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Continental shares set to gain in wake of profit report
AFX
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NEW YORK (AFX) --Continental Airlines reported Wednesday second-quarter earnings that came in well ahead of Wall Street's consensus estimate, due to strong revenue growth and a decline in employee-related costs.
Continental's stock rose 6% to $16.65 in pre-market action on Instinet.
'Our cost restructuring continues to show solid results,' said Jeff Misner, Houston-based Continental's executive vice president and chief financial officer. 'But we're not out of the woods yet, as fuel costs continue to escalate and remain at record levels.'
Net income amounted to $100 million, or $1.26 a share, reversing a loss of $28 million, or 43 cents a share, in the 2004 quarter. The carrier recorded a gain related to the contribution of shares of ExpressJet to its defined pension plan in the latest quarter.
Excluding items, the company would have earned $53 million, or 69 cents a share, well ahead of the average estimate compiled by Thomson First Call for a profit of 20 cents a share.
Revenue rose 11.9% in the latest three months to $2.86 billion from $2.55 billion in the same period a year earlier. Analysts had been looking for revenue of $2.77 billion, on average.
Continental's load factor increased by two percentage points to 79.6% amid an 8.3% rise in traffic and 5.5% growth in capacity.
Mainline fuel expenses jumped 48.6% to $188 million in the quarter, while labor costs slipped 8.7% to $649 million from $711 million a year ago as a result of pay and benefit reductions implemented in April.
Cost per available seat mile rose 3.2% in the quarter, primarily due to the higher fuel prices.
Continental also noted it restated certain prior financials to correct its lease accounting. The corrections, it said, date back to 1993 and they resulted in increases to rental expense of between $3 million and $12 million per year.
The adjustments had no impact on cash flow and revenue in any year and that results for future periods aren't expected to feel an impact, Continental said.
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This story was supplied by MarketWatch. For further information see www.marketwatch.com.
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