|
UNITED
STATES
|
|
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): October 15,
2009
|
|
CONTINENTAL
AIRLINES, INC.
|
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
|
DELAWARE
|
|
(State
or Other Jurisdiction of
Incorporation)
|
|
1-10323
|
74-2099724
|
|
(Commission
File Number)
|
(IRS
Employer 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)
|
|
______________________________________
|
|
(Former
Name or Former Address, if Changed Since Last
Report)
|
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):
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
|
|
|
(17
CFR 240.14d-2(b))
|
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
|
|
|
(17
CFR 240.13e-4(c))
|
|
Item
2.02.
|
Results of Operations
and Financial Condition.
|
On October 15, 2009, Continental
Airlines, Inc. (the “Company”) issued a press release announcing the webcast for
its third quarter 2009 financial results conference call and detailing certain
third quarter 2009 special charges. This press release is furnished
herewith as Exhibit 99.1 and is incorporated herein by reference.
On October 21, 2009, the Company issued
a press release announcing its financial results for the third 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 99.2 and is incorporated herein by
reference.
In accordance with general instruction
B.2 of Form 8−K, the information contained in this Item 2.02, including Exhibits
99.1 and 99.2, 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.
|
Item
7.01.
|
Regulation FD
Disclosure.
|
On October 21, 2009, we will provide an
update for investors presenting information relating to our financial and
operational results for the third quarter of 2009, our outlook for the fourth
quarter and full year 2009, and other information. The update is furnished
herewith as Exhibit 99.3 and is incorporated herein by reference.
In accordance with general instruction
B.2 of Form 8−K, the information contained in this Item 7.01, including Exhibit
99.3, 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.
|
Item
9.01.
|
Financial Statements
and Exhibits.
|
|
(d)
|
Exhibits
|
|
99.1
|
Press
Release dated October 15, 2009
|
|
|
99.2
|
Third
Quarter Financial Results Press Release dated October 21,
2009
|
|
|
99.3
|
Investor
Update
|
|
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.
|
|
October
21, 2009
|
By
/s/ Lori A.
Gobillot
|
|
|
Lori
A. Gobillot
|
||
|
Staff
Vice President and Assistant General Counsel
|
||
|
EXHIBIT
INDEX
|
|
99.1
|
Press
Release dated October 15, 2009
|
|
99.2
|
Third
Quarter Financial Results Press Release dated October 21,
2009
|
|
99.3
|
Investor
Update
|
|
News
Release
|
Exhibit
99.1
|
||
 |
|||
|
Contact:
|
Corporate
Communications
|
||
|
Houston:
|
713.324.5080
|
||
|
Email:
|
corpcomm@coair.com
|
||
|
News
archive:
|
continental.com/company/news/
|
Address:
|
P.O.
Box 4607, Houston, TX 77210-4607
|
CONTINENTAL
AIRLINES TO HOLD LIVE WEBCAST OF
THIRD QUARTER 2009 FINANCIAL
RESULTS
Summarizes
special charges for the third quarter 2009
HOUSTON,
Oct. 15, 2009 -- Continental Airlines (NYSE: CAL) will hold its third quarter
2009 financial results conference call on Wednesday, Oct. 21 at 9:30 a.m.
CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be
available at continental.com in the “Investor Relations” section under the
“About Continental” menu.
The
webcast will be available for replay within 24 hours of the conference call and
then archived on the Web site for approximately three months.
Third
Quarter Special Charges
Continental
expects to record special charges during the third quarter of 2009 totaling $20
million. A summary of these charges is as follows (in
millions):
|
Three
Months Ended
September 30,
2009
|
||||
|
Unused
facilities
|
$ | 9 | ||
|
Aircraft-related
charges
|
6 | |||
|
Severance
|
5 | |||
|
Total
special
charges
|
$ | 20 | ||
Continental recorded a $9 million
adjustment to increase a previously established reserve due to reductions in
expected sublease income for unused leased facilities consisting primarily of a
maintenance hangar in Denver. During the third quarter, the company
subleased five grounded EMB-135 aircraft for a term of at least two
years. The aircraft-related charges of $6 million represent
the difference between the sublease rental income and the contracted rental
payments on those aircraft during the initial term of the
agreement. Also, Continental recorded a charge of $5 million for
severance and other costs in connection with its previously announced reductions
in force, furloughs and leaves of absence.
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
134 international destinations. More than 700 additional points are served via
current alliance partners. Continental has hubs serving New
York, Houston, Cleveland and Guam, and together with its regional partners,
carries approximately 63 million passengers per year.
###
CAL09075
|
News
Release
|
Exhibit
99.2
|
||
| |
|||
|
Contact:
|
Corporate
Communications
|
||
|
Houston:
|
713.324.5080
|
||
|
Email:
|
corpcomm@coair.com
|
||
|
News
archive:
|
continental.com/company/news/
|
Address:
|
P.O.
