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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
8-K
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CURRENT
REPORT PURSUANT
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TO
SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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Date
of Report (Date of earliest event reported): July 21,
2009
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CONTINENTAL
AIRLINES, INC.
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(Exact
Name of Registrant as Specified in Its
Charter)
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DELAWARE
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(State
or Other Jurisdiction of
Incorporation)
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1-10323
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74-2099724
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1600
Smith Street, Dept. HQSEO, Houston, Texas
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77002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(713)
324-2950
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(Registrant's
Telephone Number, Including Area
Code)
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______________________________________
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(Former
Name or Former Address, if Changed Since Last
Report)
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Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction A.2.
below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
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(17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
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(17
CFR 240.13e-4(c))
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Item
2.02.
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Results of Operations
and Financial Condition.
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On July 21, 2009, Continental Airlines,
Inc. (the “Company”) issued a press release announcing its financial results for
the second quarter of 2009. The press release contains certain
non-GAAP financial information. The reconciliation of such non-GAAP financial
information to GAAP financial measures is included in the press release and the
schedules thereto. Further, the press release contains statements intended as
“forward-looking statements,” all of which are subject to the cautionary
statement about forward-looking statements set forth therein. The
press release is furnished herewith as Exhibit 99.1 and is incorporated herein
by reference.
In accordance with SEC Release No.
33-8176, the information contained in such press release shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933, as amended, except as shall be expressly set forth
by specific reference in such a filing.
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Item
7.01.
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Regulation FD
Disclosure.
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On July 21, 2009, we will provide an
update for investors presenting information relating to our financial and
operational results for the second quarter of 2009, our outlook for the third
quarter and full year 2009, and other information. The update is furnished
herewith as Exhibit 99.2 and is incorporated herein by reference.
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Item
9.01.
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Financial Statements
and Exhibits.
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(d)
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Exhibits
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99.1
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Second
Quarter Earnings Press Release dated July 21, 2009
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99.2
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Investor
Update
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SIGNATURE
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Pursuant to the requirements of the
Securities Exchange Act of 1934, Continental Airlines, Inc. has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
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CONTINENTAL
AIRLINES, INC.
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July
21, 2009
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By
/s/ Lori A.
Gobillot
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Lori
A. Gobillot
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Staff
Vice President and Assistant General
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Counsel
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EXHIBIT
INDEX
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99.1
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Second
Quarter Earnings Press Release dated July 21, 2009
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99.2
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Investor
Update
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News
Release
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Exhibit
99.1
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||
 |
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Contact:
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Corporate
Communications
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Houston:
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713.324.5080
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Email:
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corpcomm@coair.com
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News
archive:
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continental.com/company/news/
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Address:
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P.O.
Box 4607, Houston,
TX 77210-4607
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CONTINENTAL AIRLINES
ANNOUNCES SECOND QUARTER LOSS
Global
recession contributes to weak revenue environment; company to implement revenue
and cost initiatives designed to achieve approximately $100 million in annual
benefits
HOUSTON,
July 21, 2009 -- Continental Airlines (NYSE: CAL) today reported a second
quarter 2009 net loss of $213 million ($1.72 diluted loss per
share). Excluding $44 million of previously announced special
charges, Continental recorded a net loss of $169 million ($1.36 diluted loss per
share).
Second
quarter results were adversely affected by significant declines in high yield
traffic as many business travelers curtailed travel or purchased lower yield
economy tickets due to the weakened economy. In addition, the H1N1
virus reduced second quarter consolidated passenger revenue by an estimated $50
million. Fuel expense declined $762 million (46.1 percent) in the
second quarter 2009 compared to the second quarter 2008, while revenue declined
$918 million compared to the same period.
In
response to the significant decline in revenue, Continental is implementing a
number of measures to raise revenues and reduce costs that are designed to
achieve approximately $100 million in annual benefits when fully implemented in
2010 including:
|
·
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Eliminating
approximately 1,700 positions across the company, including management and
clerical positions. This is in addition to the previously
announced elimination of 500 reservation agent positions and special
company offered leaves of absence extended for 700 flight
attendants. Continental is offering employees voluntary
programs to minimize the number of involuntary furloughs and reductions in
force.
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·
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Increasing domestic checked
baggage fees by $5 for customers who do not prepay those
fees online. This change is effective immediately for travel
Aug. 19, 2009, and beyond.
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·
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Increasing
the telephone reservation
booking service fee by $5 effective
immediately.
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·
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Other
revenue initiatives to be announced when
implemented.
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“My
co-workers are doing a great job of working together to focus on customer
service despite significant challenges currently facing our industry,” said
Larry Kellner, chairman and chief executive officer. “While the unit
revenue decline appears to be bottoming out, it is doing so at low levels and we
must take aggressive steps to increase revenue and reduce costs. The
most difficult changes will be the employee reductions that we are forced to
make throughout the company.”
Second
Quarter Revenue and Capacity
Total
revenue for the quarter was $3.1 billion, a decrease of 22.7 percent compared to
the same period in 2008. Passenger revenue for the quarter fell 24.2
percent ($883 million) compared to the same period last year due to lower fares
and passenger traffic declines.
Consolidated
revenue passenger miles (RPMs) for the second quarter decreased 6.4 percent
year-over-year on a capacity
decrease of 7.8 percent, resulting in a second quarter consolidated load factor
of 82.7 percent, 1.3 points higher than the second quarter of 2008.
