Continental Airlines reports Q1 loss and considers “strategic options“ in the face of NWA-Delta merger

18 April 2008

Continental Airlines has reported a Q1 net loss of $80 million, reversing a $22 million profit in the year-ago period. The Houston-based carrier also confirmed that it had redeemed Northwest Airlines' (NWA) "golden share" which prevented it from entering into merger agreements.

NWA's golden share, which was contingent on the former not entering into any merger agreements, got annulled with  the announcement of its tie-up with Delta Air Lines (DL) earlier this week. Continental seized the opportunity to get back the shares, which now allows it to explore merger possibilities on its own.

According to Continental chairman and CEO, Larry Kellner, the NWA-DL merger "will change the competitive landscape" of the US industry, which compels it to consider its "strategic" options.

He said that Continental would review its ''continued participation'' in the SkyTeam alliance but would continue to be a member in ''one of the three alliances."

Kellner said the Q1  numbers were "solid" given an environment of high fuel costs, domestic "excess capacity," the credit crisis at home as well as a weakening economy.

He said that Continental would cut domestic mainline capacity by 5% on an annual run-rate basis starting this fall. It had already announced yesterday that between this September and April 2009  it would remove an additional 14 737-300s from service, as their leases begin to expire.