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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): January 18,
2010
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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 January 18, 2010, Continental
Airlines, Inc. (the “Company”) issued a press release detailing certain fourth
quarter and full year 2009 special items. This press release is
furnished herewith as Exhibit 99.1 and incorporated in this Item 2.02 by
reference.
On January 21, 2010, the Company issued
a press release announcing its financial results for the fourth quarter and full
year 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. This 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.
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Item
2.05.
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Costs Associated with
Exit or Disposal Activities.
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On June
5, 2008, the Company announced capacity reductions and related initiatives to
respond to unprecedented high fuel costs and other challenges facing the airline
industry. In connection with the capacity reductions, the Company announced that
it expected to record accounting charges, including severance and other employee
termination costs, contract termination costs and other associated costs in the
second and third quarters of 2008 and beyond.
For the
quarter ended December 31, 2009, the Company expects to record $77 million of
special charges, which includes $23 million of non-cash charges on owned Boeing
737-300 and 737-500 aircraft and related assets. These charges relate
to the Company’s decision in June 2008 to retire all of its Boeing 737-300
aircraft and a significant portion of its Boeing 737-500 aircraft in connection
with the capacity reductions referenced above. The Company recorded
previous impairment charges in the second quarters of 2008 and 2009 for each of
these fleet types. The additional write down in the fourth quarter of
2009 reflects further reduction in the fair value of these fleet types primarily
as a result of additional 737 aircraft being grounded by other airlines in the
current economic environment.
The
Company may incur additional accounting charges in future quarters associated
with the 737-300 and 737-500 fleet types discussed above, as well as the thirty
EMB 135 aircraft that the Company temporarily grounded in 2008, five of which
the Company subleased to a third party in the third quarter of
2009. The Company is not able at this time to estimate the amount and
timing of these future charges.
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Item
7.01.
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Regulation FD
Disclosure.
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On January 21, 2010, we will provide an
update for investors presenting information relating to certain operational
results for the fourth quarter 2009 and our outlook for the first quarter and
full year 2010, as well as other information. This 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.
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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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Press
Release dated January 18, 2010
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99.2
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Fourth
Quarter and Full Year 2009 Financial Results Press Release dated January
21, 2010
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99.3
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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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January
21, 2010
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By
/s/ Chris
Kenny
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Chris
Kenny
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Vice
President and Controller
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EXHIBIT
INDEX
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99.1
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Press
Release dated January 18, 2010
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99.2
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Fourth
Quarter and Full Year 2009 Financial Results Press Release dated January
21, 2010
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99.3
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Investor
Update
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News
Release
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Exhibit
99.1
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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 SPECIAL ITEMS FOR
FOURTH QUARTER AND FULL YEAR
2009
HOUSTON,
Jan. 18, 2010 -- Continental Airlines (NYSE: CAL) expects to record $77 million
of special charges during the fourth quarter of 2009 ($145 million for the full
year 2009). Continental also expects to record a non-cash income tax
benefit during the fourth quarter of 2009 and for the year ended Dec. 31,
2009. Special items for the three months ending Dec. 31, 2009 and for
full year 2009 are as follows in millions:
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Three
Months Ended
Dec. 31, 2009
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Year
Ended
Dec. 31, 2009
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Aircraft-related
charges
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$
36
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$
89
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Pension
plan settlement charges
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29
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29
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Severance
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-
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5
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Route
impairment and other
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12
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22
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Total special
charges
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$77
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$145
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Income
tax benefit
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*
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*
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* –
amount to be announced as part of our fourth quarter results.
Aircraft-related
charges. The aircraft-related charges in the fourth quarter of
2009 consist of a $23 million non-cash charge to write down to fair value
certain 737-300 and 737-500 aircraft and spare parts and a $13 million loss on
the sublease of eight EMB-145 aircraft. In June 2008, Continental
announced its decision to retire all of its Boeing 737-300 aircraft and a
significant portion of its Boeing 737-500 aircraft by the end of
2009. As of Dec. 31, 2009, the company had removed a majority of its
737-300 fleet from service. The 737-300 and 737-500 aircraft fleets
and spare parts, a portion of which was being sold on consignment, experienced
further declines in fair values during the fourth quarter of 2009 primarily as a
result of additional 737s being grounded by other airlines. The $13
million loss on the sublease of eight EMB-145 aircraft was based on the
difference between the sublease rental income and the contracted rental payments
on those aircraft during the two and one-half year average initial term of the
related sublease agreement.