Consolidated
yield for the second quarter decreased 19.1 percent year-over-year.
Consolidated
passenger revenue per available seat mile (RASM) for the second quarter
decreased 17.7 percent year-over-year.
Mainline
RPMs in the second quarter of 2009 decreased 5.7 percent compared to the second
quarter of 2008, on a capacity decrease of 7.3 percent
year-over-year.
Mainline
load factor was 83.2 percent, up 1.5 points year-over-year for the second
quarter. Continental’s mainline yield decreased 18.3 percent in the
second quarter over the same period in 2008. As a result, second
quarter 2009 mainline RASM was down 16.9 percent compared to the second quarter
of 2008.
Passenger
revenue for the second quarter of 2009 and period-to-period comparisons of
related statistics by geographic region for the company’s mainline operations
and regional operations are as follows:
|
Passenger
Revenue
(in
millions)
|
Percentage
Increase (Decrease) in
Second Quarter
2009 vs. Second Quarter
2008
|
|||||||||||
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Passenger
Revenue
|
ASMs
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RASM
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Yield
|
|||||||||
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Domestic
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$1,167
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(22.4)%
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(9.5)%
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(14.3)%
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(15.9)%
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|||||||
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Trans-Atlantic
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577
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(28.3)%
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(10.6)%
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(19.8)%
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(23.8)%
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|||||||
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Latin
America
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345
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(20.8)%
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(5.2)%
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(16.5)%
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(16.4)%
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|||||||
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Pacific
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211
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(12.3)%
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12.8
%
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(22.3)%
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(18.9)%
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|||||||
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Total
Mainline
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$2,300
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(22.9)%
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(7.3)%
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(16.9)%
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(18.3)%
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|||||||
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Regional
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$ 467
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(29.9)%
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(11.8)%
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(20.5)%
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(20.1)%
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|||||||
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Consolidated
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$2,767
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(24.2)%
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(7.8)%
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(17.7)%
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(19.1)%
|
|||||||
Cargo
revenue in the second quarter of 2009 decreased 37.9 percent ($50 million)
compared to the same period in 2008, due to reduced freight volume and lower
pricing.
Second
Quarter Operations and Notable Accomplishments
During
the quarter, employees earned $9 million in cash incentives for running the best
on-time
operation among the major network carriers in May and June as reported by the
U.S. Department of Transportation (DOT). Continental recorded an on-time arrival
rate of 78.7 percent and a systemwide mainline segment completion factor of 99.6
percent during the quarter.
“My
co-workers have done an impressive job running a good operation and delivering
great service despite very high load factors, which put additional stress on the
system,” said Jeff Smisek, president and chief operating officer. “We
will get through this global recession by working together and continuing to
outperform our competitors.”
The DOT
approved the application for Continental to join the existing antitrust
immunized alliance including United Airlines and eight other Star Alliance
member carriers, ensuring effective global competition with other antitrust
immunized alliances while encouraging the retention and growth of open skies
between the U.S. and other nations. Continental remains focused on providing a
seamless transition for its customers from the SkyTeam alliance to Star Alliance
this fall.
During
the quarter, Continental contributed $50 million to its defined benefit pension
plans.
Continental
continued to install DIRECTV® on its aircraft during the quarter, with the new
service now offered on 16 aircraft. DIRECTV® gives customers the
choice of 77 channels of live television programming -- more channels than any
other carrier -- including live sports, news, weather and children’s shows. The
company expects to complete installation on its fleet of Boeing 737
Next-Generation and Boeing 757-300 aircraft by the first quarter of
2011.
Second
Quarter Costs
Due to
significantly lower jet fuel costs, Continental’s mainline cost per available
seat mile (CASM) decreased 12.9 percent (13.2 percent excluding special charges)
in the second quarter compared to the same period last year. The
mainline price of a gallon of fuel dropped 39.7 percent year-over-year
and mainline fuel consumption fell by 9.4 percent. Holding fuel rate
constant and excluding special items, second quarter 2009 mainline CASM
increased 2.8 percent compared to the second quarter of 2008.
“Once again,
the entire Continental team did an outstanding job controlling costs and
running
an efficient operation in a challenging economic environment,” said Zane Rowe,
Continental’s executive vice president and chief financial officer.
Fuel
costs for the quarter were $762 million lower compared to the same period last
year as a result of a decrease in fuel prices and lower
volumes. Consolidated fuel price was $2.07 per gallon in the second
quarter of 2009, of which $0.49 per gallon was related to fuel hedge
losses. Consolidated fuel price was $3.46 per gallon in the second
quarter 2008, which included $0.17 per gallon in fuel hedge gains. During the
quarter, mainline fuel consumption decreased 9.4 percent compared to the same
period last year, while mainline RPMs decreased only 5.7 percent compared to the
same period.
Fleet
Changes Continue to Improve Efficiency
Continental
continued to improve fuel efficiency during the quarter by adding modern,
fuel-efficient aircraft, equipped with winglets. During the quarter,
Continental took delivery of two new Boeing 737-900ERs, one of which was painted
with a retro livery to commemorate the airline’s 75th
anniversary. In addition, the company removed from service four
Boeing 737-500s.
Continental
is expected to take delivery of seven Boeing 737 aircraft in the second half of
2009. The company expects to remove 29 additional Boeing 737-300 and
737-500 aircraft from service by January 2010.
Cash
and Liquidity
Continental
ended the second quarter with $2.77 billion in unrestricted cash, cash
equivalents and
short-term investments.
