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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported):

March 28, 2003

 

 

 

CONTINENTAL AIRLINES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

1-10323

74-2099724

(State or other jurisdiction

(Commission File Number)

(IRS Employer

of incorporation)

  

Identification No.)

 

1600 Smith Street, Dept. HQSEO, Houston, Texas

77002

(Address of principal executive offices)

(Zip Code)

(713) 324-2950

(Registrant's telephone number, including area code)

Item 5. Other Events.

On April 1, 2003, we issued a press release announcing our March performance and our estimated consolidated breakeven load factor for April. The press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

On March 28, 2003 Standard and Poor's downgraded our corporate credit rating from B+ to B as well as downgrading the credit rating of certain other major airlines. Reductions in our credit rating in the past have increased the interest we pay, and this reduction and any future reductions may increase the cost and reduce the availability of financing to us in the future.

Item 7. Financial Statements and Exhibits.

    1. Exhibits

      1. Press Release

 

 

SIGNATURE

 

 

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.
 

CONTINENTAL AIRLINES, INC.

 

 

April 1, 2003

By /s/ Jennifer L. Vogel                           
 

Jennifer L. Vogel
 

Vice President, General Counsel

and Secretary

 

 

EXHIBIT INDEX

 

99.1

Press Release

 

 

 

 
News Release

EXHIBIT 99.1

News Release

Contact: Corporate Communications

Houston: 713.324.5080

Email: corpcomm@coair.com

News archive: continental.com/news/ Address: P.O. Box 4607, Houston, TX 77210-4607

CONTINENTAL AIRLINES REPORTS

OPERATIONAL PERFORMANCE FOR MARCH 2003 AND

FIRST QUARTER $41 MILLION SPECIAL CHARGE

HOUSTON, April 1, 2003 - Continental Airlines (NYSE: CAL) today reported a March 2003 systemwide mainline jet load factor of 71.6 percent, 7.9 points below last year's March load factor. A significant portion of the decline in load factor was due to the war in Iraq. The March 2003 domestic mainline jet load factor was 74.3 percent and the international mainline jet load factor was 67.6 percent.

Since the ultimatum was issued to Iraq on March 17, traffic, compared to our March forecast, declined as follows:

Domestic ( 3)%

Transatlantic (10)%

Pacific (16)%

Latin America ( 6)%

System ( 5)%

Continental previously announced temporary capacity reductions on certain Transatlantic and Pacific routes in response to the lower demand caused by worldwide uncertainties.

Continental also reported today that it will record an after-tax special charge of $41 million ($65 million pre-tax) in March 2003 primarily related to the impairment of its MD-80 fleet and spare parts associated with grounded aircraft.

The airline reported a domestic on-time arrival rate of 82.7 percent and a systemwide completion factor of 99.4 percent for its mainline jet operations in March 2003.

In March 2003, Continental flew 4.9 billion mainline jet revenue passenger miles (RPMs) and 6.9 billion mainline jet available seat miles (ASMs) systemwide, resulting in a traffic decrease of 8.3 percent and a capacity increase of 1.9 percent as compared to March 2002. Domestic mainline jet traffic was 3.0 billion RPMs in March 2003, down 7.6 percent from March 2002, and March 2003 domestic mainline jet capacity was 4.1 billion ASMs, down 3.7

percent from March 2002.

-more-

Systemwide March 2003 mainline jet passenger revenue per available seat mile (RASM) is estimated to have decreased between 11 and 13 percent compared to March 2002. The carrier estimates that approximately 6 to 8 points of the decline occurred due to customers' pre-war reaction to the Iraqi situation and the movement of Easter from March to April. An additional 5 points of the decline appeared to result from the fall in demand following the start of the war. For February 2003, RASM decreased 0.4 percent as compared to February 2002.

Continental ended the first quarter with a cash and short-term investment balance of approximately $1.18 billion. Continental has hedged over 80 percent of its projected second quarter fuel volume with caps at an average weighted strike price of about $33 per barrel of crude oil.

ExpressJet Airlines, a subsidiary of Continental Airlines doing business as Continental Express, separately reported a record March load factor of 64.2 percent for March 2003, 1.1 points above last year's March load factor. ExpressJet flew 419.5 million RPMs and 653.9 million ASMs in March 2003, resulting in a traffic increase of 32.9 percent and a capacity increase of 30.7 percent versus March 2002.

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 2002 10-K and its other securities filings, which identify important matters such as terrorist attacks, domestic and international economic conditions, the significant cost of aircraft fuel, labor costs, competition, regulatory matters and industry conditions, including the demand for air travel, the airline pricing environment and industry capacity decisions. 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.

-more-

CO REPORTS OPERATIONAL PERFORMANCE FOR MARCH 2003/PAGE 3

PRELIMINARY TRAFFIC RESULTS

MARCH

  

2003   

2002   

Change   

REVENUE PASSENGER MILES (000)

    
 

Domestic

3,033,134

3,282,975

(7.6) Percent
         
 

International

1,881,485

2,075,447

(9.3) Percent
 

Transatlantic

799,649

845,895

(5.5) Percent 
 

Latin America

707,864

750,499

(5.7) Percent 
 

Pacific

373,972

479,053

(21.9) Percent 
         
 

Total Jet

4,914,619

5,358,422

(8.3) Percent
         
 

ExpressJet

419,547

315,703

32.9  Percent
         

AVAILABLE SEAT MILES (000)

    
 

Domestic

4,082,315

4,238,169

(3.7) Percent
         
 