For the full
year 2009, the $89 million in aircraft-related special charges consists of $31
million of non-cash impairments of owned 737-300 and 737-500 aircraft and
related assets, $39 million of other charges related to the grounding and sale
of 737-300 and 737-500 aircraft and the write-off of certain obsolete spare
parts, and $19 million of losses related to subleasing regional
jets.
Pension plan settlement
charges. The pension plan settlement charges relate to lump-sum
distributions from Continental’s pilot-only frozen defined benefit plan.
Accounting rules require the use of settlement accounting if, for a given year,
lump sum distributions exceed the total of the service cost and interest cost
components of the current year’s pension expense for the plan. Under settlement
accounting, unrecognized plan gains or losses must be recognized in the current
period in proportion to the percentage reduction of the plan’s projected benefit
obligation from these lump sum distributions. Continental will recognize $29
million of unrecognized plan losses for the fourth quarter and full year
2009.
Severance. Continental
incurred $5 million in costs for severance and continuing medical coverage
benefits for employees accepting company-offered leaves of absence during
2009.
Route impairment and
other. During the fourth quarter of 2009, the company recorded
a $12 million non-cash charge to write off several intangible route
assets. In September 2006, the Financial Accounting Standards Board
issued guidance that defines fair value and establishes a framework for
measuring fair value. This guidance was effective Jan. 1, 2009 for
all non-financial assets. Application of the new rules affected
Continental’s annual impairment testing of international routes, which the
company performs as of Oct. 1 of each year. International routes,
which are indefinite-lived intangible assets, represent the right to fly between
cities in the United States and foreign countries. In prior years, Continental
determined the fair value of each route by modeling the expected future
discounted cash flows associated with such routes. With the adoption
of new accounting rules, fair value is now determined based on the price that
would be received by a seller of the route in an orderly transaction between
market participants based on the highest and best use of the
asset. The special charge of $12 million in the fourth quarter of
2009 represents the write-off of the net book value associated with certain
routes to countries that are subject to “open skies” agreements and where there
were no significant barriers to the ability of new entrants to serve the
international destination, such as airport slot restrictions or gate
availability.
Prior to
the fourth quarter of 2009, Continental recorded an additional $10 million of
other special charges that related primarily to an adjustment to the company’s
reserve for unused facilities due to reductions in expected sublease income for
a maintenance hangar in Denver.
Income taxes. The
company will record a non-cash income tax benefit from continuing operations
during the fourth quarter of 2009. Under current accounting rules,
the company is required to consider all items (including items recorded in other
comprehensive income) in determining the amount of tax benefit that results from
a loss from continuing operations and that should be allocated to continuing
operations. As a result, the company will record a tax benefit on the
loss from continuing operations for the year, which will be exactly offset by
income tax expense on other comprehensive income. However, while the
income tax benefit from continuing operations
is reported on the income statement, the income tax expense on other
comprehensive income is recorded directly to other comprehensive income, which
is a component of stockholders’ equity. Because the income tax
expense on other comprehensive income is equal to the income tax benefit from
continuing operations, the company’s year-end net deferred tax position is not
impacted by this tax allocation.
Corporate
Background
Continental
Airlines is the world’s fifth largest airline. Continental, together with
Continental Express and Continental Connection, has more than 2,400 daily
departures throughout the Americas, Europe and Asia, serving 130 domestic and
132 international destinations. Continental is a member of Star Alliance, which
overall offers 19,700 daily flights to 1,077 airports in 175 countries through
its 26 member airlines. With more than 41,000 employees, Continental has hubs
serving New York, Houston, Cleveland and Guam, and together with Continental
Express, carries approximately 63 million passengers per year. Continental
consistently earns awards and critical acclaim for both its operation and its
corporate culture. For more company information, visit
continental.com.
###
CAL10007
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News
Release
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Exhibit
99.2
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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
2009 FULL-YEAR AND
FOURTH-QUARTER RESULTS
Weak
economic environment continued to impact results
HOUSTON,
Jan. 21, 2010 – Continental Airlines (NYSE: CAL) today announced a 2009
full-year net loss of $282 million ($2.18 diluted loss per
share). Excluding $145 million of previously announced special
charges, and a $158 million non-cash income tax benefit, Continental recorded a
net loss of $295 million ($2.28 diluted loss per share) for the
year.