On July
1, 2009, Continental completed the sale of $390 million of Pass Through
Certificates, the first offering of its kind to close since the credit markets
froze last year. A portion of the proceeds from the sale of the
certificates will be used to finance the company’s purchase of five new
Boeing 737-900ERs expected to be delivered by the end of
2009. The remainder of the proceeds will be used for general
corporate purposes. The Pass Through Certificates will be secured by
a total of 17 of the company’s aircraft.
In
addition, Continental completed an agreement with a commercial bank to provide
financing for two Boeing 737-900ER aircraft scheduled for delivery in July of
2009, one of which has already been delivered. The company has now
completed financing arrangements for all of its new aircraft deliveries this
year and has backstop financing available for all of its new aircraft deliveries
in 2010.
Corporate
Background
Continental
Airlines is the world’s fifth largest airline. Continental, together
with Continental Express and Continental Connection, has more than 2,750 daily
departures throughout the Americas, Europe and Asia, serving 133 domestic and
132 international destinations. Another 750 additional points are
served via current alliance partners. With more than 43,000
employees, Continental has hubs serving New York, Houston, Cleveland and Guam,
and together with its regional partners, carries approximately 63 million
passengers per year. For more company information, go to
continental.com.
Continental
Airlines will conduct a regular quarterly telephone briefing today to discuss
these results and the company’s financial and operating outlook with the
financial community and news media at 9:30 a.m. CT/10:30 a.m. ET. To listen to a
live broadcast of this briefing, go to continental.com/About
Continental/Investor Relations.
This
press release contains forward-looking statements that are not limited to
historical facts, but reflect the company's current beliefs, expectations or
intentions regarding future events. All forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. For examples of such risks and
uncertainties, please see the risk factors set forth in the company's 2008 Form
10-K and its other securities filings, including any amendments thereto, which
identify important matters such as the significant volatility in the cost of
aircraft fuel, the company's transition to a new global alliance, the
consequences of its high leverage and other significant capital commitments, its
high labor and pension costs, delays in scheduled aircraft deliveries, service
interruptions at one of its hub airports, disruptions to the operations of its
regional operators, disruptions in its computer systems, and industry
conditions, including the recession in the U.S. and global economies, the
airline pricing environment, terrorist attacks, regulatory matters, excessive
taxation, industry consolidation, the availability and cost of
insurance, public health threats and the seasonal nature of the airline
business. The company undertakes no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances that may arise
after the date of this press release, except as required by applicable
law.
-tables
attached-
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
STATEMENTS
OF OPERATIONS
(In
millions, except per share data) (Unaudited)
|
Three
Months
Ended
June 30,
|
%
Increase/
(Decrease)
|
Six
Months
Ended
June 30,
|
%
Increase/
(Decrease)
|
|||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||
|
(Adjusted)
|
(Adjusted)
|
|||||||||||
|
Operating
Revenue:
|
||||||||||||
|
Passenger (excluding fees and
taxes
of $379, $408, $725 and
$784)
|
$2,767
|
$3,650
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(24.2)%
|
$5,384
|
$6,873
|
(21.7)%
|
||||||
|
Cargo
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82
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132
|
(37.9)%
|
167
|
254
|
(34.3)%
|
||||||
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Other
|
277
|
262
|
5.7 %
|
536
|
487
|
10.1
%
|
||||||
|
3,126
|
4,044
|
(22.7)%
|
6,087
|
7,614
|
(20.1)%
|
|||||||
|
Operating
Expenses:
|
||||||||||||
|
Aircraft fuel and related taxes
(A)
|
891
|
1,653
|
(46.1)%
|
1,626
|
2,915
|
(44.2)%
|
||||||
|
Wages, salaries and related
costs
|
799
|
704
|
13.5 %
|
1,564
|
1,432
|
9.2 %
|
||||||
|
Aircraft rentals
|
235
|
246
|
(4.5)%
|
472
|
493
|
(4.3)%
|
||||||
|
Regional capacity purchase, net
(A)
|
217
|
299
|
(27.4)%
|
431
|
591
|
(27.1)%
|
||||||
|
Landing fees and other
rentals
|
216
|
210
|
2.9 %
|
425
|
418
|
1.7 %
|
||||||
|
Maintenance, materials and
repairs
|
161
|
167
|
(3.6)%
|
314
|
326
|
(3.7)%
