Continental Airlines Inc. (CAL) posted a narrower fourth-quarter loss Tuesday as higher revenue and cost-cutting efforts offset sharply higher fuel costs, but executives at the nation's fifth-largest carrier told analysts they expect a "significant loss" in the first quarter of 2006. The company's stock plunged after the news.

Larry Kellner, chairman and CEO, said Tuesday that despite labor concessions and expansion of international flights, the Houston-based carrier couldn't overcome record-high fuel costs and increased competition from low-cost carriers, most notably JetBlue Airways Corp.'s (JBLU) presence at Continental's hub in Newark, N.J.

"We expect to record a significant loss for the first quarter of 2006," he said. "2006 is expected to be yet another tough year as we continue to face the challenges of high fuel prices and increased competition."

Continental shares fell $2.13, or 11 percent, to $17.34 Tuesday on the New York Stock Exchange. The carrier's 52-week range is $8.50 to $22.27.

Continental's fourth-quarter loss came to $43 million, or 53 cents per share, versus a year-earlier loss of $208 million, or $3.16 per share. The latest results included a gain of $106 million related to the sale of stock in Panamanian airline Copa Holdings S.A. and other special charges of $21 million primarily stemming from a non-cash settlement related to lump-sum distributions from pilot pension plans.

Excluding these special items, Continental recorded a loss of $128 million, or $1.58 per share.

Revenue increased 17 percent to $2.85 billion from $2.44 billion a year earlier.

Analysts surveyed by Thomson Financial expected the company to post a loss of $1.68 per share on sales of $2.82 billion.

"They came in about where expected, maybe a little better, and it's no surprise," said Raymond Neidl, an analyst for Calyon Securities Inc. "That's not what counts. What counts is going forward. They verified what we thought, that the first quarter will have a significant loss. The rest of the year remains a little more hazy concerning what happens."

Continental said fuel expenses spiked nearly 58 percent in the quarter, driving its operating costs up 13 percent.

"The price of oil still hovers at record high prices, JetBlue has invaded our Newark hub, Delta is using its bankruptcy advantage to expand into our profitable international markets and United Airlines, flush with $3 billion in exit financing and greatly reduced costs, is coming out of bankruptcy," Kellner said.

In late March last year, Continental reached 45-month pay and benefit cut agreements with its largest unions, except the airline's more than 8,000 flight attendants. The deals approved by pilots, mechanics and other unions, along with $169 million in wage and benefit cuts affecting nonunion employees, reached about $418 million of the carrier's goal to cut costs by $500 million a year.

Last month flight attendants reached a tentative four-year pact that lets them keep their current pay longer than under concession agreements the other unions already accepted while saving the airline $72 million. Continental will squeeze the remaining $10 million in savings from international locations.

Flight attendants will vote to ratify or reject their deal Wednesday through Jan. 29.

Kellner said Tuesday labor concessions would stop at the $500 million. "We've got to look at other areas of the business to make sure we're competitive," he said.

For the full year 2005, Houston-based Continental posted a loss of $68 million, or 97 cents per share, versus a loss of $409 million, or $6.25 per share, a year ago. Excluding one-time items, losses totaled $205 million, or $2.93 per share.

The company said the loss was the result of increased competition from low-cost carriers and the inability to recover, through fare increases, the higher cost of fuel. Full-year revenue grew 13 percent to $11.21 billion from $9.99 billion.

Wall Street had expected the company to post a full-year loss of $2.80 per share on revenue of $11.19 billion.

Executives didn't discuss Monday's death of a mechanic employed by a contractor who was sucked into an engine of a Continental-operated Boeing 737-500 during a maintenance check at El Paso International Airport. The National Transportation Safety Board is investigating.