Box 4607, Houston, TX 77210-4607
|
CONTINENTAL AIRLINES
ANNOUNCES THIRD QUARTER RESULTS
Records
$18 million loss; profit of $2 million excluding special charges
HOUSTON,
Oct. 21, 2009 -- Continental Airlines (NYSE: CAL) today reported a third quarter
2009 net loss of $18 million ($0.14 diluted loss per
share). Excluding $20 million of previously announced special
charges, Continental recorded net income of $2 million ($0.02 diluted earnings
per share).
Third
quarter results continued to be adversely affected by significant declines in
high yield traffic as business travelers are flying less and purchasing lower
yield economy tickets due to the global recession.
“We had
record operational performance thanks to the hard work of my co-workers,” said
Larry Kellner, Continental’s chairman and chief executive
officer. “Their focus on customer service and running an on-time
operation continued to set us apart from the competition. We are
well-positioned to take full advantage of improvement in the economic
environment.”
Operating
results for the third quarter improved $213 million year-over-year, primarily
driven by a $926 million decline in fuel expense, which was largely offset by an
$839 million decline in revenue compared to the same period last
year.
Third
Quarter Revenue and Capacity
Total
revenue for the quarter was $3.3 billion, a decrease of 20.2 percent compared to
the same period in 2008. Passenger revenue for the quarter fell 21.6
percent ($813 million) compared to the same period last year due to lower fares
and passenger traffic declines.
Consolidated
revenue passenger miles (RPMs) for the third quarter decreased 0.9 percent on a
capacity (available seat mile, ASM) decrease of 4.5 percent
year-over-year.
Consolidated
load factor in the third quarter was a record 85.1 percent, 3.1 points higher
than the third quarter of 2008. Consolidated yield for the quarter
decreased 20.9 percent year-over-year. As a result, third quarter
2009 consolidated revenue per available seat mile (RASM) for the third quarter
decreased 17.9 percent year-over-year.
Mainline RPMs in the third quarter of
2009 decreased 0.9 percent on a mainline capacity decrease of 4.1 percent
year-over-year.
Mainline
load factor in the third quarter was a record 85.8 percent, up 2.9 points
year-over-year. Continental’s mainline yield decreased 21.7 percent
in the third quarter over the same period in 2008. As a result, third
quarter 2009 mainline RASM was down 19.1 percent compared to the third quarter
of 2008.
Passenger
revenue for the third 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
Third Quarter 2009 vs.
Third Quarter 2008
|
|||||||||||
|
Passenger
Revenue
|
ASMs
|
RASM
|
Yield
|
|||||||||
|
Domestic
|
$1,177
|
(20.5)%
|
(5.8)%
|
(15.6)%
|
(19.5)%
|
|||||||
|
Trans-Atlantic
|
649
|
(29.2)%
|
(10.5)%
|
(21.0)%
|
(24.7)%
|
|||||||
|
Latin
America
|
361
|
(22.4)%
|
2.4
%
|
(24.3)%
|
(24.1)%
|
|||||||
|
Pacific
|
255
|
(9.5)%
|
16.9
%
|
(22.6)%
|
(21.0)%
|
|||||||
|
Total
Mainline
|
$2,442
|
(22.4)%
|
(4.1)%
|
(19.1)%
|
(21.7)%
|
|||||||
|
Regional
|
$ 505
|
(17.7)%
|
(7.7)%
|
(10.9)%
|
(16.8)%
|
|||||||
|
Consolidated
|
$2,947
|
(21.6)%
|
(4.5)%
|
(17.9)%
|
(20.9)%
|
|||||||
Cargo
revenue in the third quarter of 2009 decreased 28.7 percent ($37 million)
compared to the same period in 2008, due to reduced freight volume and lower
pricing.
Third
Quarter Operations and Notable Accomplishments
During
the quarter, employees earned $11 million in cash incentives for finishing first
in on-time performance, as reported by the U.S. Department of Transportation
(DOT), among the major network carriers in August and September, and for
finishing among the top three major network carriers in
July. Continental recorded a DOT on-time arrival rate of 82.8 percent
and a systemwide mainline segment completion factor of 99.7 percent during the
third quarter. The company operated 32 days during the quarter
without a single mainline flight cancellation.
“My
co-workers ran a superb operation under record passenger loads,” said
Continental’s president and chief operating officer Jeff
Smisek. “While our financial results were disappointing, our
operational results were stellar.”
During
the quarter, Continental set Oct. 27, 2009 as the date for joining Star
Alliance. The company will end its participation in SkyTeam after its
last scheduled flight on Oct. 24, 2009. Continental’s participation
in Star Alliance will provide significantly improved benefits to customers
including access to the world’s largest airline network and reciprocal frequent
flier and airport lounge benefits with Star Alliance’s 24 other member airlines
around the world.
