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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): April 22,
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 April 22, 2009, Continental
Airlines, Inc. (the “Company”) issued a press release announcing its financial
results for the first 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 April 22, 2009, we will provide an
update for investors presenting information relating to our financial and
operational results for the first quarter of 2009, our outlook for the second
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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First
Quarter Earnings Press Release dated April 22, 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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April
22, 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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First
Quarter Earnings Press Release dated April 22, 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 FIRST QUARTER LOSS
Results
adversely affected by significant declines in high yield traffic
HOUSTON,
April 22, 2009 -- Continental Airlines (NYSE: CAL) today reported a first
quarter 2009 net loss of $136 million ($1.10 diluted loss per
share). First 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. Fuel expense declined $527 million (41.8 percent) in the
first quarter 2009 compared to the first quarter 2008. Excluding $4
million of aircraft-related charges, Continental recorded a net loss of $132
million ($1.07 diluted loss per share).
“My
co-workers did a great job of working together to meet continued challenges
during a tough quarter,” said Larry Kellner, Continental’s chairman and chief
executive officer. “They displayed resilience and remained focused on
running a solid operation.”
First
Quarter Revenue and Capacity
Total
revenue for the quarter was $3.0 billion, a decrease of 17.0 percent compared to
the same period in 2008. Passenger revenue for the quarter fell 18.8
percent ($606 million) compared to the same period last year due to lower fares
and passenger traffic declines. Consolidated average fares dropped 7.4 percent
during the quarter compared to first quarter 2008, declining 16.3 percent in
March 2009 versus March 2008.
Consolidated
revenue passenger miles (RPMs) for the first quarter decreased 11.2 percent
year-over-year on a capacity decrease of 7.2 percent, resulting in a first
quarter consolidated load factor of 75.2 percent, 3.3 points lower than the
first quarter of 2008.
Consolidated
yield for the first quarter decreased 8.6 percent
year-over-year. Consolidated passenger revenue per available seat
mile (RASM) for the first quarter decreased 12.5 percent
year-over-year.
Mainline
RPMs in the first quarter of 2009 decreased 11.2 percent compared to the first
quarter of 2008, on a capacity decrease of 7.6 percent
year-over-year.
Mainline
load factor was 75.8 percent, down 3.0 points
year-over-year. Continental’s mainline yield decreased 7.6 percent in
the first quarter over the same period in 2008. As a result, first
quarter 2009 mainline RASM was down 11.2 percent compared to the first quarter
of 2008.
Passenger
revenue for the first 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
First Quarter
2009 vs. First Quarter
2008
|
|||||||
|
Passenger
Revenue
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RASM
|
ASMs
|
||||||
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Domestic
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$1,070
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(21.0)%
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(10.0)%
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(12.2)%
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||||
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Trans-Atlantic
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475
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(21.7)%
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(19.3)%
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(3.0)%
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||||
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Latin
America
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421
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(9.0)%
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(10.3)%
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1.5
%
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||||
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Pacific
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232
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(9.6)%
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0.6
%
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(10.2)%
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||||
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Total
Mainline
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$2,198
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(18.0)%
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(11.2)%
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(7.6)%
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||||
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Regional
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$ 419
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(22.8)%
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(19.6)%
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(4.1)%
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||||
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Consolidated
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$2,617
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(18.8)%
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(12.5)%
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(7.2)%
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||||
Cargo
revenue in the first quarter 2009 decreased 30.3 percent ($37 million) compared
to the same period 2008, due to reduced freight volume and lower
pricing. Other revenue increased 15.6 percent ($35 million) due to
checked bag fees, partially offset by changes in how certain costs are accounted
for under Continental’s capacity purchase agreement with
ExpressJet.
First
Quarter Operations and Notable Accomplishments
During
the quarter, Continental recorded a U.S. Department of Transportation (DOT)
on-time arrival rate of 76.4 percent and a systemwide mainline segment
completion factor of 99.2 percent and employees earned a total of $3 million in
cash incentives for achieving on-time performance goals.
The DOT
tentatively approved the application for Continental to join the existing
antitrust immunized alliance between United Airlines and eight other Star
Alliance member carriers. This alliance will benefit consumers, ensure global
competition with other antitrust immunized alliances and encourage the retention
and growth of open skies between the U.S. and other nations. Continental remains
a full member of SkyTeam through Oct. 24, 2009, and is focused on providing a
customer-friendly transition to Star.
