Continental Airlines has reported a second
quarter 2010 net income of $233 million ($1.46 diluted earnings
per share). Excluding $24 million of merger-related costs and
other special charges, Continental recorded second quarter net
income of $257 million ($1.60 diluted earnings per share).
Operating income for the second quarter of 2010
was $328 million, up $482 million compared to the same period of
2009.
Total revenue for the second quarter of 2010 was $3.7 billion, an
increase of 18.6% compared to the same period in 2009.
Passenger revenue for the second quarter rose 19.7% ($544
million) compared to the same period in 2009.
Consolidated revenue passenger miles (RPMs) for the second quarter
of 2010 increased 2% while capacity (available seat
miles, ASMs) remained flat year-over-year, resulting in a record
second quarter consolidated load factor of 84.6%.
Consolidated yield for the quarter increased 17.3%
year-over-year. Combined with the 1.9 point year-over-year
increase in consolidated load factor, second quarter 2010
consolidated passenger revenue per available seat mile (RASM)
increased 19.9%.
Continental’s mainline
yield increased 16.3% in the second quarter over the same
period in 2009. Mainline load factor of 85% was also a
second quarter record, up 1.8 points year-over-year. Second
quarter 2010 mainline RASM increased 18.8% year-over-year.
Mainline RPMs in the second quarter of 2010 increased 1.5%
on a mainline capacity decrease of 0.7% year-over-year.
Cargo revenue in the second quarter of 2010 increased
35.4% ($29 million) compared to the same period in 2009,
principally due to increased freight volume.
Continental’s employees earned a
total of $6 million in cash incentives for on-time performance
during the quarter. The company recorded a DOT on-time arrival
rate of 83.1% and a system wide mainline segment completion
factor of 99.3% during the quarter, despite record load
factors and flight disruptions due to the volcanic ash plume that
closed European airspace for several days during the quarter.
Second Quarter Costs and
End of Quarter Cash
Continental’s mainline cost per
available seat mile (CASM) increased 3.9% in the second
quarter 2010 compared to the same period last year. Mainline fuel
prices for the second quarter increased 8.7% compared to
the second quarter of 2009, while mainline fuel consumption
declined 1.1% year-over-year on 0.7% less mainline
capacity. Holding fuel rate constant and excluding special charges
and merger-related costs, second quarter 2010 mainline CASM
increased 2.2% compared to the second quarter of 2009.
“These results represent another quarter of strong
operational performance and cost control by the entire Continental
team,” said Zane Rowe, Continental’s executive vice president and
chief financial officer. “While there is still a lot of work ahead
in order to sustain profitability, we are pleased with this
quarter’s results.”
Through June 30, 2010, the
company has accrued $18 million under its current year profit
sharing plan. The actual amount of profit sharing that the company
will distribute to eligible employees in February 2011 depends on
the company’s full year financial results.
During
the second quarter of 2010, Continental contributed $40 million to
its defined benefit pension plans. The company contributed an
additional $38 million to its defined benefit plans earlier this
month, bringing its total year-to-date contributions to $112
million.
In the second quarter of 2010,
Continental recorded $18 million of merger-related costs, relating
to financial advisor, legal, accounting and consultant fees and
communication costs. The company also had $6 million of special
charges in the second quarter of 2010, primarily related to a
change in the company’s reserve for unused space at its
maintenance facility in Denver.
Continental ended
the second quarter with $3.5 billion in unrestricted cash, cash
equivalents and short-term investments.
Merger
with United
In May,
Continental and United announced their
plans to merge. The merger is expected to deliver
$1 to $1.2 billion in net annual synergies by 2013,
including between $800 million and $900 million of incremental
annual revenues, in large part from expanded customer options
resulting from the greater scope and scale of the network, and
additional international service enabled by the broader network of
the combined carrier. The companies remain on track to close the
merger in the fourth quarter of 2010.
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