Continental Airlines today
reported a first quarter 2005 net loss of $184 million ($2.77 diluted loss
per share), including a net special gain of $8 million related to the
company’s defined benefit pension plan. Excluding the special items,
Continental recorded a net loss of $192 million ($2.89 diluted loss per
share) for the quarter, which compares favorably to the First Call mean
estimate of $3.10 loss per share. Extraordinarily high fuel prices and weak domestic yields continue to
adversely impact results despite cost reduction efforts and recent fare
increases in some domestic markets. Mainline fuel costs for the quarter
increased $137 million over the first quarter of 2004, primarily due to a
39.5-percent increase in fuel prices compared to the same period last
year. The price of West Texas Intermediate crude oil continued to trade at
record levels during the quarter, closing at a peak of $56.72 per barrel
on March 18, 2005.

During the quarter, Continental’s pilots, mechanics, dispatchers and
simulator engineers ratified new collective bargaining agreements with the
carrier. Changes to wages, work rules and benefits were also finalized
with U.S.-based management and clerical, reservations, food services,
airport, cargo, and customer service and certain international employees.
Continental expects to achieve approximately $418 million of savings on an
annual basis from these pay and benefit cuts and work rule changes when
they are fully implemented. The company continues to work with the flight
attendants, the only domestic group that did not ratify their agreement,
along with Continental Micronesia employees and the remaining
international work groups, to reach agreements on pay and benefit
reductions.

As a result of the ratifications, Continental issued to all domestic
employees, other than flight attendants and officers, stock options for
approximately 8.7 million shares of Continental’s common stock with an
exercise price of $11.89 per share. These options represent approximately
13 percent of the currently outstanding shares of common stock.

“While we lost money in the first quarter, I appreciate the commitment
shown by my co-workers who took painful yet necessary action to quickly
ratify new agreements,” said Chairman and Chief Executive Officer Larry
Kellner. “Even though we still have more work to do, we have made
significant progress to move our company closer to profitability.”
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