To
enhance connectivity with Star Alliance member carriers, Continental will launch
nonstop service between Houston and Frankfurt, Germany on Nov. 1,
2009. Also in connection with joining Star Alliance, the company
announced service to several new destinations during the quarter, including
nonstop service between Houston and Edmonton, Canada, and daily nonstop service
from Houston and Cleveland to Washington Dulles International Airport, both
beginning Nov. 1, 2009.
In
addition, Continental announced new service from Guam and Honolulu to Nadi, Fiji
starting Dec. 18, 2009, and new flights between Orange County and Honolulu
starting March 7, 2010.
Continental
continued to install DIRECTV® on its aircraft during the quarter, with the new
service now offered on 30 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 of DIRECTV® on its fleet of Boeing
737 Next-Generation and Boeing 757-300 aircraft by the end of the first quarter
of 2011.
During
the third quarter, Continental contributed $40 million to its defined benefit
pension plans. Continental contributed an additional $36 million to its plans
in October, bringing its total year-to-date contribution to its defined benefit
pension plans to $176 million.
Third
Quarter Costs
Due
primarily to significantly lower jet fuel costs, Continental’s mainline cost per
available seat mile (CASM) decreased 21.1 percent in the third quarter compared
to the same period last year. The average mainline price of a gallon
of fuel dropped 48.4 percent year-over-year and mainline fuel consumption fell
by 5.1 percent. Holding fuel rate constant and excluding special
items, third quarter 2009 mainline CASM increased 1.0 percent compared to the
third quarter of 2008, on a mainline ASM decline of 4.1 percent.
“Companywide,
everyone has been doing an impressive job managing costs and looking for
additional ways to increase revenue,” said Zane Rowe, Continental’s executive
vice president and chief financial officer.
Fuel
expense for the quarter declined $926 million (51.2 percent) compared to the
same period last year as a result of a decrease in fuel prices and lower
volumes.
Fleet
Changes Continue to Improve Efficiency
Continental
continued to improve fuel efficiency during the quarter by retiring older
aircraft and adding modern, fuel-efficient aircraft. During the
quarter, Continental took delivery of six new Boeing 737-900ERs and removed from
service 13 Boeing 737-300s and six Boeing 737-500s.
Having
received certification from the Federal Aviation Administration for the world’s
first blended 757-300 winglet, Continental began installing winglets on its
entire 757-300 fleet. The move is estimated to save approximately $7
million in fuel costs on an annual run-rate basis for its fleet of 757-300
aircraft at current fuel prices. All of the company’s 737-500s, 700s,
800s, 900s and 757-200s have winglets. The company expects to
complete installation of winglets on its entire narrowbody fleet by the end of
the second quarter of 2010.
Cash
and Liquidity
Continental
ended the third quarter with $2.54 billion in unrestricted cash, cash
equivalents and short-term investments.
During
the quarter, Continental completed a public offering of 14.4 million shares of
its common stock, raising net proceeds of $158 million.
On July 1, 2009, Continental completed
the sale of $390 million of Pass Through Certificates to be secured by a total
of 17 owned aircraft. During the third quarter of 2009, the
company received from this sale proceeds of $249 million for general corporate
purposes and $113 million to finance the purchase of four new Boeing 737-900ER
aircraft delivered in the third quarter. One remaining new Boeing
737-900ER aircraft will be financed through this issuance when delivered in the
fourth quarter of 2009.
