Continental Airlines ( CAL) posted a narrower-than-expected loss Thursday, citing gains in passenger traffic and yield.

The Houston-based airline lost $26 million, or 29 cents a share, for the quarter ended Dec. 31, compared with the year-ago loss of $43 million, or 53 cents a share. Excluding a charge tied to retiring pilot payments, the loss was 4 cents a share, against a 15-cent loss expected by analysts surveyed by Thomson Financial.

Revenue rose 11% from a year ago to $3.16 billion, matching the Wall Street estimate. Consolidated revenue passenger miles rose 8.7% on a capacity increase of 6.1%, resulting in a record fourth-quarter consolidated load factor of 79.8%, 1.9 percentage points above the previous fourth-quarter record set in 2005. Consolidated yield for the quarter increased 1.8% year-over-year. Consolidated revenue per available seat mile rose 4.3% due to increased yield and record load factors.

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