“We are
excited to be joining Star Alliance, which will bring unparalleled benefits to
our customers worldwide, and growth opportunities for Continental and its
employees,” said Jeff Smisek, president and chief operating officer. “We
look forward to working with our Star partners, as we create new and substantial
competition with other global alliances.”
Continental
was again rated the top airline on FORTUNE magazine’s annual airline industry
list of World’s Most Admired Companies. This is the sixth consecutive year that
Continental has topped that list. The rankings are determined in a survey of
corporate and airline executives, boards of directors and industry analysts.
Companies are evaluated according to quality of products/services, global
competitiveness, people management, social responsibility, innovation, use of
corporate assets, financial soundness, long-term investment and quality of
management.
Continental
was the first U.S. carrier to inaugurate daily nonstop scheduled service between
New York and Shanghai on March 25, linking the world’s financial center and top
business and tourism destination with China’s center for finance and trade. With
the new service to Shanghai, Continental is the only airline in the world
providing daily nonstop service between New York and three Chinese cities;
Shanghai, Beijing and Hong Kong.
Continental received approval from the
DOT to operate daily year-round nonstop service between its Houston hub at Bush
Intercontinental Airport and Rio de Janeiro, Brazil and through flight service
between New Orleans and Rio de Janeiro beginning summer 2009, pending final
government approvals. During the quarter, Continental began
installing DIRECTV, which will provide up to 80 channels of live,
satellite-based television programming, movies and TV shows on its
aircraft. More than 200 of Continental’s next generation Boeing 737s
and 757-300 aircraft will be equipped with the system by the end of
2010.
Continental
contributed $50 million to its defined benefit pension plans during the first
quarter of 2009. On April 9, 2009, the company contributed an
additional $50 million to its defined benefit pension plans.
Continental
was the first commercial carrier to successfully demonstrate the use of
sustainable biofuel to power an aircraft in North America. During the
demonstration flight, Continental’s test pilots successfully conducted a number
of flight maneuvers, and the biofuel met all performance requirements as
compared to traditional jet fuel. The biofuel blend included components
derived from algae and jatropha plants, both sustainable, second-generation
sources that do not impact food crops or water resources or contribute to
deforestation.
First
Quarter Costs and End of Quarter Cash
Due to
significantly lower jet fuel costs, Continental’s mainline cost per available
seat mile (CASM) decreased 10.4 percent (10.8 percent excluding special items)
in the first quarter compared to the same period last year. The
mainline price of a gallon of fuel dropped 34.6 percent year-over-year and
mainline fuel consumption fell by 11.2 percent. Holding fuel rate
constant and excluding special items, first quarter 2009 mainline CASM increased
0.9 percent compared to the first quarter of 2008.
“This strong CASM performance, despite decreases in capacity, is a tribute
to the ongoing focus on efficiency and cost control by the entire Continental
team,” said Zane Rowe, Continental’s executive vice president and chief
financial officer.
Consolidated fuel price was $1.82 per
gallon in the first quarter 2009, of which $0.35 per gallon was related to
Continental’s fuel hedges. Consolidated fuel price was $2.80 per
gallon in the first quarter 2008.
Continental
ended the first quarter with $2.65 billion in unrestricted cash, cash
equivalents and short-term investments.
Fleet
Changes Continue to Improve Efficiency
Continental
continued to improve fuel efficiency during the quarter by adding modern,
fuel-efficient aircraft to its fleet and installing winglets on additional
aircraft. During the quarter, Continental took delivery of four new
Boeing 737-900ERs. In addition, the company removed from service
three Boeing 737-300s and returned to service two Boeing 737-500s that were
temporarily grounded at Dec. 31, 2008.
Continental
is currently scheduled to take delivery of nine Boeing 737 aircraft in the
remaining nine months of 2009. The company has also agreed to lease
four Boeing 757-300 aircraft from Boeing Capital Corporation that are expected
to be placed into service in the first half of 2010. By the end of
2009, the company expects to remove 27 additional Boeing 737-300 and 737-500
aircraft from service.