In
addition, Continental obtained financing for two new Boeing 737-900ER aircraft,
both of which were delivered and financed in July 2009. The company
has financing commitments 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 2,500 daily
departures throughout the Americas, Europe and Asia, serving 133 domestic and
134 international destinations. With more than 41,000 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
September 30,
|
%
Increase/
(Decrease)
|
Nine
Months
Ended
September 30,
|
%
Increase/
(Decrease)
|
|||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||
|
(Adjusted)
|
(Adjusted)
|
|||||||||||
|
Operating
Revenue:
|
||||||||||||
|
Passenger (excluding fees and
taxes
of $397, $402, $1,121 and
$1,186)
|
$2,947
|
$3,760
|
(21.6)%
|
$8,331
|
$10,633
|
(21.6)%
|
||||||
|
Cargo
|
92
|
129
|
(28.7)%
|
259
|
383
|
(32.4)%
|
||||||
|
Other
|
278
|
267
|
4.1
%
|
814
|
755
|
7.8 %
|
||||||
|
3,317
|
4,156
|
(20.2)%
|
9,404
|
11,771
|
(20.1)%
|
|||||||
|
Operating
Expenses:
|
||||||||||||
|
Aircraft fuel and related taxes
(A)
|
881
|
1,807
|
(51.2)%
|
2,507
|
4,722
|
(46.9)%
|
||||||
|
Wages, salaries and related
costs
|
794
|
765
|
3.8
%
|
2,358
|
2,197
|
7.3 %
|
||||||
|
Aircraft rentals
|
233
|
244
|
(4.5)%
|
705
|
736
|
(4.2)%
|
||||||
|
Landing fees and other
rentals
|
222
|
225
|
(1.3)%
|
647
|
643
|
0.6
%
|
||||||
|
Regional capacity purchase, net
(A)
|
211
|
247
|
(14.6)%
|
641
|
838
|
(23.5)%
|
||||||
|
Distribution costs
|
160
|
182
|
(12.1)%
|
467
|
558
|
(16.3)%
|
||||||
|
Maintenance, materials and
repairs
|
159
|
152
|
4.6 %
|
473
|
478
|
(1.0)%
|
||||||
|
Depreciation and
amortization
|
124
|
112
|
10.7 %
|
353
|
327
|
8.0 %
|
||||||
|
Passenger services
|
99
|
113
|
(12.4)%
|
282
|
315
|
(10.5)%
|
||||||
|
Special charges
(B)
|
20
|
91
|
NM
|
68
|
141
|
NM
|
||||||
|
Other
|
353
|
370
|
(4.6)%
|
1,050
|
1,105
|
(5.0)%
|
||||||
|
3,256
|
4,308
|
(24.4)%
|
9,551
|
12,060
|
(20.8)%
|
|||||||
|
Operating
Income (Loss)
|
61
|
(152)
|
NM
|
(147)
|
(289)
|
(49.1)%
|
||||||
|
Nonoperating
Income (Expense):
|
||||||||||||
|
Interest expense
(C)
|
(91)
|
(95)
|
(4.2)%
|
(274)
|
(279)
|
(1.8)%
|
||||||
|
Interest
capitalized
|
8
|
8
|
-
|
25
|
25
|
-
|
||||||
|
Interest income
|
2
|
16
|
(87.5)%
|
10
|
56
|
(82.1)%
|
||||||
|
Gain on sale of
investments
|
-
|
-
|
-
|
-
|
78
|
(100.0)%
|
||||||
|
Other-than-temporary
impairment losses on investments
|
-
|
-
|
-
|
-
|
(29)
|
(100.0)%
|
||||||
|
Other, net
|
2
|
(27)
|
NM
|
19
|
11
|
72.7 %
|
||||||
|
(79)
|
(98)
|
(19.4)%
|
(220)
|
(138)
|
59.4 %
|
|||||||
|
Loss
before Income Taxes
|
(18)
|
(250)
|
(92.8)%
|
(367)
|
(427)
|
(14.1)%
|
||||||
|
Income
Tax Benefit (C)
|
-
|
20
|
(100.0)%
|
-
|
110
|
(100.0)%
|
||||||
|
Net
Loss
|
$ (18)
|
$ (230)
|
(92.2)%
|
$ (367)
|
$ (317)
|
15.8 %
|
||||||
|
Basic
and Diluted Loss per Share
|
$ (0.14)
|
$(2.09)
|
(93.3)%
|
$(2.91)
|
$ (3.08)
|
(5.5)%
|
||||||
|
Shares
Used for Basic and Diluted
Computation
|
132
|
110
|
20.0 %
|
126
|
103
|
22.3
%
|
||||||
|
(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 the company’s 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 September
30,
|
Year
Ended
September
30,
|
||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||
|
Aircraft-related
charges, net of gains on sales of aircraft
|
$ 6
|
$ 12
|
$ 53
|
$ 45
|
|||||
|
Severance
|
5
|
33
|
5
|
33
|
|||||
|
Route
impairment and other
|
9
|
38
|
10
|
55
|
|||||
|
Pension
settlement charges
|
-
|
8
|
-
|
8
|
|||||
|
Total
special charges
|
$20
|
$ 91
|
$ 68
|
$ 141
|
|||||
|
2009. During
the third quarter, the company subleased five grounded EMB-135 aircraft
for a term of at least two years. The aircraft-related charges
of $6 million represent the difference between the sublease rental income
and the contracted rental payments on those aircraft during the initial
term of the agreement. The company also recorded a charge of $5
million for severance and other costs in connection with previously
announced reductions in force, furloughs and leaves of
absence. Route impairment and other in the third quarter of
2009 represents a $9 million adjustment to increase a previously
established reserve due to reductions in expected sublease income for
unused leased facilities consisting primarily of a maintenance hangar in
Denver. Aircraft-related charges in 2009 prior to the third
quarter include $31 million of non-cash impairments on owned Boeing
737-300 and 737-500 aircraft and related assets, and $16 million of other
charges ($12 million of which was non-cash) related to the grounding and
disposition of Boeing 737-300 aircraft and the write-off of certain
obsolete spare parts.