|
||||||
|
Distribution costs
|
150
|
194
|
(22.7)%
|
307
|
375
|
(18.1)%
|
||||||
|
Depreciation and
amortization
|
118
|
108
|
9.3
%
|
229
|
215
|
6.5 %
|
||||||
|
Passenger services
|
96
|
107
|
(10.3)%
|
183
|
203
|
(9.9)%
|
||||||
|
Special charges
(B)
|
44
|
58
|
NM
|
48
|
50
|
NM
|
||||||
|
Other
|
353
|
369
|
(4.3)%
|
696
|
733
|
(5.0)%
|
||||||
|
3,280
|
4,115
|
(20.3)%
|
6,295
|
7,751
|
(18.8)%
|
|||||||
|
Operating
Loss
|
(154)
|
(71)
|
NM
|
(208)
|
(137)
|
51.8 %
|
||||||
|
Nonoperating
Income (Expense):
|
||||||||||||
|
Interest expense
(C)
|
(90)
|
(91)
|
(1.1)%
|
(183)
|
(185)
|
(1.1)%
|
||||||
|
Interest
capitalized
|
8
|
8
|
-
|
17
|
17
|
-
|
||||||
|
Interest income
|
4
|
16
|
(75.0)%
|
8
|
40
|
(80.0)%
|
||||||
|
Gain on sale of
investments
|
-
|
78
|
(100.0)%
|
-
|
78
|
(100.0)%
|
||||||
|
Other, net
|
19
|
11
|
72.7 %
|
17
|
10
|
70.0
%
|
||||||
|
(59)
|
22
|
NM
|
(141)
|
(40)
|
NM
|
|||||||
|
Loss
before Income Taxes
|
(213)
|
(49)
|
NM
|
(349)
|
(177)
|
97.2 %
|
||||||
|
Income
Tax Benefit (C)
|
-
|
44
|
(100.0)%
|
-
|
90
|
(100.0)%
|
||||||
|
Net
Loss
|
$
(213)
|
$ (5)
|
NM
|
$
(349)
|
$ (87)
|
NM
|
||||||
|
Basic
and Diluted Loss per Share
|
$(1.72)
|
$(0.05)
|
NM
|
$(2.82)
|
$(0.87)
|
NM
|
||||||
|
Shares
Used for Basic and Diluted
Computation
|
124
|
99
|
25.3 %
|
124
|
99
|
25.3 %
|
||||||
|
(A)
|
Expense
related to fuel and related taxes on flights operated for us by other
operators under capacity purchase agreements is now included in aircraft
fuel and related taxes, whereas it was previously reported in regional
capacity purchase, net. Reclassifications have been made in
these financial statements to conform to our current
presentation. These reclassifications do not affect operating
loss or net loss for any period.
|
||||||||
|
(B)
|
Operating Expenses:
Special Charges. Special charges includes the
following:
|
||||||||
|
Three
Months
Ended June
30,
|
Year
Ended
June
30,
|
||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||
|
Aircraft-related
charges, net of gains on sales of aircraft
|
$ 43
|
$ 41
|
$ 47
|
$ 33
|
|||||
|
Other
|
1
|
17
|
1
|
17
|
|||||
|
Total
special charges
|
$ 44
|
$ 58
|
$ 48
|
$ 50
|
|||||
|
2009. Aircraft-related
charges in the second quarter of 2009 include $31 million of non-cash
impairments on owned Boeing 737-300 and 737-500 aircraft and related
assets, an $8 million non-cash charge related to the disposition of three
Boeing 737-300 aircraft and a $4 million non-cash charge to write off
certain obsolete spare parts. In the first quarter of 2009, the
company recorded $4 million charge for future lease costs and other
related costs on a permanently grounded Boeing 737-300
aircraft.
|
|||||||||
|
2008. Aircraft-related
charges in the second quarter of 2008 include $37 million of non-cash
impairments on owned Boeing 737-300 and 737-500 aircraft and related
assets, a non-cash charge of $14 million to write down spare parts and
supplies for the Boeing 737-300 and 737-500 fleets to the lower of cost or
net realizable value and $10 million of gains on the sale of two owned
Boeing 737-500 aircraft. Other special charges in the second
quarter of 2008 include $17 million of charges related to contract
settlements with regional carriers and unused
facilities. During the first quarter of 2008, the company sold
three owned Boeing 737-500 aircraft, resulting in net gains of $8
million.
|
|||||||||
|
(C)
|
Effective
January 1, 2009, we adopted the Financial Accounting Standards Board’s
Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement),” which clarifies the accounting for convertible debt
instruments that may be settled in cash (including partial cash
settlement) upon conversion. The financial statements for the
three and six months ended June 30, 2008 have been adjusted to reflect our
adoption of this standard.
|
||||||||
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
STATISTICS
|
Three
Months
Ended
June 30,
|
%
Increase/
(Decrease)
|
Six
Months
Ended
June 30,
|
%
Increase/
(Decrease)
|
||||||
|
2009
|
2008
|
2009
|
2008
|
||||||
|
Mainline
Operations:
|
|||||||||
|
Passengers (thousands)
|
11,876
|
13,000
|
(8.6)%
|
22,438
|
25,196
|
(10.9)%
|
|||
|
Revenue
passenger miles (millions)
|
20,772
|
22,017
|
(5.7)%
|
38,462
|
41,940
|
(8.3)%
|
|||
|
Available
seat miles (millions)
|
24,963
|
26,933
|
(7.3)%
|
48,316
|
52,211
|
(7.5)%
|
|||
|
Cargo
ton miles (millions)
|
219
|
263
|
(16.7)%
|
420
|
524
|
(19.8)%
|
|||
|
Passenger
load factor:
|
|||||||||
|
Mainline
|
83.2%
|
81.7%
|
1.5 pts.
|
79.6%
|
80.3%
|
(0.7) pts.
|
|||
|
Domestic
|
86.4%
|
84.7%
|
1.7 pts.
|
83.2%
|
83.4%
|
(0.2) pts.
|
|||
|
International
|
80.2%
|
78.8%
|
1.4
pts.