Continental
installed winglets on nine of the company’s 737 aircraft during the
quarter, and now has winglets on over 275 of its mainline
aircraft. In February, Aviation Partners Boeing, a joint venture of
Aviation Partners, Inc. and The Boeing Company, completed the world’s first
blended 757-300 winglet installation on one of Continental’s
aircraft. Continental plans to begin installing winglets on all
757-300s later this year. All of the company’s 737-500s, 700s, 800s,
900s and 757-200s have winglets, as do select aircraft from Continental’s
737-300 series fleets. Winglets increase aerodynamic efficiency and
decrease drag, reducing fuel consumption and emissions by up to five
percent.
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. More than 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 67 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, industry capacity decisions, industry
consolidation, terrorist attacks, regulatory matters, excessive taxation, 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
FINANCIAL
SUMMARY
(In
millions, except per share data)
(Unaudited)
|
|
Three
Months Ended
March
31,
|
%
Increase/
(Decrease)
|
||||
|
2009
|
2008
|
|||||
|
Adjusted
|
||||||
|
Operating
Revenue:
|
||||||
|
Passenger (excluding fees and
taxes of $346 and $376)
|
$2,617
|
$3,223
|
(18.8)%
|
|||
|
Cargo
|
85
|
122
|
(30.3)%
|
|||
|
Other
|
260
|
225
|
15.6 %
|
|||
|
2,962
|
3,570
|
(17.0)%
|
||||
|
Operating
Expenses:
|
||||||
|
Wages, salaries and related
costs
|
765
|
729
|
4.9
%
|
|||
|
Aircraft fuel and related taxes
(A)
|
735
|
1,262
|
(41.8)%
|
|||
|
Aircraft rentals
|
237
|
247
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(4.0)%
|
|||
|
Regional capacity purchase, net
(A)
|
213
|
292
|
(27.1)%
|
|||
|
Landing fees and other
rentals
|
209
|
207
|
1.0 %
|
|||
|
Distribution costs
|
156
|
182
|
(14.3)%
|
|||
|
Maintenance, material and
repairs
|
153
|
159
|
(3.8)%
|
|||
|
Depreciation and
amortization
|
111
|
106
|
4.7 %
|
|||
|
Passenger services
|
88
|
96
|
(8.3)%
|
|||
|
Special charges (credits)
(B)
|
4
|
(8)
|
NM
|
|||
|
Other
|
346
|
364
|
(4.9)%
|
|||
|
3,017
|
3,636
|
(17.0)%
|
||||
|
Operating
Loss
|
(55)
|
(66)
|
(16.7)%
|
|||
|
Nonoperating
Income (Expense):
|
||||||
|
Interest expense
(C)
|
(93)
|
(93)
|
-
|
|||
|
Interest
capitalized
|
8
|
9
|
(11.1)%
|
|||
|
Interest income
|
4
|
24
|
(83.3)%
|
|||
|
Other, net
|
-
|
(1)
|
(100.0)%
|
|||
|
(81)
|
(61)
|
32.8 %
|
||||
|
Loss
before Income Taxes
|
(136)
|
(127)
|
7.1 %
|
|||
|
Income
Tax Benefit
|
-
|
45
|
(100.0)%
|
|||
|
Net
Loss
|
$ (136)
|
$ (82)
|
65.9 %
|
|||
|
Basic
and Diluted Loss per Share
|
$(1.10)
|
$(0.82)
|
34.1 %
|
|||
|
Shares
Used for Basic and Diluted Computation
|
123
|
98
|
25.5 %
|
|||
|
(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)
|
Special
charges (credits) includes a $4 million charge for future lease costs on
permanently grounded Boeing 737-300 aircraft and a credit of $8 million
related to the sales of three Boeing 737-500 aircraft in the three months
ended March 31, 2009 and 2008, respectively.
|
|
(C)
|
Effective
January 1, 2009, we adopted 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 months ended March 31, 2008 have been adjusted to reflect our
adoption of this standard.
