Continental Airlines Posts Surprise Profit

Continental Airlines posted a surprise fourth-quarter profit and Southwest Airlines reported its 37th consecutive year of profitability.


Continental

The two companies benefited from sharp declines in fuel costs, which helped the
airlines offset falling ticket prices. Continental had lost money for eight
consecutive quarters while Southwest had been in the red in four of the past
five quarters.

Jeff Smisek, chairman and chief executive of Continental, noted that the company was seeing a slight improvement in the business traffic segment but warned that returning the company to full-year profitability would take time.

On Wednesday AMR, the parent company of American Airlines, reported a similar uptick in corporate travel and analysts believe that it could herald a significant improvement in airline performance in the coming year.

In the three months to the end of December, Continental reported a net income of
$4m, or $0.03 per share, when certain special charges are excluded. Continental
lost $96m, or $0.84 per share, in the fourth quarter of 2008.

Revenues fell 8.3 per cent to $3.2bn in the fourth quarter compared with the same period last year but that was a marked improvement on the 20 per cent decline the
company recorded in the third quarter.

Meanwhile, Southwest Airlines made a net profit of $74m, or $0.10 per share, compared with $61m, or $0.08 per share, in the fourth quarter of 2008, excluding certain
items. Revenues for the fourth quarter of 2009 fell 0.8 per cent to $2.7bn.

As the leading US low-cost carrier, Southwest has fared better in the recession
than traditional rivals, using fuel hedging to lower costs as well as offering
cheap flights and free baggage to attract customers.

But it too has been hit by the global recession, dropping
its longtime growth strategy, and cutting capacity in line with other airlines.
The company said it had no plans to increase capacity in 2010.

For the full year, Southwest achieved net income of $143m, or $0.19 per share,
compared with $294m, or $0.40 per share, in 2008, excluding exceptional items.
Revenues fell 6.1 per cent to $10.4bn, although passenger traffic grew.