Continental Airlines ( CAL) has bolstered its cash position by selling $204 million of new common stock, giving the carrier some additional liquidity as it enters the seasonally slower winter months.

The company announced the pricing of 18 million shares at $11.35 Tuesday evening after reporting a third-quarter profit that was well ahead of Wall Street's expectations.

Shares of Continental finished the previous session at $11.89, but the stock fell 49 cents, or 4.1%, to $11.40 in early trading Wednesday.

The Houston-based airline, the nation's sixth-largest, also could sell as many as 2.7 million more shares in the next month through underwriter UBS Investment Bank. Although it will dilute the existing shares by more than 20%, Tuesday's sale will provide Continental some flexibility going into the winter, when airlines tend to burn cash. This winter will be especially cruel, because jet fuel prices remain crushingly high.

Excluding proceeds from the new shares, Continental said it expected to end the fourth quarter with $1.4 billion in cash, less than previous guidance for $1.5 billion. The company finished the third quarter with $1.92 billion in its coffers.

Continental's ability to float an equity offering now shows investors remain confident in the airline, which has weathered the industry's crisis better than rivals like Delta Air Lines ( DALR) and Northwest Airlines ( NWACQ), both of whom filed for Chapter 11 bankruptcy protection last month.

"This proves that there is money available for airlines with defensible business plans," says Helane Becker, an airline analyst at Benchmark, referring to Continental's stock sale.

In its earnings release Tuesday, Continental said its existing cash and expected cash flow should get it through 2006 without a hitch if current trends hold and there are no significant increases in fuel costs.

Still, the airline reiterated in a regulatory filing that "it is possible" it could find itself unable to meet financial obligations in 2007 if domestic fares don't improve, fuel prices remain high and it can't raise additional funds.