For the
fourth quarter of 2009, Continental reported a fourth quarter net income of $85
million ($0.60 diluted earnings per share). Excluding $77 million of
previously announced special charges, and a $158 million non-cash income tax
benefit, Continental recorded a fourth quarter net income of $4 million ($0.03
diluted earnings per share).
Full-year
2009 and fourth-quarter results continued to be adversely affected by declines
in high yield traffic due to the global recession.
“My
co-workers have done a superb job working through enormous challenges in 2009,
while providing the best customer service and product in the business,” said
Jeff Smisek, Continental’s chairman, president and chief executive
officer. “While we are seeing some business traffic increasing, we likely
have a long and slow road to recovery. We remain focused on achieving and
maintaining profitability.”
Fourth
Quarter Revenue and Capacity
Total
revenue for the fourth quarter of 2009 was $3.2 billion, a decrease of 8.3
percent
compared
to the same period in 2008. Passenger revenue for the fourth quarter
fell 9.5 percent ($296 million) compared to the same period in 2008 due to lower
yields.
Consolidated
revenue passenger miles (RPMs) for the fourth quarter of 2009 increased 3.5
percent on a capacity (available seat mile, ASM) decrease of 0.6 percent
year-over-year.
Consolidated
load factor was a fourth quarter record 82.0 percent, 3.3 points higher than the
fourth quarter of 2008. Consolidated yield for the quarter decreased
12.6 percent year-over-year. As a result, fourth quarter 2009
consolidated passenger revenue per available seat mile (RASM) decreased 9.0
percent year-over-year.
Mainline RPMs in the fourth quarter of
2009 increased 3.7 percent on a mainline capacity decrease of 0.5 percent
year-over-year.
Mainline
load factor of 82.6 percent was also a fourth quarter record, up 3.3 points
year-over-year. Continental’s mainline yield decreased 13.6 percent
in the fourth quarter over the same period in 2008. As a result,
fourth quarter 2009 mainline RASM was down 9.9 percent compared to the fourth
quarter of 2008.
Passenger
revenue for the fourth 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:
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Passenger
Revenue
(in millions)
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Percentage
Increase (Decrease) in
Fourth Quarter 2009 vs. Fourth Quarter
2008
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|||||||
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Passenger
Revenue
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ASMs
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RASM
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Yield
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$1,166
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(9.8)%
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0.4
%
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(10.2)%
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(12.3)%
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Trans-Atlantic
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548
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(16.3)%
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(11.0)%
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(6.0)%
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(14.8)%
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Latin
America
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357
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(8.1)%
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5.5
%
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(12.9)%
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(14.6)%
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Pacific
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234
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(1.2)%
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16.1
%
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(14.9)%
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(16.5)%
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Total
Mainline
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$2,305
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(10.4)%
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(0.5)%
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(9.9)%
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(13.6)%
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Regional
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$ 502
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(5.4)%
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(1.4)%
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(4.0)%
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(7.5)%
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Consolidated
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$2,807
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(9.5)%
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(0.6)%
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(9.0)%
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(12.6)%
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Cargo
revenue in the fourth quarter of 2009 decreased 6.1 percent ($7 million)
compared to the same period in 2008, principally due to lower year-over-year
fuel surcharges. Other revenue during the fourth quarter of
2009 was $14 million higher than the prior year due primarily to higher bag fee
revenue.
Fourth
Quarter Operations
Continental’s
employees earned a total of $3 million in cash incentives for on-time
performance during the quarter. The company recorded a U.S.
Department of Transportation (DOT) on-time arrival rate of 77.2 percent and a
systemwide mainline segment completion factor of 99.4 percent during the
quarter.
Global
Reach with Star Alliance
Continental
Airlines joined Star Alliance in the fourth quarter of 2009, providing
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 25 other member airlines around the
world.
“Thanks
to the focus and hard work of my co-workers, we successfully transitioned to
Star Alliance,” said Jim Compton, Continental’s executive vice president and
chief marketing officer. “Our hubs are a perfect fit for Star
Alliance and our customers now enjoy a network second to none.”
