Continental Posts Big Loss, Cites Everything

Pick a reason, any reason.

Continental Airlines (CAL) blamed rising fuel costs, the war in Iraq, a weak economy, terrorism fears and the SARS outbreak for a huge loss in the first quarter.

The carrier reported a loss of $221 million, or $3.38 a share, which includes a $41 million writedown for the reduced market value of its MD-80 fleet, an older series of twinjets used for shorter flights. Still, this beat the $3.43 loss per share expected by Wall Street analysts, who have been dropping their estimates in recent weeks as travel warnings have been issued about the international outbreak of the SARS virus.

Excluding all charges, the carrier lost $180 million, or $2.75 a share, which also topped analyst estimates of a $2.80 loss per share. Continental shares dropped 0.9% to $5.64 on the news.

"In spite of the convergence of a war, domestic terrorism, SARS, a poor economy and high fuel prices, coupled with one of the highest tax burdens of any industry, we're going to make it across the finish line," said Gordon Bethune, Continental's chairman and CEO. "Our strength is the unwavering integrity and professionalism of our employees and our product."

Total revenue, including cargo, came in at $2.04 billion, topping analyst estimates by about $20 million. Passenger revenue was flat with the year-ago quarter, despite Continental's capacity being up 0.7%. The airline may have flown more, but the planes weren't as full, coming in with a load factor of 69.6% vs. 74% a year ago. In order to break even in the first quarter, the company said it needed a consolidated load factor of 84.5%.