Continental Blames Loss on Fuel Costs

Continental(CAL Quote) said high fuel prices sent it to a third-quarter loss, and the carrier modified its delivery schedule with Boeing(BA Quote).

Excluding special items, the carrier reported a loss of $145 million, or $1.32 a share. Analysts surveyed by Thomson Reuters had estimated a loss of $1.55. Revenue rose 8.8% to $4.2 billion and topped expectations.

Continental said fuel expenses were $606 million higher than in the same period a year earlier. Additionally, Hurricane Ike cut its operating results by $50 million, and the carrier recognized $63 million in fuel-hedging losses.

"During the quarter, the high cost of fuel continued to be a challenge, outpacing strong revenue gains," said CFO Zane Rowe, in a prepared statement.

Consolidated passenger revenue per available seat mile rose by 7.3%, as capacity declined 0.1%. Mainline RASM rose 8%. Mainline domestic capacity in September was down by 13.4%, due to capacity reductions and Hurricane Ike. Cost per available seat mile, holding fuel rates constant, fell 2.8%.

Also, the carrier said it has rescheduled the delivery of two Boeing 777 jets from 2009 to 2010, and postponed 16 737s scheduled for delivery in 2009 and 2010. They will now arrive in 2011 and beyond.

As a result, in next year Continental will take delivery of 14 Boeing 737s, for which it has arranged backstop financing. In 2010, it will take 12 737s, two 777s and two 787s. Additionally, it has agreed in principal to lease up to four 757s from Boeing, starting in 2009 and 2010, pending a decision by plane maker.