HOUSTON, April 15 /PRNewswire-FirstCall/—Continental Airlines
(NYSE: CAL) today reported a first quarter net loss of $114 million
($1.79 diluted loss per share) excluding a previously announced special
charge, which compares favorably to the First Call estimate of $1.97 loss per
share. Including the special charge, Continental reported a net loss of
$166 million ($2.61 diluted loss per share).
Despite reporting a loss for the full quarter, Continental recorded
positive pre-tax income of $25 million in March, the carrier`s first
profitable month since Sept. 11.
“Our team of professionals has once again outperformed all others in our
crippled industry,” said Gordon Bethune, Continental Airlines` chairman and
chief executive officer. “Industry capacity excesses overshadow our successes
in operational performance, revenue generation and cost management.”
First quarter passenger revenue was $1.9 billion, down 18.8 percent from
the same period last year, due to traffic declines and widespread industry
fare discounting following Sept. 11. Continental achieved a record system
wide load factor of 74 percent in the first quarter of 2002 on substantially
reduced capacity, a 3.6 point increase over the first quarter of 2001. While
the airline`s first quarter capacity was down 11.7 percent compared with the
same period in the prior year, Continental achieved a 3.5 point premium to the
industry average load factor by closely managing capacity and utilizing the
right-size aircraft to meet specific market demand. Despite a record load
factor, industry fare discounting drove Continental`s breakeven load factor up
to 80.8 percent, an increase of 13.4 points over the same period last year
System wide revenue per available seat mile (RASM) remained weak, yet
Continental continued to enjoy domestic yield and length-of-haul adjusted RASM
premiums to the industry.
During the quarter, Continental continued to excel at the fundamentals of
its business, breaking 10 of 11 company records held for various operating
performance metrics. For the quarter, the airline reported a record on-time
arrival rate of 85.1 percent and a record completion factor of 99.8 percent,
completing 31 days without a single flight cancellation. Since 1995,
Continental has remained an industry leader in customer satisfaction, on-time
performance and operational reliability.
Continental maintained its outstanding operational performance in spite of
the transition of security screening to the federal government and the
implementation of a comprehensive positive bag-matching program for all
domestic flights to meet the requirements of federal law. In February, the
carrier further expedited the security screening process for frequent fliers
and first-class customers by designating special security checkpoint lanes in
its hub cities of Houston, New York/Newark and Cleveland.
In addition to improvements in airport services, Continental continued to
buck the industry trend of reducing inflight amenities by announcing more
comfort for customers with all new sleeper seats for its BusinessFirst cabin.
The airline began installing the enhanced seats on its Boeing 777 fleet that
serve transatlantic and transpacific routes April 4.
In the first quarter, Continental also partnered with Amtrak to launch the
nation`s first domestic air/rail code share. The agreement allows travelers
to transfer easily between Amtrak`s northeast rail service in four major
cities to air service via Continental Airlines at the airline`s New
“Business and leisure travelers continue to seek out the quality product
that our employees provide,” said Continental president Larry Kellner. “Our
co-workers` efforts have a direct impact on our bottom line.” Unlike any other airline, for the fourth consecutive year, Continental was
named one of FORTUNE magazine`s “100 Best Companies to Work For” in 2002. The
airline was the highest-ranking commercial airline on the magazine`s top 50
global “All Stars” list, and for the third consecutive year, Continental
ranked No. 2 on the magazine`s Most Admired U.S. Airlines list among America`s
Most Admired Companies.
Despite idled capacity and significantly increased security and insurance
costs, Continental`s cost per available seat mile (CASM) declined 2.6 percent
(1.5 percent higher holding fuel rate constant) in the first quarter over the
same period last year.
As previously reported, the company recorded a charge of $52 million
($83 million before taxes) in connection with the permanent grounding and
retirement of its DC-10-30 fleet.
Continental ended the quarter with approximately $1.2 billion in cash and
short-term investments, including $147 million of restricted cash related to
an aircraft financing transaction.
During the first quarter, Continental issued $200 million of 4.5 percent
convertible notes with a conversion price of $40 per share, for net proceeds
of $195 million. In addition, the company completed an offering of
$329 million of pass-through certificates and a private placement of
$146 million of pass-through certificates at a current effective interest rate
of 6.4 percent. The proceeds will be used to finance seven new Boeing
aircraft scheduled for delivery through May 2002. This completes
Continental`s aircraft financing needs until the fourth quarter of 2003 when
additional new aircraft are scheduled for delivery.
“Even in this most difficult of economic environments, we continue to have
outstanding cost control and have readily demonstrated our ability to access
capital markets by successfully completing equity, convertible, and secured
financings post Sept. 11,” said Jeff Misner, Continental`s senior vice
president and chief financial officer. “Clearly Wall Street continues to
believe in our ability to execute on our business plan.” During the first quarter, the Company took delivery of 14 Boeing 737, 757,
767 and 777 aircraft. In addition, Continental and Boeing worked
cooperatively to reschedule future deliveries of new aircraft. Continental is in the process of an initial public offering of common
stock of the parent of ExpressJet Airlines.