|
76.2%
|
77.3%
|
(1.1)
pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
9.21
|
11.08
|
(16.9)%
|
9.31
|
10.85
|
(14.2)%
|
|||
|
Total
revenue per available seat mile (cents)
|
10.59
|
12.49
|
(15.2)%
|
10.71
|
12.22
|
(12.4)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
11.07
|
13.55
|
(18.3)%
|
11.69
|
13.50
|
(13.4)%
|
|||
|
Average
fare per revenue passenger
|
$195.82
|
$231.94
|
(15.6)%
|
$202.48
|
$227.07
|
(10.8)%
|
|||
|
Cost
per available seat mile (CASM) (cents) (A)
|
10.85
|
12.45
|
(12.9)%
|
10.71
|
12.13
|
(11.7)%
|
|||
|
Special
charges per available seat mile (cents)
|
0.18
|
0.16
|
NM
|
0.10
|
0.06
|
NM
|
|||
|
CASM,
holding fuel rate constant (cents) (A)
|
12.82
|
12.45
|
3.0
%
|
12.40
|
12.13
|
2.2 %
|
|||
|
Average
price per gallon of fuel, including
fuel taxes
|
$2.08
|
$3.45
|
(39.7)%
|
$1.96
|
$3.13
|
(37.4)%
|
|||
|
Fuel
gallons consumed (millions)
|
358
|
395
|
(9.4)%
|
692
|
769
|
(10.0)%
|
|||
|
Actual
aircraft in fleet at end of period (B)
|
351
|
375
|
(6.4)%
|
351
|
375
|
(6.4)%
|
|||
|
Average
length of aircraft flight (miles)
|
1,551
|
1,497
|
3.6 %
|
1,527
|
1,477
|
3.4 %
|
|||
|
Average
daily utilization of each aircraft (hours)
|
10:46
|
11:34
|
(7.0)%
|
10:34
|
11:23
|
(7.1)%
|
|||
|
Regional
Operations:
|
|||||||||
|
Passengers
(thousands)
|
4,472
|
4,962
|
(9.9)%
|
8,318
|
9,205
|
(9.6)%
|
|||
|
Revenue
passenger miles (millions)
|
2,394
|
2,729
|
(12.3)%
|
4,494
|
5,085
|
(11.6)%
|
|||
|
Available
seat miles (millions)
|
3,044
|
3,450
|
(11.8)%
|
6,015
|
6,548
|
(8.1)%
|
|||
|
Passenger
load factor
|
78.7%
|
79.1%
|
(0.4) pts.
|
74.7%
|
77.7%
|
(3.0) pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
15.35
|
19.31
|
(20.5)%
|
14.74
|
18.47
|
(20.2)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
19.51
|
24.41
|
(20.1)%
|
19.72
|
23.78
|
(17.1)%
|
|||
|
Actual
aircraft in fleet at end of period (C)
|
266
|
278
|
(4.3)%
|
266
|
278
|
(4.3)%
|
|||
|
Consolidated
Operations (Mainline and Regional):
|
|||||||||
|
Passengers
(thousands)
|
16,348
|
17,962
|
(9.0)%
|
30,756
|
34,401
|
(10.6)%
|
|||
|
Revenue
passenger miles (millions)
|
23,166
|
24,746
|
(6.4)%
|
42,956
|
47,025
|
(8.7)%
|
|||
|
Available
seat miles (millions)
|
28,007
|
30,383
|
(7.8)%
|
54,331
|
58,759
|
(7.5)%
|
|||
|
Passenger
load factor
|
82.7%
|
81.4%
|
1.3 pts.
|
79.1%
|
80.0%
|
(0.9) pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
9.88
|
12.01
|
(17.7)%
|
9.91
|
11.70
|
(15.3)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
11.94
|
14.75
|
(19.1)%
|
12.53
|
14.62
|
(14.3)%
|
|||
|
Average
price per gallon of fuel, including
fuel
taxes
|
$2.07
|
$3.46
|
(40.2)%
|
$1.95
|
$3.14
|
(37.9)%
|
|||
|
Fuel
gallons consumed (millions)
|
430
|
478
|
(10.0)%
|
833
|
929
|
(10.3)%
|
|||
|
(A)
|
Includes
impact of special charges.
|
|
(B)
|
Excludes
nine grounded Boeing 737-300 aircraft, nine grounded Boeing 737-500
aircraft and one Boeing 737-900ER aircraft delivered but not yet placed
into service at June 30, 2009.
|
|
(C)
|
Consists
of aircraft operated under capacity purchase agreements with Continental’s
regional carriers ExpressJet, Colgan, Chautauqua and
CommutAir. Excludes 30 EMB-135 aircraft temporarily grounded at
June 30, 2009.
|
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
NON-GAAP
FINANCIAL MEASURES
|
Net
Loss (in millions)
|
Three
Months
Ended June 30,
2009
|
|
|
Net
loss
|
$(213)
|
|
|
Adjust
for special charges (net of tax of $0)
|
44
|
|
|
Net
loss, excluding special items (A)
|
$(169)
|
|
|
Loss
per Share
|
Three
Months
Ended June 30,
2009
|
|
|
Diluted
Loss per share
|
$(1.72)
|
|
|
Adjust
for special charges
|
0.36
|
|
|
Diluted
loss per share, excluding special items (A)
|
$(1.36)
|
|
|
CASM
Mainline Operations (cents)
|
Three
Months
Ended
June 30,
|
%
Increase/
(Decrease)
|
Six
Months
Ended
June 30,
|
%
Increase/
(Decrease)
|
||
|
2009
|
2008
|
2009
|
2008
|
|||
|
Cost
per available seat mile (CASM)
|
$10.85
|
$12.45
|
(12.9)%
|
$10.71
|
$12.13
|
(11.7)%
|
|
Less: Special
charges per available seat mile
|
(0.18)
|
(0.16)
|
NM
|
(0.10)
|
(0.06)
|
NM
|
|
CASM,
excluding special charges
|
10.67
|
12.29
|
(13.2)%
|
10.61
|
12.07
|
(12.1)%
|
|
Less: Current
year fuel cost per available
seat
mile (B)
|
(2.98)
|
-
|
NM
|
(2.80)
|
-
|
NM
|
|
Add: Current
year fuel cost at prior year
fuel price per available seat mile (B)
|
4.95
|
-
|
NM
|
4.49
|
-
|
NM
|
|
CASM,
holding fuel rate constant and
excluding
special charges (A)
|
$12.64
|
$12.29
|
2.8 %
|
$12.30
|
$12.07
|
1.9 %
|
|
(A)
|
These
financial measures provide management and investors the ability to measure
and monitor Continental's performance on a consistent
basis.
