Rising Fuel Costs And Slipping Load Factor Taking A Toll

In a filing with the Securities and Exchange Commission Thursday, Houston-based Continental Airlines Inc. announced it would take $91 million in special charges in the third quarter of 2008, due in part to capacity cuts and severance costs.

The Associated Press reports Continental said it would record a $27 million adjustment for increased revenue and lower liability for its frequent-flier program was related to new fees on passengers who redeemed awards within 20 days of travel.

Severance and medical coverage for employees who took buyouts and leaves of absence accounts for another $33 million charge. Continental also said it would take a noncash settlement charge of $8 million for pension payments to retired pilots.

Other charges include $12 million for future lease costs on grounded jets, an $18 million write-off to move all London flights from Gatwick to Heathrow Airport, and $9 million to reimburse ExpressJet, an operator of feeder flights for Continental, for grounded planes, the AP said.

Despite reducing its ranks by 3,000 employees and grounding flights to decrease capacity, high fuel costs and a weakening economy have prompted Continental to announce it would likely incur more charges in future quarters to ground additional aircraft.

Continental Airlines said it will hold its third quarter financial results conference call on Thursday, October 16 at 10:30 AM ET, and a live, listen-only webcast of the conference call will be available at continental.com in the "Investor Relations" section under the "About Continental" menu.

FMI: www.continental.com