|
|
|
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
|
STATISTICS
|
Three
Months Ended
March
31,
|
%
Increase/
|
|||||
|
2009
|
2008
|
(Decrease)
|
||||
|
Mainline
Operations:
|
||||||
|
Passengers
(thousands)
|
10,562
|
12,197
|
(13.4)%
|
|||
|
Revenue
passenger miles (millions)
|
17,690
|
19,923
|
(11.2)%
|
|||
|
Available
seat miles (millions)
|
23,352
|
25,278
|
(7.6)%
|
|||
|
Cargo
ton miles (millions)
|
200
|
261
|
(23.4)%
|
|||
|
Passenger
load factor:
|
||||||
|
Mainline
|
75.8%
|
78.8%
|
(3.0) pts.
|
|||
|
Domestic
|
79.7%
|
81.9%
|
(2.2) pts.
|
|||
|
International
|
72.1%
|
75.6%
|
(3.5) pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
9.41
|
10.60
|
(11.2)%
|
|||
|
Total
revenue per available seat mile (cents)
|
10.83
|
11.93
|
(9.2)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
12.43
|
13.45
|
(7.6)%
|
|||
|
Average
fare per revenue passenger
|
$209.94
|
$221.87
|
(5.4)%
|
|||
|
Cost
per available seat mile (CASM) (cents) (A)
|
10.56
|
11.79
|
(10.4)%
|
|||
|
Special
charges (credits) per available seat mile (cents)
|
0.02
|
(0.03)
|
NM
|
|||
|
CASM,
holding fuel rate constant (cents) (A)
|
11.94
|
11.79
|
1.3 %
|
|||
|
Average
price per gallon of fuel, including fuel taxes
|
$1.83
|
$2.80
|
(34.6)%
|
|||
|
Fuel
gallons consumed (millions)
|
333
|
375
|
(11.2)%
|
|||
|
Actual
aircraft in fleet at end of period (B)
|
354
|
372
|
(4.8)%
|
|||
|
Average
length of aircraft flight (miles)
|
1,502
|
1,457
|
3.1 %
|
|||
|
Average
daily utilization of each aircraft (hours)
|
10:22
|
11:11
|
(7.4)%
|
|||
|
Regional
Operations:
|
||||||
|
Passengers
(thousands)
|
3,846
|
4,243
|
(9.4)%
|
|||
|
Revenue
passenger miles (millions)
|
2,100
|
2,357
|
(10.9)%
|
|||
|
Available
seat miles (millions)
|
2,971
|
3,098
|
(4.1)%
|
|||
|
Passenger
load factor
|
70.7%
|
76.1%
|
(5.4) pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
14.11
|
17.54
|
(19.6)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
19.96
|
23.05
|
(13.4)%
|
|||
|
Actual
aircraft in fleet at end of period (C)
|
280
|
269
|
4.1 %
|
|||
|
Consolidated
Operations (Mainline and Regional):
|
||||||
|
Passengers
(thousands)
|
14,408
|
16,440
|
(12.4)%
|
|||
|
Revenue
passenger miles (millions)
|
19,790
|
22,280
|
(11.2)%
|
|||
|
Available
seat miles (millions)
|
26,323
|
28,376
|
(7.2)%
|
|||
|
Passenger
load factor
|
75.2%
|
78.5%
|
(3.3) pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
9.94
|
11.36
|
(12.5)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
13.23
|
14.47
|
(8.6)%
|
|||
|
Average
price per gallon of fuel, including fuel taxes
|
$1.82
|
$2.80
|
(35.0)%
|
|||
|
Fuel
gallons consumed (millions)
|
403
|
451
|
(10.6)%
|
|||
|
(A)
|
Includes
impact of special charges (credits).
|
|
(B)
|
Excludes
11 737-300 and five 737-500 grounded aircraft at March 31,
2009.
|
|
(C)
|
Consists
of flights operated under capacity purchase agreements with Continental’s
regional carriers ExpressJet, Colgan, Chautauqua and
CommutAir. Excludes 30 EMB-135 aircraft temporarily grounded at
March 31, 2009.
