Continental Closes Higher Despite Second-Quarter Loss - TheStreet

Continental

(CAL) - Get Report

reported a second-quarter loss and said it is getting mixed signals about fall bookings.

Excluding special items, the carrier said it lost $25 million, or 25 cents a share. Analysts had expected a loss of 49 cents. Revenue rose 9% to $4 billion, in line with estimates.

Including $22 million of net after-tax special items, the loss was $3 million, or 3 cents a share.

"We're experiencing the worst financial environment for U.S. carriers since 9/11 due to high fuel prices, the weak dollar, and the generally uncertain economic environment," said CEO Larry Kellner on an earnings conference call. Higher fuel prices had a $666 million impact, as compared with the same quarter a year earlier.

Continental ended the second quarter with $3.4 billion in unrestricted cash and short-term investments. In June, the carrier received $413 million when Chase purchased frequent flier mileage credits for a bankcard joint-marketing agreement, as well as $162 million from a stock sale, as it sought to build cash. At the end of the first quarter, Continental had $2.5 billion in unrestricted cash and short-term investments

Looking ahead, President Jeff Smisek said that consolidated bookings are flat over the next six weeks, compared with the same period a year earlier, but that yields are higher. Third-quarter load factor is expected to fall by a point. Asked whether business travel will decline, Kellner said that is a risk but added: "You see some indicators: the problem is those indicators have predicted ten of the last five downturns."

During the quarter, revenue per available seat mile grew 4.6% while capacity grew 2.7%. The carrier showed RASM growth in all regions except for the trans-Atlantic, which had a 1.3% decline on a 14% capacity increase, with the weaker dollar limiting U.S. travel to Europe. On the cost side, cost per available seat mile grew 15.1%. Holding fuel constant and excluding special charges, CASM fell 4.8%. Continental has hedged 63% of third-and fourth-quarter fuel requirements.

Continental shares closed higher on Thursday, up 77 cents to $9.96 after trading as low as $8.32 earlier in the day.