|
|
(B)
|
Both
the cost and availability of fuel are subject to many economic and
political factors and are therefore beyond the company's
control.
|
###
 |
EXHIBIT
99.2
DeAnne
Gabel
Director
- Investor Relations
|
|
Investor
Update
|
Issue
Date: July 21, 2009
|
This
investor update provides information on Continental's guidance for the third
quarter and the full year 2009, as well as certain historical information
pertaining to the second quarter of 2009.
Advanced Booked Seat Factor
(Percentage of Available Seats that are Sold)
As
compared to the same period last year, for the next six weeks, mainline domestic
advanced booked seat factor is running 2 - 3 points higher, mainline Latin
advanced booked seat factor is running flat to down 1 point, Transatlantic
advanced booked seat factor is running 1 - 2 points higher, Pacific advanced
booked seat factor is running 4 - 5 points lower and regional advanced booked
seat factor is running 3 to 4 points higher.
For the
third quarter of 2009, the Company expects both its consolidated and mainline
load factors to be up about 1 point year-over-year (“yoy”).
Unrestricted Cash, Cash
Equivalents and Short Term Investments Balance
Continental
anticipates ending the third quarter of 2009 with an unrestricted cash, cash
equivalents and short-term investments balance of approximately $2.4
billion.
Cargo, Mail, and Other
Revenue
The
Company's Cargo, Mail, and Other Revenue for the third quarter 2009 is expected
to be between $355 and $365 million.
|
2009
Estimate
|
||||
|
Available Seat Miles
(ASMs)
|
Year-over-Year %
Change
|
|||
|
3rd
Qtr.
|
Full
Year
|
|||
|
Mainline
|
||||
|
Domestic
|
(6.7%)
|
(7.7%)
|
||
|
Latin
America
|
1.7%
|
(0.2%)
|
||
|
Transatlantic
|
(10.9%)
|
(9.1%)
|
||
|
Pacific
|
16.8%
|
8.4%
|
||
|
Total
Mainline
|
(4.7%)
|
(5.6%)
|
||
|
Regional
|
(8.3%)
|
(7.2%)
|
||
|
Consolidated
|
||||
|
Domestic
|
(7.1%)
|
(7.7%)
|
||
|
International
|
(2.8%)
|
(3.5%)
|
||
|
Total
Consolidated
|
(5.1%)
|
(5.8%)
|
||
|
Load
Factor
|
3rd Qtr. 2009
(E)
|
Full Year 2009
(E)
|
|||||
|
Domestic
|
86%
|
-
|
87%
|
83%
|
-
|
84%
|
|
|
Latin
America
|
82%
|
-
|
83%
|
80%
|
-
|
81%
|
|
|
Transatlantic
|
82%
|
-
|
83%
|
77%
|
-
|
78%
|
|
|
Pacific
|
75%
|
-
|
76%
|
73%
|
-
|
74%
|
|
|
Total
Mainline
|
83%
|
-
|
84%
|
80%
|
-
|
81%
|
|
|
Regional
|
78%
|
-
|
79%
|
75%
|
-
|
76%
|
|
|
Consolidated
|
82%
|
-
|
83%
|
80%
|
-
|
81%
|
|
Continental's
month-to-date consolidated load factor is updated daily and can be found on
continental.com on the Investor Relations page under the About Continental
menu.
Second Quarter 2009 Domestic
Performance on a Hub by Hub Basis
Continental’s
second quarter 2009 consolidated domestic capacity at its New York Liberty hub
was down 8.5%, with traffic down 8.0%, resulting in a load factor increase of
0.4 pts compared to the second quarter of 2008. Transcon capacity,
which is a subset of New York Liberty capacity, was down 3.4% yoy in the second
quarter while traffic was down 1.6%, resulting in a load factor increase of 1.6
pts compared to the same period in 2008. Consolidated domestic
capacity at its Houston hub was down 8.2% yoy, with traffic down 6.3%, resulting
in a load factor increase of 1.7 pts compared to the second quarter of
2008. Consolidated domestic capacity at its Cleveland hub was down
23.3% yoy, with traffic down 21.0%, resulting in a second quarter load factor
increase of 2.5 pts compared to the same period in 2008.
Pension Expense and
Contributions
Year-to-date, the Company has
contributed $120 million to its tax-qualified defined benefit pension plans.
Continental's remaining minimum funding requirements during calendar year 2009
are approximately $30 million.