|
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
NON-GAAP
FINANCIAL MEASURES
|
Net
Loss (in millions)
|
Three
Months Ended
March 31,
2009
|
|||||||||||
|
Net
loss
|
$(136)
|
|||||||||||
|
Adjust
for special charges (net of tax of $0)
|
4
|
|||||||||||
|
Net
loss, excluding special charges (A)
|
$(132)
|
|||||||||||
|
Loss
per Share
|
Three
Months Ended
March 31,
2009
|
|||||||||||
|
Diluted
loss per share
|
$(1.10)
|
|||||||||||
|
Adjust
for special charges
|
0.03
|
|||||||||||
|
Diluted
loss per share, excluding special charges (A)
|
$(1.07)
|
|||||||||||
|
CASM
Mainline Operations (cents)
|
Three
Months Ended
March
31,
|
%
Increase/
|
||||||||||
|
2009
|
2008
|
(Decrease)
|
||||||||||
|
Cost
per available seat mile (CASM)
|
$10.56
|
$11.79
|
(10.4)%
|
|||||||||
|
Less: Special
(charges) credits
|
(0.02)
|
0.03
|
NM
|
|||||||||
|
CASM,
excluding special (charges) credits
|
10.54
|
11.82
|
(10.8)%
|
|||||||||
|
Less: Current
year fuel per cost available seat mile (B)
|
(2.61)
|
-
|
NM
|
|||||||||
|
Add: Current
year fuel cost at prior year fuel price
per
available seat mile (B)
|
4.00
|
-
|
NM
|
|||||||||
|
CASM
holding fuel rate constant and excluding
special
(charges) credits (A)
|
$11.93
|
$11.82
|
0.9 %
|
|||||||||
|
(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: April 22, 2009
|
This
investor update provides information on Continental's guidance for the second
quarter and the full year 2009, as well as certain historical information
pertaining to the first quarter of 2009.
Advanced Booked Seat Factor
(Percentage of Available Seats that are Sold)
As
compared to the same period last year, consolidated domestic bookings for the
next six weeks are running ahead 2 - 3 points, mainline Latin bookings are
running behind 1 - 2 points, Transatlantic bookings are running ahead 4 - 5
points, and Pacific bookings are running ahead 2 - 3 points.
For the
second quarter of 2009, the Company expects both its consolidated and mainline
load factors to be about flat to up 1 point year-over-year (“yoy”).
Unrestricted Cash, Cash
Equivalents and Short Term Investments Balance
Continental
anticipates ending the second quarter of 2009 with an unrestricted cash, cash
equivalents and short-term investments balance of approximately $2.8
billion.
Cargo, Mail, and Other
Revenue
The
Company's Cargo, Mail, and Other Revenue for the second quarter 2009 is expected
to be between $370 and $380 million.
|
2009
Estimate
|
||||
|
Available Seat Miles
(ASMs)
|
Year-over-Year %
Change
|
|||
|
2nd
Qtr.
|
Full
Year
|
|||
|
Mainline
|
||||
|
Domestic
|
(10.1)%
|
(6
- 7)%
|
||
|
Latin
America
|
(1.1)%
|
0%
- 1%
|
||
|
Transatlantic
|
(10.9)%
|
(7
- 8)%
|
||
|
Pacific
|
13.8%
|
8%
- 9%
|
||
|
Total
Mainline
|
(7.0)%
|
(4
- 5)%
|
||
|
Regional
|
(10.7)%
|
(5
- 6)%
|
||
|
Consolidated
|
||||
|
Domestic
|
(10.3)%
|
(6
- 7)%
|
||
|
International
|
(4.0)%
|
(2
- 3)%
|
||
|
Total
Consolidated
|
(7.4)%
|
(4
-
5)%
|
||
|
Load
Factor
|
2nd Qtr. 2009
(E)
|
Full Year 2009
(E)
|
|||||
|
Domestic
|
84%
|
-
|
85%
|
82%
|
-
|
83%
|
|
|
Latin
America
|
80%
|
-
|
81%
|
80%
|
-
|
81%
|
|
|
Transatlantic
|
81%
|
-
|
82%
|
76%
|
-
|
77%
|
|
|
Pacific
|
77%
|
-
|
78%
|
76%
|
-
|
77%
|
|
|
Total
Mainline
|
82%
|
-
|
83%
|
80%
|
-
|
81%
|
|
|
Regional
|
77%
|
-
|
78%
|
74%
|
-
|
75%
|
|
|
Consolidated
|
81%
|
-
|
82%
|
79%
|
-
|
80%
|
|
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.
