and what it called excessive government taxes and fees.

The loss reported Thursday amounted to $3.12 a share came despite improving economic conditions that bolstered travel demand in the last three months of the year. It adds to more than $650 million that Continental has lost since the beginning of 2001.

Continental had earned $47 million, or 61 cents a share, in the fourth quarter a year ago.

The latest quarterly loss included $14 million mostly from retirement of aircraft and $18 million related to a change in expected future costs for frequent flyer reward redemptions on alliance carriers.

Continental, excluding the special items, reported a quarterly loss of $174 million, or $2.62 per share — better than the Thomson First Call mean estimate of $3.29 loss per share.

Shares of Continental were up 27 cents, or nearly 3 percent, at $9.72 on the New York Stock Exchange (search).

The company said it incurred $258 million in fees and non-income related taxes for the latest quarter and $1.05 billion for the full year, charged on passenger tickets by various governmental entities.

Revenue for the latest quarter improved 6.7 percent from the year-ago period to $2.2 billion.

"Even though we closed 2004 with a significant loss, Continental took many steps last year that are helping to position us for a stronger future," Continental chairman and chief executive Larry Kellner said in a prepared statement.

Continental said it lost $363 million, or $5.55 per share, for the year, joining other struggling air carriers in wrapping up 2004 on a negative note.

Executives said cost control continues to be a focus in the face of the losses. Earlier this month, Houston-based Continental finalized $99 million in wage and benefit cuts for domestic airport ticket, gate, ramp, operations and cargo agent workers.

The cuts will save the carrier part of the $500 million annually that it wants from employee groups by Feb. 28 to fend off a potential liquidity crisis, layoffs and deeper payroll cuts in light of soaring jet fuel costs.

Continental, with more than 41,000 employees, had already announced $70 million in cuts in wages, benefits and work rule changes for nonunion employees such as management, reservations, food services and clerical workers. Negotiations continued with pilots, flight attendants and mechanics.

Kellner, who succeeded Gordon Bethune (search) as chairman and chief executive in late December, will take a 25 percent cut in pay and long-term bonuses. Other top executives agreed to take 20 percent cuts in pay.

The carrier said earlier that it also expects to report losses in 2005 unless conditions improve.