To
enhance connectivity with Star Alliance member carriers, Continental launched
nonstop service between Houston and Frankfurt, Germany on Nov. 1, 2009 and
announced that it will launch daily nonstop service between its New York hub at
Newark Liberty International Airport and Munich beginning March 27,
2010. Also in connection with joining Star Alliance, the company
began 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. In addition,
Continental began new service from Guam and Honolulu to Nadi, Fiji on Dec. 18,
2009.
To
facilitate easy connections between Continental’s flights and those of other
Star Alliance airlines, Continental successfully relocated its operations at
several key airports, including Chicago, Frankfurt, Narita, Honolulu and
Beijing.
Continental,
United and All Nippon Airways (ANA) filed an application with the DOT for
antitrust immunity to enable the three carriers to create a more efficient and
comprehensive trans-Pacific network, generating substantial service and pricing
benefits for consumers. The trans-Pacific joint venture – the first
of its kind between the U.S. and Asia – will also enable Continental, United and
ANA to compete more effectively with other global alliances, each of which has a
significant presence in Tokyo.
Notable
Product Enhancements
Continental’s
first aircraft with new flat-bed BusinessFirst seats took to the skies in the
fourth quarter of 2009, with installation complete on three aircraft; two Boeing
777s and a 757-200. Flat-bed seats are being installed on
Continental’s entire fleet of Boeing 777, 757-200, 767-200 and substantially all
of its 767-400 aircraft, and on its Boeing 787 fleet as the aircraft are
delivered to Continental.
Continental
continued to install DIRECTV® on its aircraft during the
quarter, with the new service now offered on 53
aircraft. DIRECTV®
offers customers the choice of more than 100 channels of live television and
previously recorded programming. The company has completed installation of
DIRECTV® on
its Boeing 737-900ER fleet and expects to complete installation of DIRECTV® on
its entire fleet of Boeing 737 Next-Generation aircraft by the end of
2010.
Continental
announced that this summer, it will begin installing Gogo Inflight Internet
service on its fleet of 21 Boeing 757-300 aircraft.
Cashless
cabin was introduced to Continental’s customers in the fourth quarter of 2009.
Flight crews now accept credit and debit cards exclusively for on-board
purchases (except duty-free) on Continental flights.
Continental
was recognized many times for its product and services during the fourth quarter
of 2009. The company was named the Best Large Domestic Airline for
Premium Class and Best Value for the Money (International) among all airlines in
Zagat’s 2009 Airline Survey. Continental won top honors in two
categories in the 2009 OAG Airline Industry Awards, “Best Executive/Business
Class” and “Best Airline Based in North America” and Continental outranked its
U.S. network competitors to take top honors in Business Travel News’ Annual
Airline Survey for the second consecutive year.
Fourth
Quarter Costs
Due
primarily to significantly lower jet fuel costs, Continental’s mainline cost per
available seat mile (CASM) decreased 8.6 percent in the fourth quarter compared
to the same period last year. The average mainline price of a gallon
of fuel dropped 31.7 percent year-over-year and mainline fuel consumption fell
by 1.5 percent. Holding fuel rate constant and excluding special
charges, fourth quarter 2009 mainline CASM increased 1.4 percent compared to the
fourth quarter of 2008, on a mainline ASM decline of 0.5 percent.
“Our
entire team has done an excellent job holding the line on costs and working more
efficiently,” said Zane Rowe, Continental’s executive vice president and chief
financial officer. “As you see with our new aircraft, flat-bed seats,
DIRECTV® and
audio video on demand, we will continue to invest in our product where it makes
sense.”
Fuel
expense for the quarter declined $388 million (32.4 percent) compared to the
same period in 2008 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 to its
fleet. During the quarter, the company took delivery of one new
Boeing 737-900ER and three leased Boeing 757-300 aircraft. In
addition, Continental removed from service four older Boeing 737-300 aircraft.
Continental’s young, fuel-efficient fleet continues to provide a natural hedge
against the cost of jet fuel.
Continental
continued to install winglets on its fleet of Boeing 757-300
aircraft. 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.
Continental
is scheduled to take delivery of 12 Boeing 737 aircraft and two Boeing 777
aircraft in 2010, and expects to take delivery of one leased Boeing 757-300
aircraft in the first quarter of 2010. By the end of the first
quarter of 2010, the company expects to remove from service its last three
Boeing 737-300 aircraft.
Cash
and Liquidity
Continental ended the fourth quarter
with $2.86 billion in unrestricted cash and short-term investments.
