Well Positioned for 2004; High Fuel Prices Remain a Challenge

On Tuesday, Continental Airlines reported a fourth quarter net income of $47 million ($0.67 diluted earnings per share). These results include additional net income of $85 million relating to special items, primarily driven by the sale of interests in Hotwire and Orbitz.

Excluding the special items, Continental's loss per share was $0.58 for the quarter, which compares favorably to the First Call mean estimate of $0.81 loss per share. The results, excluding special items, are a 65 percent improvement over the fourth quarter 2002 loss per share of $1.67.

Continental's net income for the full year was $38 million ($0.58 diluted earnings per share). Excluding special items ($136 million after taxes) and the government security fee reimbursement ($111 million after taxes), the net loss for the year would have been $209 million.

"Our cost reduction efforts have successfully prepared us for a tough revenue environment in 2004," said Continental's Chairman and CEO Gordon Bethune. "However, it's going to be a struggle to break even this year with persistently high fuel prices."

Passenger revenue for the world's seventh-largest airline was $2.1 billion, 8.4 percent higher than the same period last year as a result of record mainline and regional load factors. Continental's mainline load factor in the fourth quarter of 2003 was 75.5 percent, up 4.4 points over the same period in 2002. Mainline revenue passenger miles increased 6.3 percent on flat capacity compared to the fourth quarter of 2002. Mainline yields continued to be weak during the quarter, decreasing 2.1 percent year-over-year.

Revenue passenger miles for Continental's regional operations were up 51.3 percent on a capacity increase of 39.3 percent during the fourth quarter of 2003, compared to the fourth quarter of 2002. The airline's regional load factor was 70.4 percent in the fourth quarter, a 5.7 point increase over the same period in 2002.

FMI: www.continental.com