First Quarter 2009 Domestic
Performance on a Hub by Hub Basis
Continental’s
first quarter 2009 consolidated domestic capacity at its New York Liberty hub
was down 10.3%, with traffic down 14.5%, resulting in a load factor decrease of
3.7 pts compared to the first quarter of 2008. Transcon capacity,
which is a subset of New York Liberty capacity, was down 4.6% yoy in the first
quarter while traffic was down 7.9%, resulting in a load factor decrease of 2.8
pts compared to the same period in 2008. Consolidated domestic
capacity at its Houston hub was down 9.8% yoy, with traffic down 12.5%,
resulting in a load factor decrease of 2.5 pts compared to the first quarter of
2008. Consolidated domestic capacity at its Cleveland hub was down
18.0% yoy, with traffic down 20.4%, resulting in a first quarter load factor
decrease of 2.4 pts compared to the same period in 2008.
Pension Expense and
Contributions
During
the first quarter of 2009, the Company contributed $50 million to our
tax-qualified defined benefit pension plans and on April 9, 2009 the Company
contributed an additional $50 million to the plans. Including these
contributions, Continental's remaining minimum required contribution to be made
during calendar year 2009 is approximately $50 million.
Continental
estimates that its non-cash pension expense will be approximately $250 million
for 2009. This amount excludes non-cash settlement charges related to
lump-sum distributions.
|
CASM Mainline
Operating Statistics
|
2009 Estimate
(cents)
|
|||||||
|
2nd
Qtr.
|
Full
Year
|
|||||||
|
CASM
|
10.77
|
-
|
10.82
|
10.55
|
-
|
10.60
|
||
|
Special
Items per ASM
|
0.00
|
0.00
|
||||||
|
CASM
Less Special Items (a)
|
10.77
|
-
|
10.82
|
10.55
|
-
|
10.60
|
||
|
Aircraft
Fuel & Related Taxes per ASM
|
(3.01)
|
(2.73)
|
||||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
7.76
|
-
|
7.81
|
7.82
|
-
|
7.87
|
||
|
CASM Consolidated
Operating Statistics
|
2009 Estimate
(cents)
|
|||||||
|
2nd
Qtr.
|
Full
Year
|
|||||||
|
CASM
|
11.63
|
-
|
11.68
|
11.40
|
-
|
11.45
|
||
|
Special
Items per ASM
|
0.00
|
0.00
|
||||||
|
CASM
Less Special Items (a)
|
11.63
|
-
|
11.68
|
11.40
|
-
|
11.45
|
||
|
Aircraft
Fuel & Related Taxes per ASM
|
(3.21)
|
(2.92)
|
||||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.42
|
-
|
8.47
|
8.48
|
-
|
8.53
|
||
(a) These
financial measures provide management and investors the ability to measure and
monitor Continental's performance on a consistent basis.
(b) 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
In
accordance with the Company's profit sharing plan, to the extent applicable,
profit sharing accruals are accrued each quarter based on the actual cumulative
profits earned year-to-date. For more information regarding this program,
see the Company’s 2008 Form 10-K. Generally, the profit sharing
program provides for a profit sharing pool for eligible employees of 30% of the
first $250 million of annual pre-tax income, 25% of the next $250 million, and
20% thereafter (with certain adjustments to pre-tax income as defined in the
profit sharing program).
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
$13.20 on April 15, 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
April 15, 2009 will result in an increase or decrease of approximately $2
million in Wages, Salaries, and Related Costs attributable to the awards to be
recognized in the second 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)
|
2009
Estimate
|
||
|
2nd
Qtr.
|
Full
Year
|
||
|
Mainline
|
355
million
|
1,390
million
|
|
|
Regional
|
70
million
|
283
million
|
|
|
Consolidated
Fuel Price per Gallon (including
fuel
|
|||
|
taxes
and impact of hedges)
|
$2.12
|
$1.93
|
|
Fuel Hedges - As of April
15, 2009
As of
April 15, 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)
|
|||||
|
Second Quarter
2009
|
||||||||
|
WTI
crude oil
collars
|
35%
|
$3.48
|
35%
|
$2.61
|
||||
|
Total
|
35%
|
35%
|
||||||
|
Third Quarter
2009
|
||||||||
|
WTI
crude oil
swaps
|
5%
|
$1.31
|
5%
|
$1.31
|
||||
|
WTI
crude oil
collars
|
11%
|
3.21
|
11%
|
2.40
|
||||
|
Total
|
16%
|
16%
|
||||||
|
Fourth Quarter
2009
|
||||||||
|
WTI
crude oil
swaps
|
5%
|
$1.36
|
5%
|
$1.36
|
||||
|
Total
|
5%
|
5%
|
||||||
Based on
the forward curve for WTI as of April 15, 2009, the Company estimates that all
of its fuel hedges would result in a net increase in fuel expense of $0.55 per
gallon in the second quarter 2009 and $0.26 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 $1.57
for the second quarter and $1.67 for the full year 2009.