|
|||||||||
|
2008. Special
charges in the third quarter of 2008 related to capacity reductions
included $33 million for severance and continuing medical coverage for
employees accepting early retirement packages or company-offered leaves of
absence, $12 million of charges for future lease costs on permanently
grounded Boeing 737-300 aircraft and an $11 million charge related to
future rents for leased space at locations that were no longer expected to
be used or subleased. Special charges in the third quarter of
2008 also include an $18 million non-cash charge to write off an
intangible London Gatwick Airport route asset, a $9 million charge
pertaining to the reimbursement of certain costs incurred by ExpressJet
for temporarily grounded aircraft and airport slots being returned to the
company and a non-cash settlement charge of $8 million related to lump sum
distributions from the pilot-only defined benefit pension plan to retired
pilots. Aircraft-related charges in 2008 prior to the third
quarter 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 $18
million of gains on the sales of five aircraft. Route
impairment and other special charges in 2008 prior to the third quarter
also include $17 million of charges related to contract settlements with
regional carriers and unused facilities.
|
|||||||||
|
(C)
|
On
January 1, 2009, Continental adopted the Cash Conversion Subsections of
the Financial Accounting Standards Board’s Accounting Standards
Codification Subtopic 470-20, “Debt with Conversion and Other Options –
Cash Conversion,” which clarify 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 nine months ended September 30, 2008 have been adjusted to
reflect the company’s adoption of this standard.
|
||||||||
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
STATISTICS
|
Three
Months
Ended
September 30,
|
%
Increase/
(Decrease)
|
Nine
Months
Ended
September 30,
|
%
Increase/
(Decrease)
|
||||||
|
2009
|
2008
|
2009
|
2008
|
||||||
|
Mainline
Operations:
|
|||||||||
|
Passengers (thousands)
|
12,181
|
12,518
|
(2.7)%
|
34,619
|
37,714
|
(8.2)%
|
|||
|
Revenue
passenger miles (millions)
|
22,127
|
22,318
|
(0.9)%
|
60,589
|
64,258
|
(5.7)%
|
|||
|
Available
seat miles (millions)
|
25,803
|
26,914
|
(4.1)%
|
74,119
|
79,124
|
(6.3)%
|
|||
|
Cargo
ton miles (millions)
|
245
|
245
|
-
|
664
|
769
|
(13.7)%
|
|||
|
Passenger
load factor:
|
|||||||||
|
Mainline
|
85.8%
|
82.9%
|
2.9
pts.
|
81.7%
|
81.2%
|
0.5
pts.
|
|||
|
Domestic
|
87.9%
|
83.9%
|
4.0 pts.
|
84.9%
|
83.5%
|
1.4
pts.
|
|||
|
International
|
83.7%
|
82.0%
|
1.7 pts.
|
78.8%
|
78.9%
|
(0.1)
pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
9.46
|
11.69
|
(19.1)%
|
9.36
|
11.13
|
(15.9)%
|
|||
|
Total
revenue per available seat mile (cents)
|
10.84
|
13.07
|
(17.1)%
|
10.75
|
12.51
|
(14.1)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
11.04
|
14.10
|
(21.7)%
|
11.45
|
13.71
|
(16.5)%
|
|||
|
Average
fare per revenue passenger
|
$202.87
|
$254.28
|
(20.2)%
|
$202.62
|
$236.09
|
(14.2)%
|
|||
|
Cost
per available seat mile (CASM) (cents) (A)
|
10.41
|
13.19
|
(21.1)%
|
10.60
|
12.49
|
(15.1)%
|
|||
|
Special
charges per available seat mile (cents)
|
0.05
|
0.30
|
NM
|
0.08
|
0.15
|
NM
|
|||
|
CASM,
holding fuel rate constant and excluding
special
charges (cents)
|
13.02
|
12.89
|
1.0 %
|
12.55
|
12.34
|
1.7
%
|
|||
|
Average
price per gallon of fuel, including
fuel taxes
|
$1.99
|
$3.86
|
(48.4)%
|
$1.97
|
$3.38
|
(41.7)%
|
|||
|
Fuel
gallons consumed (millions)
|
369
|
389
|
(5.1)%
|
1,061
|
1,159
|
(8.5)%
|
|||
|
Aircraft
in fleet at end of period (B)
|
338
|
351
|
(3.7)%
|
338
|
351
|
(3.7)%
|
|||
|
Average
length of aircraft flight (miles)
|
1,593
|
1,533
|
3.9
%
|
1,549
|
1,496
|
3.5 %
|
|||
|
Average
daily utilization of each aircraft (hours)
|
11:06
|
11:21
|
(2.2)%
|
10:45
|
11:22
|
(5.5)%
|
|||
|
Regional
Operations:
|
|||||||||
|
Passengers
(thousands)
|
4,614
|
4,590
|
0.5 %
|
12,932
|
13,795
|
(6.3)%
|
|||
|
Revenue
passenger miles (millions)
|
2,490
|
2,518
|
(1.1)%
|
6,984
|
7,604
|
(8.2)%
|
|||
|
Available
seat miles (millions)
|
3,130
|
3,390
|
(7.7)%
|
9,145
|
9,938
|
(8.0)%
|
|||
|
Passenger
load factor
|
79.6%
|
74.3%
|
5.3 pts.