Continental
estimates that its non-cash pension expense will be approximately $250 million
for 2009.
|
CASM Mainline
Operating Statistics
|
2009 Estimate
(cents)
|
|||||||
|
3rd
Qtr.
|
Full
Year
|
|||||||
|
CASM
|
10.32
|
-
|
10.37
|
10.63
|
-
|
10.68
|
||
|
Special
Items per ASM (a)
|
0.00
|
0.05
|
||||||
|
CASM
Less Special Items (b)
|
10.32
|
-
|
10.37
|
10.58
|
-
|
10.63
|
||
|
Aircraft
Fuel & Related Taxes per ASM
|
(2.73)
|
(2.74)
|
||||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(c)
|
7.59
|
-
|
7.64
|
7.84
|
-
|
7.89
|
||
|
CASM Consolidated
Operating Statistics
|
||||||||
|
CASM
|
11.17
|
-
|
11.22
|
11.50
|
-
|
11.55
|
||
|
Special
Items per ASM (a)
|
0.00
|
0.04
|
||||||
|
CASM
Less Special Items (b)
|
11.17
|
-
|
11.22
|
11.46
|
-
|
11.51
|
||
|
Aircraft
Fuel & Related Taxes per ASM
|
(2.93)
|
(2.94)
|
||||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(c)
|
8.24
|
-
|
8.29
|
8.52
|
-
|
8.57
|
||
(a) Full
Year special charges of $48 million include aircraft related charges and other
special charges.
(b) These
financial measures provide management and investors the ability to measure and
monitor Continental's performance on a consistent basis.
(c) Cost
per available seat mile excluding special items, fuel, and related taxes is
computed by multiplying fuel price per gallon, including fuel taxes, by fuel
gallons consumed and subtracting that amount from operating expenses excluding
special items then dividing by available seat miles. This statistic
provides management and investors the ability to measure and monitor
Continental's cost performance absent special items and fuel price
volatility. Both the cost and availability of fuel are subject to
many economic and political factors beyond Continental's control.
Variable
Compensation
Continental
has granted profit based restricted stock unit ("RSU") awards pursuant to its
Long-Term Incentive and RSU Program. Expense for these awards is
recognized ratably over the required service period, with changes in the price
of the Company's common stock and the payment percentage (which is tied to
varying levels of cumulative profit sharing) resulting in a corresponding
increase or decrease in "Wages, Salaries, and Related Costs" in the Company's
consolidated statements of operations. The closing stock price of
$8.86 on June 30, 2009 was used in estimating the expense impact of the awards
for the Company's 2009 cost estimates included herein. Based on the
Company's current assumptions regarding payment percentages and the cumulative
profit sharing targets to be achieved pursuant to the awards, the Company
estimates that a $1 increase or decrease in the price of its common stock from
June 30, 2009 will result in an increase or decrease of approximately $1 million
in Wages, Salaries, and Related Costs attributable to the awards to be
recognized in the third quarter 2009. For more information regarding
these awards, including performance periods and how the Company accrues for the
awards, see the Company's 2008 Form 10-K.
|
Fuel Requirements
(Gallons)
|
||
|
3rd
Qtr.
|
Full
Year
|
|
|
Mainline
|
367
million
|
1,382
million
|
|
Regional
|
74
million
|
285
million
|
|
Consolidated
Fuel Price per Gallon (including fuel
taxes and
|
$1.91
|
$1.92
|
|
impact
of hedges)
|
||
Fuel Hedges - As of July 16,
2009
As of
July 16, 2009, the Company's projected consolidated fuel requirements were
hedged as follows:
|
Maximum
Price
|
Minimum
Price
|
|||||||
|
%
of
Expected
Consumption
|
Weighted
Average Price (per gallon)
|
%
of
Expected
Consumption
|
Weighted
Average
Price
(per
gallon)
|
|||||
|
Third Quarter
2009
|
||||||||
|
WTI
crude oil swaps
|
5%
|
$1.31
|
5%
|
$1.31
|
||||
|
WTI
crude oil collars
|
11%
|
$3.21
|
11%
|
$2.40
|
||||
|
Gulf
Coast jet fuel swaps
|
2%
|
$1.81
|
2%
|
$1.81
|
||||
|
Total
|
18%
|
18%
|
||||||
|
Fourth Quarter
2009
|
||||||||
|
WTI
crude oil swaps
|
5%
|
$1.36
|
5%
|
$1.36
|
||||
|
Gulf
Coast jet fuel swaps
|
5%
|
$1.75
|
5%
|
$1.75
|
||||
|
Total
|
10%
|
10%
|
||||||
Based on
the forward curve for WTI as of July 16, 2009, the Company estimates that all of
its fuel hedges would result in a net increase in fuel expense of $0.11 per
gallon in the third quarter 2009 and $0.24 per gallon for the full year
2009. For the un-hedged portion of its consolidated fuel requirements, the
Company is assuming an average cost of jet fuel (including fuel taxes) of $1.80
for the third quarter and $1.68 for the full year 2009.
|
Selected Expense
Amounts (Consolidated Expense)
|
2009 Estimate Amounts
(millions)
|
|
|
3rd
Qtr
|
Full
Year
|
|
|
Aircraft
Rent
|
$232
|
$933
|
|
Depreciation
& Amortization
|
$121
|
$474
|
|
Net
Interest Expense*
|
$82
|
$323
|
|
*Net
Interest Expense includes interest expense, capitalized interest and
interest income.
|
||
Continental Airlines, Inc.