During
the fourth quarter, Continental completed the sale of $644 million of enhanced
equipment trust certificates to be secured by a total of 19 owned
aircraft. A portion of the proceeds from the sale of the
certificates will be used to finance the company’s purchase of nine new
Boeing
737-800
and two Boeing 777 aircraft and the remainder of the proceeds will be used for
general corporate purposes. The funds are expected to be received in
the first half of 2010.
Also in
the fourth quarter, the company issued $230 million of 4.5% convertible
debt. The notes mature on Jan. 15, 2015, and are convertible into
Continental’s common stock at an initial conversion price of approximately
$19.87 per share.
2009
in Review
During
2009, Continental took a number of steps to strengthen its cash balance and
competitive position, and continued to distinguish itself from competitors.
Continental:
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·
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Raised
approximately $1.7 billion through the issuance of enhanced equipment
trust certificates, other new secured borrowings, convertible debt and
common stock.
|
|
·
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Inaugurated
daily nonstop service between New York and Shanghai, linking the world’s
leading financial center and top business and tourism destination with
China’s center for finance and trade. In addition, Continental began daily
nonstop service between its Houston hub and Frankfurt and between Houston
and Rio de Janeiro.
|
|
·
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Took
delivery of 13 Boeing 737-900ER and three leased Boeing 757-300
aircraft. In addition, the company removed from service 20
Boeing 737-300 aircraft and eight Boeing 737-500
aircraft.
|
|
·
|
Delivered
solid operational performance, operating 101 days without a single
mainline flight cancellation. The company recorded a DOT
mainline segment completion factor of 99.5 percent and a systemwide
on-time arrival rate of 78.8 percent for the
year.
|
|
·
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Rated
as the top airline on FORTUNE magazine’s World’s Most Admired Airline on
its 2009 list of World’s Most Admired Companies for the sixth consecutive
year.
|
|
·
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Became
the first commercial carrier to successfully demonstrate the use of
sustainable biofuel to power an aircraft in North
America.
|
|
·
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Paid
employees $25 million ($595 per employee) in cash incentive payments for
monthly on-time performance.
|
|
·
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Contributed
$176 million to its defined benefit pension plans. In addition,
the company contributed $34 million to its defined benefit pension plans
in January 2010. Since the beginning of 2002, Continental has
contributed approximately $1.8 billion to its defined benefit pension
plans.
|
|
·
|
Provided
scholarships to 210 employees and dependents through the Continental
Scholarship Fund, which is the largest number of awards ever made by the
fund. Since 2002, the scholarship fund has assisted 1,235
employees or their dependents. Scholarship funds are donated by
employees and raised by the Continental Management
Association.
|
|
·
|
Donated
nearly $1 million through Continental’s WE CARE Employee Fund, which
assisted 437 employees in times of
need.
|
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
135 international destinations. Continental is a member of Star