|
76.4%
|
76.5%
|
(0.1) pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
16.14
|
18.12
|
(10.9)%
|
15.22
|
18.35
|
(17.1)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
20.29
|
24.39
|
(16.8)%
|
19.93
|
23.98
|
(16.9)%
|
|||
|
Aircraft
in fleet at end of period (C)
|
266
|
279
|
(4.7)%
|
266
|
279
|
(4.7)%
|
|||
|
Consolidated
Operations (Mainline and Regional):
|
|||||||||
|
Passengers
(thousands)
|
16,795
|
17,108
|
(1.8)%
|
47,551
|
51,509
|
(7.7)%
|
|||
|
Revenue
passenger miles (millions)
|
24,617
|
24,836
|
(0.9)%
|
67,573
|
71,862
|
(6.0)%
|
|||
|
Available
seat miles (millions)
|
28,933
|
30,304
|
(4.5)%
|
83,264
|
89,062
|
(6.5)%
|
|||
|
Passenger
load factor
|
85.1%
|
82.0%
|
3.1
pts.
|
81.2%
|
80.7%
|
0.5 pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
10.19
|
12.41
|
(17.9)%
|
10.01
|
11.94
|
(16.2)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
11.97
|
15.14
|
(20.9)%
|
12.33
|
14.80
|
(16.7)%
|
|||
|
Average
price per gallon of fuel, including
fuel
taxes
|
$1.99
|
$3.85
|
(48.3)%
|
$1.97
|
$3.38
|
(41.7)%
|
|||
|
Fuel
gallons consumed (millions)
|
443
|
470
|
(5.7)%
|
1,276
|
1,398
|
(8.7)%
|
|||
|
(A)
|
Includes
impact of special charges.
|
|
(B)
|
Excludes
12 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 September 30, 2009.
|
|
(C)
|
Consists
of aircraft operated under capacity purchase agreements with Continental’s
regional carriers ExpressJet, Colgan, Chautauqua and
CommutAir. Excludes 25 EMB-135 aircraft temporarily grounded
and 30 ERJ-145 aircraft and five EMB-135 aircraft subleased to other
operators but are not operated on the company’s behalf at September 30,
2009.
|
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
NON-GAAP
FINANCIAL MEASURES
|
Net
Loss (in millions)
|
Three
Months
Ended September 30,
2009
|
|
|
Net
loss
|
$(18)
|
|
|
Adjust
for special charges (net of tax of $0)
|
20
|
|
|
Net
income, excluding special items (A)
|
$ 2
|
|
|
Loss
per Share
|
Three
Months
Ended
September 30, 2009
|
|
|
Diluted
loss per share
|
$(0.14)
|
|
|
Adjust
for special charges
|
0.16
|
|
|
Diluted
earnings per share, excluding special items (A)
|
$ 0.02
|
|
|
CASM
Mainline Operations (cents)
|
Three
Months
Ended
September 30,
|
%
Increase/
(Decrease)
|
Nine
Months
Ended
September 30,
|
%
Increase/
(Decrease)
|
||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||
|
Cost
per available seat mile (CASM)
|
$10.41
|
$13.19
|
(21.1)%
|
$10.60
|
$12.49
|
(15.1)%
|
||||
|
Less: Special
charges per available
seat
mile
|
(0.05)
|
(0.30)
|
NM
|
(0.08)
|
(0.15)
|
NM
|
||||
|
CASM,
excluding special charges
|
10.36
|
12.89
|
(19.6)%
|
10.52
|
12.34
|
(14.7)%
|
||||
|
Less: Current
year fuel cost per
available
seat mile (B)
|
(2.85)
|
-
|
NM
|
(2.82)
|
-
|
NM
|
||||
|
Add: Current
year fuel cost at prior
year fuel price per available
seat
mile (B)
|
5.51
|
-
|
NM
|
4.85
|
-
|
NM
|
||||
|
CASM,
holding fuel rate constant and
excluding
special charges (A)
|
$13.02
|
$12.89
|
1.0
%
|
$12.55
|
$12.34
|
1.7 %
|
||||
|
(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
99.3
DeAnne
Gabel
Director
- Investor Relations
|
|
Investor
Update
|
Issue
Date: October 21, 2009
|
This
investor update provides information on Continental's guidance for the fourth
quarter and full year, as well as certain historical information pertaining to
the third quarter of 2009.