Tax Computation
The
Company's ability to record a tax benefit on net losses is limited by its net
deferred tax position. The Company previously recorded the maximum
available deferred tax benefit permitted by its prior net deferred tax liability
position. Subsequent losses will generally not be benefitted until the
Company re-establishes a net deferred tax liability. Subsequent pretax
income, when considered along with subsequent other comprehensive income, will
generally not carry tax expense until the Company exhausts its beginning
unbenefitted net deferred tax assets via release of valuation
allowance.
Debt and Capital
Leases
Scheduled
debt and capital lease payments for the full year 2009 are estimated to total
$597 million, with $98 million and $71 million paid in the first and second
quarters, respectively, and approximately $368 million and $60 million to be
paid in the third and fourth quarters of 2009, respectively.
|
Cash Capital
Expenditures ($Millions)
|
2009
Estimate
|
|
|
Fleet
Related
|
$190
|
|
|
Non-Fleet
|
120
|
|
|
Rotable
Parts & Capitalized Interest
|
56
|
|
|
Total
|
$366
|
|
|
Net
Purchase Deposits Paid/(Refunded)
|
(30)
|
|
|
Total
Cash Capital Expenditures
|
$336
|
|
EPS Estimated Share
Count
Share
count estimates for calculating basic and diluted earnings per share at
different income levels are as follows:
Third
Quarter 2009 (Millions)
|
Quarterly
|
Number
of Shares
|
Interest addback (net
of applicable profit
|
|
|
Earnings
Level
|
Basic
|
Diluted
|
sharing and income
taxes impact)
|
|
Over
$117
|
124
|
137
|
$9
|
|
Between
$76 - $117
|
124
|
132
|
$5
|
|
Under
$76
|
124
|
124
|
--
|
|
Net
Loss
|
124
|
124
|
--
|
Full
Year 2009 (Millions)
|
Year-to-date
|
Number
of Shares
|
Interest addback (net
of applicable profit
|
|
|
Earnings
Level
|
Basic
|
Diluted
|
sharing and income
taxes impact)
|
|
Over
$313
|
124
|
137
|
$24
|
|
Between
$202 - $313
|
124
|
133
|
$14
|
|
Under
$202
|
124
|
124
|
--
|
|
Net
Loss
|
124
|
124
|
--
|
These
share count charts are based upon several assumptions including market stock
price and number of shares outstanding. The number of shares used in
the actual EPS calculation will likely be different than those set forth
above.
This update
contains forward-looking statements that are not limited to historical facts,
but reflect the Company’s current beliefs, expectations or intentions regarding
future events. All forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements. For examples of such risks and uncertainties, please
see the risk factors set forth in the Company’s 2008 Form 10-K and its other
securities filings, including any amendments thereto, which identify important
matters such as the significant volatility in the cost of aircraft fuel, its
transition to a new global alliance, the consequences of its high leverage and
other significant capital commitments, its high labor and pension costs, delays
in scheduled aircraft deliveries, service interruptions at one of its hub
airports, disruptions to the operations of its regional operators, disruptions
in its computer systems, and industry conditions, including the recession in the
U.S. and global economies, the airline pricing environment, terrorist attacks,
regulatory matters, excessive taxation, industry consolidation, the availability
and cost of insurance, public health threats and the seasonal nature of the
airline business. The Company undertakes no obligation to publicly update or
revise any forward-looking statements to reflect events or circumstances that
may arise after the date of this update, except as required by applicable
law.
Continental
Airlines Fleet Plan
Includes
Aircraft Operated by the Company or Operated on the
Company's
Behalf Under a Capacity Purchase Agreement
July
16, 2009
|
Total
Qtr
End
2Q09
|
Net
Inductions
and
Exits
|
Total
Year
End
2009E
|
Net
Inductions
and
Exits
|
Total
Year
End
2010E
|
|||||
|
3Q09E
|
4Q09E
|
1Q10E
|
2Q10E
|
3Q10E
|
4Q10E
|
||||
|
Mainline
|
|||||||||
|
777-200ER
767-400ER
767-200ER
757-300
757-200
737-900ER
737-900
737-800
737-700
737-500*
737-300*
|
20
16
10
17
41
22
12
117
36
40
20
|
-
-
-
-
-
6
-
-
-
(6)
(12)
|
-
-
-
-
-
2
-
-
-
-
(4)
|
20
16
10
17
41
30
12
117
36
34
4
|
-
-
-
3
-
-
-
4
-
(3)
(4)
|
2
-
-
1
-
-
-
4
-
-
-
|
-
-
-
-
-
2
-
1
-
-
-
|
-
-
-
-
-
-
-
-
-
-
-
|
22
16
10
21
41
32
12
126
36
31
-
|
|
Total
|
351
|
(12)
|
(2)
|
337
|
-
|
7
|
3
|
-
|
347
|
|
Regional
|
|||||||||
|
ERJ-145
ERJ-135
CRJ200LR
Q400
Q200
|
229
-
7
14
16
|
-
-
-
-
-
|
-
-
-
-
-
|
229
-
7
14
16
|
-
-
(7)
-
-
|
-
-
-
-
-
|
-
-
-
1
-
|
-
-
-
5
-
|
229
-
-
20
16
|
|
Total
|
266
|
-
|
-
|
266
|
(7)
|
-
|
1
|
5
|
265
|
|
Total
Count
|
617
|
(12)
|
(2)
|
603
|
(7)
|
7
|
4
|
5
|
612
|
* Final
quantity and timing of 737-300 / 737-500 exits subject to change