International

2,782,603

2,501,498

11.2  Percent
 

Transatlantic

1,227,842

998,421

23.0 Percent 
 

Latin America

968,185

941,970

2.8 Percent 
 

Pacific

586,576

561,107

4.5 Percent 
         
 

Total Jet

6,864,918

6,739,668

1.9 Percent 
         
 

ExpressJet

653,881

500,243

30.7  Percent 
         

PASSENGER LOAD FACTOR

    
 

Domestic

74.3 Percent

77.5 Percent

(3.2) Points
         
 

International

67.6 Percent

83.0 Percent

(15.4) Points
 

Transatlantic

65.1 Percent 

84.7 Percent 

(19.6) Points 
 

Latin America

73.1 Percent 

79.7 Percent 

(6.6) Points 
 

Pacific

63.8 Percent 

85.4 Percent 

(21.6) Points 
         
 

Total Jet

71.6 Percent

79.5 Percent

(7.9) Points
         
 

ExpressJet

64.2 Percent

63.1 Percent

1.1  Points
         

CARGO REVENUE TON MILES (000)

    
 

Total

86,205

80,216

7.5  Percent

 

-more-

CO REPORTS OPERATIONAL PERFORMANCE FOR MARCH 2003/PAGE 4

PRELIMINARY TRAFFIC RESULTS

YEAR-TO-DATE

  

2003   

2002   

Change   

REVENUE PASSENGER MILES (000)

    
 

Domestic

8,061,594

8,593,572

(6.2) Percent
         
 

International

5,210,569

5,438,849

(4.2) Percent
 

Transatlantic

2,109,020

2,117,534

(0.4) Percent 
 

Latin America

1,987,386

2,051,623

(3.1) Percent 
 

Pacific

1,114,163

1,269,692

(12.2) Percent 
         
 

Total Jet

13,272,163

14,032,421

(5.4) Percent
         
 

ExpressJet

1,078,375

834,907

29.2  Percent
         

AVAILABLE SEAT MILES (000)

    
 

Domestic

11,340,306

11,868,718

(4.5) Percent
         
 

International

7,734,763

7,082,708

9.2  Percent
 

Transatlantic

3,230,290

2,805,494

15.1 Percent 
 

Latin America

2,751,226

2,657,961

3.5 Percent 
 

Pacific

1,753,247

1,619,253

8.3 Percent 
         
 

Total Jet

19,075,069

18,951,426

0.7 Percent
         
 

ExpressJet

1,767,306

1,423,775

24.1  Percent 
         

PASSENGER LOAD FACTOR

    
 

Domestic

71.1 Percent

72.4 Percent

(1.3) Points
         
 

International

67.4 Percent

76.8 Percent

(9.4) Points
 

Transatlantic

65.3 Percent 

75.5 Percent 

(10.2) Points 
 

Latin America

72.2 Percent 

77.2 Percent 

(5.0) Points 
 

Pacific

63.5 Percent 

78.4 Percent 

(14.9) Points 
         
 

Total Jet

69.6 Percent

74.0 Percent

(4.4) Points
         
 

ExpressJet

61.0 Percent

58.6 Percent

2.4  Points
         

CARGO REVENUE TON MILES (000)

    
 

Total

233,452

208,184

12.1  Percent

 

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CO REPORTS OPERATIONAL PERFORMANCE FOR MARCH 2003/PAGE 5

PRELIMINARY OPERATIONAL AND FINANCIAL RESULTS

MARCH

  

2003 

2002 

Change  

On-Time Performance1

82.7%

84.8%

(2.1) Points
         

Completion Factor2

99.4%

99.9%

(0.5) Points
       
         

YEAR-TO-DATE

  

2003 

2002 

Change  

On-Time Performance1

82.1%

85.1%

(3.0) Points
         

Completion Factor2

98.8%

99.8%

(1.0) Points
       
     

February 2003 actual consolidated breakeven load factor3

85.2  Percent
         

March 2003 estimated year-over-year RASM change

(11-13) Percent
         

March 2003 estimated average price per gallon of fuel,

                       excluding fuel taxes

$1.06      
         

March 2003 estimated consolidated breakeven load factor3,4

89 Percent
         

March 2003 actual consolidated load factor5

70.9  Percent
         

April 2003 estimated consolidated breakeven load factor3

80 Percent
 

YEAR-OVER-YEAR RASM6

2002 vs. 2001

2002 vs. 2000

  

May

(6.3) Percent

(15.1) Percent

  

June

(5.5) Percent

(15.5) Percent

  

July

(4.0) Percent

(13.5) Percent

  

August

(2.7) Percent

(15.2) Percent

  

September

10.8  Percent

(17.6) Percent

  

October

9.3  Percent

(15.7) Percent

  

November

(1.7) Percent

(18.4) Percent

  

December

10.1 Percent

(5.7) Percent

  
 

2003 vs. 2002

2003 vs. 2001

  

January

3.6 Percent

(10.9) Percent

  

February

(0.4) Percent

(11.3) Percent

  

March (estimated)

(11-13) Percent

(16-18) Percent

  

1 Department of Transportation Arrivals within 14 minutes

2 System Mileage Completion Percentage

3 Consolidated load factor (including Continental Airlines and Continental Express) needed to break even on a

consolidated net income basis. Actual consolidated breakeven load factor may vary significantly from

estimates depending on actual passenger revenue yields, fuel price and other factors. Month-to-date

consolidated load factor information can be found on Continental's website at continental.com in the Investor

Relations-Financial/Traffic Releases section.

4 After tax special charge of $41 million included in estimated consolidated breakeven load factor accounts for 8

percentage points.

5 Includes Continental Airlines and Continental Express

6 CAL has been releasing RASM data since May 2001

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