Advanced Booked Seat Factor
(Percentage of Available Seats that are Sold)
Compared
to the same period last year, for the next six weeks, mainline domestic advanced
booked seat factor is running flat to 1 point higher, mainline Latin advanced
booked seat factor is running flat to 1 point higher, Transatlantic advanced
booked seat factor is running 4 - 5 points higher, Pacific advanced booked seat
factor is currently about flat, and regional advanced booked seat factor is
running flat to 1 point higher.
For the
fourth quarter of 2009, the Company expects both its consolidated and mainline
load factors to be up approximately 2.9 points year-over-year (“yoy”) compared
to the same period in 2008.
Unrestricted Cash, Cash
Equivalents and Short Term Investments Balance
Continental
anticipates ending the fourth 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 fourth quarter of 2009 is
expected to be between $345 and $355 million.
Third Quarter 2009 Domestic
Performance on a Hub by Hub Basis
Continental’s
third quarter 2009 consolidated domestic capacity at its New York Liberty hub
was down 6.8%, with traffic down 2.9%, resulting in a load factor increase of
3.5 pts compared to the third quarter of 2008. Third quarter 2009
Transcon capacity, which is a subset of New York Liberty capacity, was up 0.1%
while traffic was up 2.6%, resulting in a load factor increase of 2.3 pts
compared to the same period in 2008. Third quarter 2009 consolidated
domestic capacity at its Houston hub was down 3.1%, with traffic up 2.3%,
resulting in a load factor increase of 4.6 pts compared to the third quarter of
2008. Consolidated domestic capacity at its Cleveland hub for the
third quarter 2009 was down 21.3%, with traffic down 16.1%, resulting in a third
quarter load factor increase of 5.3 pts, compared to the same period in
2008.
|
2009
Estimate
|
|||
|
Available Seat Miles
(ASMs)
|
Year-over-Year %
Change
|
||
|
4th
Qtr.
|
|||
|
Mainline
|
|||
|
Domestic
|
0.5%
|
||
|
Latin
America
|
4.7%
|
||
|
Transatlantic
|
(11.4%)
|
||
|
Pacific
|
16.1%
|
||
|
Total
Mainline
|
(0.7%)
|
||
|
Regional
|
(1.6%)
|
||
|
Consolidated
|
|||
|
Domestic
|
0.1%
|
||
|
International
|
(1.9%)
|
||
|
Total
Consolidated
|
(0.8%)
|
||
For the
full year 2010, Continental expects its consolidated capacity to be up 1.5% to
2.5% yoy. The Company expects its mainline capacity to be up 2% to 3%
yoy, with its mainline domestic capacity about flat yoy and its mainline
international capacity up 5% to 6% yoy. The international increase is
primarily due to the run-rate of international routes added in 2009 and the
restoration of the Company's full schedule to Mexico following its capacity
pulldown earlier this year related to H1N1.
|
Load
Factor
|
4th Qtr. 2009
(E)
|
|||
|
Domestic
|
84%
|
-
|
85%
|
|
|
Latin
America
|
81%
|
-
|
82%
|
|
|
Transatlantic
|
80%
|
-
|
81%
|
|
|
Pacific
|
73%
|
-
|
74%
|
|
|
Total
Mainline
|
82%
|
-
|
83%
|
|
|
Regional
|
77%
|
-
|
78%
|
|
|
Consolidated
|
81%
|
-
|
82%
|
|
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.
|
CASM Mainline
Operating Statistics
|
2009 Estimate
(cents)
|
|||||
|
4th
Qtr.
|
||||||
|
CASM
|
10.99
|
-
|
11.04
|
|||
|
Special
Items per ASM
|
0.00
|
|||||
|
CASM
Less Special Items (a)
|
10.99
|
-
|
11.04
|
|||
|
Aircraft
Fuel & Related Taxes per ASM
|
(2.94)
|
|||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.05
|
-
|
8.10
|
|||
|
CASM Consolidated
Operating Statistics
|
||||||
|
CASM
|
11.89
|
-
|
11.94
|
|||
|
Special
Items per ASM
|
0.00
|
|||||
|
CASM
Less Special Items (a)
|
11.89
|
-
|
11.94
|
|||
|
Aircraft
Fuel & Related Taxes per ASM
|
(3.16)
|
|||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.73
|
-
|
8.78
|
|||
(a)
Cost per available seat mile less special items is computed by dividing
operating expenses excluding special items by available seat miles. 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 less special items, aircraft 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
$16.44 on September 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
September 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 fourth 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)
|
||||
|
4th
Qtr.
