Fuel costs and hurricane Ike push Continental into the red by $236 million; company modifies Boeing delivery schedule

17 October 2008

The cost of aviation turbine fuel, and dealing with Hurricane Ike were loss-making events for Continental Airlines during the third quarter to the tune of $236 million.

Continental said $91 million of the loss was on account of special items, including hurricane Ike which had battered the Gulf Coast in September. Continental had to cancel flights across the US as hurricane Ike forced the closure of Bush Intercontinental Airport at Houston, which is Continental's base. The airline's headquarters staff moved operations to a Cold War-era bunker 50 miles north of Houston.

"My co-workers did a great job working through significant operational challenges this past quarter," said Larry Kellner, Continental's chairman and chief executive officer. "Despite several severe storms, including Hurricane Ike, affecting both our employees' personal lives and our operations, we worked together to deliver a superb product." Continental estimated the adverse impact of Hurricane Ike on operating results in the third quarter of 2008 was approximately $50 million.

Continental has reported a third quarter loss of $2.14 per share, against a profit of $241 million or $2.15 per share during the third quarter of 2007. Other than the one-time items, the loss was $1.32 per share, lower than the $1.55 that Wall Street was anticipating, as reported by Reuters. Continental said a run-up in fuel costs that peaked in July at $145 per barrel of crude spurred fuel expenses for its mainline jets $606 million in the third quarter as compared to a year ago.

Continental's third quarter revenues were $4.2 billion, jumping 8.8 per cent or $336 million over numbers from the same quarter a year ago. The airline closed the third quarter with around $2.9 billion in unrestricted cash, cash equivalents and short-term investments. Passenger revenue was up 7.1 per cent or $249 million from the 2007 third quarter.

"We had solid revenue performance in an exceedingly difficult operating environment," said Jeff Smisek, Continental's president and chief operating officer. "Despite four hurricanes and two tropical storms, our team took care of our customers and delivered on the revenue."