Alliance, which overall offers 19,700 daily flights to 1,077 airports in 175
countries through its 26 member airlines. 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.
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 (A)
(In
millions, except per share data) (Unaudited)
|
Three
Months
Ended
December 31,
|
%
Increase
(Decrease)
|
Year
Ended
December
31,
|
%
Increase
(Decrease)
|
|||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||
|
Operating
Revenue:
|
||||||||||||
|
Passenger (excluding fees and
taxes of
$355, $345, $1,476 and
$1,531)
|
$2,807
|
$3,103
|
(9.5)%
|
$11,138
|
$13,737
|
(18.9)%
|
||||||
|
Cargo
|
107
|
114
|
(6.1)%
|
366
|
497
|
(26.4)%
|
||||||
|
Other
|
268
|
254
|
5.5 %
|
1,082
|
1,007
|
7.4 %
|
||||||
|
3,182
|
3,471
|
(8.3)%
|
12,586
|
15,241
|
(17.4)%
|
|||||||
|
Operating
Expenses:
|
||||||||||||
|
Aircraft fuel and related taxes
(B)
|
809
|
1,197
|
(32.4)%
|
3,317
|
5,919
|
(44.0)%
|
||||||
|
Wages, salaries and related
costs
|
779
|
760
|
2.5
%
|
3,137
|
2,957
|
6.1
%
|
||||||
|
Aircraft rentals
|
229
|
240
|
(4.6)%
|
934
|
976
|
(4.3)%
|
||||||
|
Regional capacity purchase, net
(B)
|
206
|
221
|
(6.8)%
|
848
|
1,059
|
(19.9)%
|
||||||
|
Landing fees and other
rentals
|
194
|
210
|
(7.6)%
|
841
|
853
|
(1.4)%
|
||||||
|
Distribution costs
|
157
|
159
|
(1.3)%
|
624
|
717
|
(13.0)%
|
||||||
|
Maintenance, materials and
repairs
|
144
|
135
|
6.7 %
|
617
|
612
|
0.8 %
|
||||||
|
Depreciation and
amortization
|
141
|
111
|
27.0 %
|
494
|
438
|
12.8
%
|
||||||
|
Passenger services
|
91
|
91
|
-
|
373
|
406
|
(8.1)%
|
||||||
|
Special charges
(C)
|
77
|
40
|
NM
|
145
|
181
|
NM
|
||||||
|
Other
|
354
|
332
|
6.6
%
|
1,402
|
1,437
|
(2.4)%
|
||||||
|
3,181
|
3,496
|
(9.0)%
|
12,732
|
15,555
|
(18.1)%
|
|||||||
|
Operating
Income (Loss)
|
1
|
(25)
|
NM
|
(146)
|
(314)
|
(53.5)%
|
||||||
|
Nonoperating
Income (Expense):
|
||||||||||||
|
Interest expense
|
(93)
|
(97)
|
(4.1)%
|
(367)
|
(376)
|
(2.4)%
|
||||||
|
Interest
capitalized
|
8
|
8
|
-
|
33
|
33
|
-
|
||||||
|
Interest income
|
2
|
8
|
(75.0)%
|
12
|
65
|
(81.5)%
|
||||||
|
Other, net
|
10
|
(161)
|
NM
|
29
|
(103)
|
NM
|
||||||
|
(73)
|
(242)
|
(69.8)%
|
(293)
|
(381)
|
(23.1)%
|
|||||||
|
Loss
before Income Taxes
|
(72)
|
(267)
|
(73.0)%
|
(439)
|
(695)
|
(36.8)%
|
||||||
|
Income
Tax Benefit (Expense) (D)
|
157
|
(2)
|
NM
|
157
|
109
|
44.0 %
|
||||||
|
Net
Income (Loss)
|
$ 85
|
$ (269)
|
NM
|
$
(282)
|
$
(586)
|
(51.9)%
|
||||||
|
Earnings
(Loss) per Share:
|
||||||||||||
|
Basic
|
$
0.61
|
$
(2.35)
|
NM
|
$
(2.18)
|
$
(5.54)
|
(60.6)%
|
||||||
|
Diluted
|
$ 0.60
|
$
(2.35)
|
NM
|
$
(2.18)
|
$
(5.54)
|
(60.6)%
|
||||||
|
Shares
used for Computation:
|
||||||||||||
|
Basic
|
138
|
114
|
21.1 %
|
129
|
106
|
21.7
%
|
||||||
|
Diluted
|
142
|
114
|
24.6 %
|
129
|
106
|
21.7
%
|
||||||
|
(A)
|
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 months and year ended December 31, 2008, have been adjusted to
reflect the company’s adoption of this standard.
|
||||||||
|
(B)
|
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.
|
||||||||
|
(C)
|
Operating
Expenses: Special Charges. Includes
the following (in millions):
|
||||||||
|
Three
Months
Ended December
31,
|
Year
Ended
December
31,
|
||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||
|
Aircraft-related
charges
|
$36
|
$ (5)
|
$ 89
|
$ 40
|
|||||
|
Pension
settlement charges
|
29
|
44
|
29
|
52
|
|||||
|
Severance
|
-
|
1
|
5
|
34
|
|||||
|
Route
impairment and other
|
12
|
-
|
22
|
55
|
|||||
|
Special
charges
|
$77
|
$ 40
|
$145
|
$ 181
|
|||||
|
(D)
|
Income taxes.
