Continental Airlines ( CAL) posted a loss in the second quarter as revenue fell 23%, reflecting sharply lower business travel, and said it would eliminate 1,700 jobs. Excluding items, the second-quarter loss was $169 million, or $1.36 a share, in line with estimates. Revenue fell 23% to $3.1 billion, also in line with estimates. Including items, the loss was $213 million, or $1.72 a share. During the quarter, fuel expenses fell by 46%, or $762 million. But the benefit was overwhelmed by a $918 million revenue decline, reflecting lower fares and a 7.8% capacity reduction. The carrier said results reflected "significant declines in high-yield traffic as business travelers curtailed travel or purchased lower yield economy tickets due to the weakened economy." Additionally, the H1N1 virus reduced revenue by an estimated $50 million, the airline said.
The reduction of 1,700 positions, including management and clerical positions, is designed to reduce costs by $100 million annually, starting in 2010. The carrier already has announced it will eliminate 500 reservation agent positions and offered leaves for 700 flight attendants. Continental will post $5 increases in domestic checked bag fees paid at the airport and in telephone reservation booking fees. "While the unit revenue decline appears to be bottoming out, it is doing so at low levels and we must take aggressive steps to increase revenue and reduce costs," said CEO Larry Kellner, in a prepared statement. Consolidated passenger revenue per available seat mile fell by 17.7%, including a 22.3% decline in the Pacific and a 19.8% decline over the Atlantic. On the cost side, mainline cost per available seat mile, excluding fuel and special items, increased 2.8%. Continental ended the second quarter with $2.77 billion in unrestricted cash, cash equivalents and short-term investments.