|
||||
|
Mainline
|
335
million
|
|||
|
Regional
|
71
million
|
|||
|
Consolidated
Fuel Price per Gallon (including fuel
taxes and
|
$ | 2.04 | ||
|
impact
of hedges)
|
||||
Fuel Hedges - As of October
16, 2009
As of
October 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)
|
|||||||||||||
|
Fourth Quarter
2009
|
||||||||||||||||
|
WTI
crude oil swaps
|
5 | % | $ | 1.36 | 5 | % | $ | 1.36 | ||||||||
|
Gulf
Coast jet fuel swaps
|
15 | % | $ | 1.83 | 15 | % | $ | 1.83 | ||||||||
|
Total
|
20 | % | 20 | % | ||||||||||||
|
First Quarter
2010
|
||||||||||||||||
|
Gulf
Coast jet fuel swaps
|
5 | % | $ | 1.94 | 5 | % | $ | 1.94 | ||||||||
|
WTI
crude oil swaps
|
1 | % | $ | 1.62 | 1 | % | $ | 1.62 | ||||||||
|
WTI
crude call options
|
1 | % | $ | 1.88 | n/a | |||||||||||
|
Total
|
7 | % | 6 | % | ||||||||||||
|
Selected Expense
Amounts (Consolidated Expense)
|
2009 Estimate Amounts
(millions)
|
|||
|
4th
Qtr
|
||||
|
Aircraft
Rent
|
$ | 229 | ||
|
Depreciation
& Amortization
|
$ | 124 | ||
|
Net
Interest Expense*
|
$ | 82 | ||
|
*Net
Interest Expense includes interest expense, capitalized interest and
interest income.
|
||||
Pension Expense and
Contributions
During
the first nine months of 2009, the Company contributed
$140 million to its tax-qualified defined benefit pension plans. On
October 9, 2009, Continental contributed an additional $36 million to the plans,
and has satisfied its minimum funding requirements during calendar year
2009.
Continental
estimates that its non-cash pension expense will be approximately $250 million
for 2009.
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
$604 million, with $98 million, $71 million, and $373 million paid in the first,
second, and third quarters, respectively, and approximately $62 million to be
paid in the fourth quarter of 2009.
|
Cash Capital
Expenditures ($Millions)
|
2009
Estimate
|
|||
|
Fleet
Related
|
$ | 260 | * | |
|
Non-Fleet
|
120
|
|||
|
Rotable
Parts & Capitalized Interest
|
53
|
|||
|
Total
|
$433
|
|||
|
Net
Purchase Deposits Paid/(Refunded)
|
(33)_
|
|||
|
Total
Cash Capital Expenditures
|
$400
|
|||
*Includes
lease termination payments on 737-500 aircraft Continental temporarily took
ownership of just prior to completing the sale of these aircraft to a third
party.
EPS Estimated Share
Count
Share
count estimates for calculating basic and diluted earnings per share at
different income levels are as follows:
Fourth
Quarter 2009 (Millions)
|
Quarterly
|
Number
of Shares
|
Interest addback (net
of applicable profit
|
||||||||||
|
Earnings
Level
|
Basic
|
Diluted
|
sharing and income
taxes impact)
|
|||||||||
|
Over
$132
|
138 | 153 | $ | 9 | ||||||||
|
Between
$88 - $132
|
138 | 148 | $ | 5 | ||||||||
|
Under
$88
|
138 | 140 | -- | |||||||||
|
Net
Loss
|
138 | 138 | -- | |||||||||
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
$328
|
129 | 143 | $ | 24 | ||||||||
|
Between
$212 - $328
|
129 | 139 | $ | 14 | ||||||||
|
Under
$212
|
129 | 130 | -- | |||||||||
|
Net
Loss
|
129 | 129 | -- | |||||||||
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
October
21, 2009
|
Total
Qtr
End
3Q09
|
Net
Inductions and Exits
|
Total
Year
End
2009E
|
Net
Inductions
and
Exits
|
Total
Year
End
2010E
|
||||
|
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
28
12
117
36
34
7
|
-
-
-
1
-
2
-
-
-
-
(3)
|
20
16
10
18
41
30
12
117
36
34
4
|
-
-
-
3
-
-
-
4
-
(3)
(4)
|
2
-
-
-
-
-
-
4
-
-
-
|
-
-
-
-
-
-
-
1
-
-
-
|
-
-
-
-
-
2
-
-
-
-
-
|
22
16
10
21
41
32
12
126
36
31
-
|
|
Total
|
338
|
-
|
338
|
-
|
6
|
1
|
2
|
347
|
|
Regional
|
||||||||
|
ERJ-145
ERJ-135
CRJ200LR
Q400
Q200
|
229
-
7
14
16
|
-
-
-
-
-
|
229
-
7
14
16
|
-
-
(7)
-
-
|
-
-
-
-
-
|
-
-
-
-
-
|
-
-
-
6
-
|
229
-
-
20
16
|
|
Total
|
266
|
-
|
266
|
(7)
|
-
|
-
|
6
|
265
|
|
Total
Count
|
604
|
-
|
604
|
(7)
|
6
|
1
|
8
|
612
|
* Final
quantity and timing of 737-300 / 737-500 exits subject to
change