As of
April 15, 2009 the Company had $152 million posted with its fuel hedge
counterparties in the form of cash and granted a lien on one 777-200
aircraft and one 757-200 aircraft in favor of a counterparty in lieu of posting
an additional $56 million in cash.
|
Selected Expense
Amounts
|
2009 Estimated Amounts
($Millions)
|
|
|
2nd
Qtr.
|
Full
Year
|
|
|
Aircraft
Rent
|
$234
|
$930
|
|
Depreciation
& Amortization
|
$119
|
$481
|
|
Net
Interest Expense*
|
$82
|
$337
|
|
*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
$551 million, with $98 million paid in the first quarter and approximately $52
million, $341 million and $60 million to be paid in the second, third and fourth
quarters of 2009, respectively.
|
Cash Capital
Expenditures ($Millions)
|
2009
Estimate
|
|
|
Fleet
Related
|
$210
|
|
|
Non-Fleet
|
180
|
|
|
Rotable
Parts & Capitalized Interest
|
57
|
|
|
Total
|
$447
|
|
|
Net
Purchase Deposits Paid/(Refunded)
|
7
|
|
|
Total
Cash Capital Expenditures
|
$454
|
|
EPS Estimated Share
Count
Share
count estimates for calculating basic and diluted earnings per share at
different income levels are as follows:
Second
Quarter 2009 (Millions)
|
Quarterly
|
Number
of Shares
|
Interest addback (net
of applicable profit
|
|
|
Earnings
Level
|
Basic
|
Diluted
|
sharing and income
taxes impact)
|
|
Over
$115
|
124
|
137
|
$9
|
|
Between
$75 - $115
|
124
|
133
|
$5
|
|
Under
$75
|
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
$203 - $313
|
124
|
133
|
$14
|
|
Under
$203
|
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.
Adjustment for Retrospective
Application of FSP APB 14-1
The
Company has adjusted the financial statements for the years ending December 31,
2008, 2007 and 2006 to reflect our adoption of 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. Please see Appendix A for quarterly financials for the
year 2008 reflecting this adjustment. In addition, the Company now
includes fuel and related taxes on flights operated for us by other operators
under capacity purchase agreements as part of “Aircraft fuel and related
taxes”. The quarterly financials as shown on Appendix A reflect the
reclassification of these amounts for the year 2008.
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.
Appendix
A
|
CONTINENTAL
AIRLINES, INC.
|
|||||||
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
|||||||
|
(In
millions of dollars)
|
|||||||
|
Adjusted
Presentation
|
|||||||
|
1Q
|
2Q
|
3Q
|
4Q
|
||||
|
2008
|
2008
|
2008
|
2008
|
||||
|
Operating
Revenue:
|
|||||||
|
Total
Passenger
|
3,223
|
3,650
|
3,760
|
3,103
|
|||
|
Cargo,
mail and other
|
347
|
394
|
396
|
368
|
|||
|
3,570
|
4,044
|
4,156
|
3,471
|
||||
|
Operating
Expenses:
|
|||||||
|
Wages,
salaries and related costs
|
729
|
704
|
765
|
760
|
|||
|
Aircraft
fuel and related taxes
|
1,262
|
1,653
|
1,807
|
1,197
|
|||
|
Regional
capacity purchase, net
|
292
|
299
|
247
|
221
|
|||
|
Aircraft
rentals
|
247
|
246
|
244
|
240
|
|||
|
Landing
fees and other rentals
|
207
|
210
|
225
|
210
|
|||
|
Distribution
costs
|
182
|
194
|
182
|
159
|
|||
|
Maintenance,
material and repairs
|
159
|
167
|
152
|
135
|
|||
|
Depreciation
and amortization
|
106
|
108
|
112
|
111
|
|||
|
Passenger
services
|
96
|
107
|
113
|
91
|
|||
|
Special
charges (credits)
|
(8)
|
58
|
91
|
40
|
|||
|
Other
|
364
|
369
|
370
|
332
|
|||
|
3,636
|
4,115
|
4,308
|
3,496
|
||||
|
Operating
Income (Loss)
|
(66)
|
(71)
|
(152)
|
(25)
|
|||
|
Nonoperating
Income (Expense):
|
|||||||
|
Interest
expense
|
(93)
|
(91)
|
(95)
|
(97)
|
|||
|
Interest
capitalized
|
9
|
8
|
8
|
8
|
|||
|
Interest
income
|
24
|
16
|
16
|
8
|
|||
|
Gain
on sale of investments
|
78
|
||||||
|
Other,
net
|
(1)
|
11
|
(27)
|
(161)
|
|||
|
(61)
|
22
|
(98)
|
(242)
|
||||
|
Income
(Loss) before Income Taxes
|
(127)
|
(49)
|
(250)
|
(267)
|
|||
|
Income
Tax Benefit (Expense)
|
45
|
44
|
20
|
(2)
|
|||
|
Net
Income (Loss)
|
($82)
|
($5)
|
($230)
|
($269)
|
|||
|
Earnings
Per Share
|
(0.82)
|
(0.05)
|
(2.09)
|
(2.35)
|
|||
|
Special
Items per Share
|
(0.06)
|
(0.21)
|
0.83
|
1.49
|
|||
|
Earnings
Per Share Excluding Special Items
|
(0.88)
|
(0.26)
|
(1.26)
|
(0.86)
|
|||
Fleet
News
Continental
Airlines Fleet Plan
Includes
Aircraft Operated by the Company or Operated on the
Company's
Behalf Under a Capacity Purchase Agreement
April
15, 2009
|
Net
|
Net
|
|||||||||
|
Total
@
|
Changes
|
Total
@
|
Changes
|
Total
@
|
||||||
|
YE
2008
|
2009E
|
YE
2009E
|
2010E
|
YE
2010E
|
||||||
|
Mainline
Jets
|
||||||||||
|
777-200ER*
|
20
|
-
|
20
|
2
|
22
|
|||||
|
787-8
|
-
|
-
|
-
|
-
|
-
|
|||||
|
767-400ER
|
16
|
-
|
16
|
-
|
16
|
|||||
|
767-200ER
|
10
|
-
|
10
|
-
|
10
|
|||||
|
757-300
|
17
|
-
|
17
|
4
|
21
|
|||||
|
757-200
|
41
|
-
|
41
|
-
|
41
|
|||||
|
737-900ER*
|
17
|
13
|
30
|
4
|
34
|
|||||
|
737-900
|
12
|
-
|
12
|
-
|
12
|
|||||
|
737-800*
|
116
|
1
|
117
|
7
|
124
|
|||||
|
737-700
|
36
|
-
|
36
|
-
|
36
|
|||||
|
737-300**
|
23
|
(23)
|
-
|
-
|
-
|
|||||
|
737-500**
|
42
|
(5)
|
37
|
-
|
37
|
|||||
|
Total
Mainline
|
350
|
(14)
|
336
|
17
|
353
|
|||||
|
Regional
|
||||||||||
|
ERJ-145
|
234
|
(5)
|
229
|
-
|
229
|
|||||
|
CRJ200LR
|
17
|
(10)
|
7
|
(7)
|
-
|
|||||
|
Q400
|
15
|
(1)
|
14
|
6
|
20
|
|||||
|
Q200
|
16
|
-
|
16
|
-
|
16
|
|||||
|
Total
Regional
|
282
|
(16)
|
266
|
(1)
|
265
|
|||||
|
Total
Count
|
632
|
(30)
|
602
|
16
|
618
|
|||||
|
*Final
mix of new 737-800/-900ERs is subject to change
|
||||||||||
|
**Final
mix and quantity of 737-300 / 737-500 exits are subject to
change
|
||||||||||