The company recorded a $158 million non-cash income tax benefit from
continuing operations during the fourth quarter of 2009. Under
current accounting rules, the company is required to consider all items
(including items recorded in other comprehensive income) in determining
the amount of tax benefit that results from a loss from continuing
operations and that should be allocated to continuing
operations. As a result, the Company will record a tax benefit
on the loss from continuing operations for the year, which will be exactly
offset by income tax expense on other comprehensive
income. However, while the income tax benefit from continuing
operations is reported on the income statement, the income tax expense on
other comprehensive income is recorded directly to other comprehensive
income, which is a component of stockholders’ equity. Because
the income tax expense on other comprehensive income is equal to the
income tax benefit from continuing operations, the company’s year-end net
deferred tax position is not impacted by this tax
allocation. The company also recorded $1 million of tax expense
related to state and foreign tax
expense.
|
||||||||
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
STATISTICS
|
Three
Months
Ended
December 31,
|
%
Increase
(Decrease)
|
Year Ended
December
31,
|
%
Increase
(Decrease)
|
||||||
|
2009
|
2008
|
2009
|
2008
|
||||||
|
Mainline
Operations:
|
|||||||||
|
Passengers
(thousands)
|
10,954
|
10,968
|
(0.1)%
|
45,573
|
48,682
|
(6.4)%
|
|||
|
Revenue
passenger miles (millions)
|
19,235
|
18,548
|
3.7 %
|
79,824
|
82,806
|
(3.6)%
|
|||
|
Available
seat miles (millions)
|
23,288
|
23,402
|
(0.5)%
|
97,407
|
102,527
|
(5.0)%
|
|||
|
Cargo
ton miles (millions)
|
284
|
236
|
20.3 %
|
948
|
1,005
|
(5.7)%
|
|||
|
Passenger
load factor:
|
|||||||||
|
Mainline
|
82.6%
|
79.3%
|
3.3
pts.
|
81.9%
|
80.8%
|
1.1 pts.
|
|||
|
Domestic
|
84.6%
|
82.6%
|
2.0
pts.
|
84.8%
|
83.3%
|
1.5 pts.
|
|||
|
International
|
80.5%
|
75.8%
|
4.7 pts.
|
79.2%
|
78.2%
|
1.0 pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
9.90
|
10.99
|
(9.9)%
|
9.49
|
11.10
|
(14.5)%
|
|||
|
Total
revenue per available seat mile (cents)
|
11.44
|
12.51
|
(8.6)%
|
10.92
|
12.51
|
(12.7)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
11.98
|
13.87
|
(13.6)%
|
11.58
|
13.75
|
(15.8)%
|
|||
|
Average
fare per revenue passenger
|
$212.04
|
$236.87
|
(10.5)%
|
$204.89
|
$236.26
|
(13.3)%
|
|||
|
Cost
per available seat mile (CASM) (cents) (A)
|
11.22
|
12.27
|
(8.6)%
|
10.75
|
12.44
|
(13.6)%
|
|||
|
Special
charges per available seat mile (cents)
|
0.28
|
0.17
|
NM
|
0.13
|
0.15
|
NM
|
|||
|
CASM,
holding fuel rate constant and excluding
special charges
(cents)
|
12.27
|
12.10
|
1.4 %
|
12.48
|
12.29
|
1.5 %
|
|||
|
Average
price per gallon of fuel, including
fuel taxes
|
$2.00
|
$2.93
|
(31.7)%
|
$1.98
|
$3.27
|
(39.4)%
|
|||
|
Fuel
gallons consumed (millions)
|
334
|
339
|
(1.5)%
|
1,395
|
1,498
|
(6.9)%
|
|||
|
Aircraft
in fleet at end of period (B)
|
337
|
350
|
(3.7)%
|
337
|
350
|
(3.7)%
|
|||
|
Average
length of aircraft flight (miles)
|
1,552
|
1,489
|
4.2 %
|
1,550
|
1,494
|
3.7
%
|
|||
|
Average
daily utilization of each aircraft (hours)
|
10:12
|
10:14
|
(0.5)%
|
10:37
|
11:06
|
(4.4)%
|
|||
|
Regional
Operations:
|
|||||||||
|
Passengers
(thousands)
|
4,304
|
4,215
|
2.1 %
|
17,236
|
18,010
|
(4.3)%
|
|||
|
Revenue
passenger miles (millions)
|
2,327
|
2,277
|
2.2 %
|
9,312
|
9,880
|
(5.7)%
|
|||
|
Available
seat miles (millions)
|
3,002
|
3,046
|
(1.4)%
|
12,147
|
12,984
|
(6.4)%
|
|||
|
Passenger
load factor
|
77.5%
|
74.7%
|
2.8 pts.
|
76.7%
|
76.1%
|
0.6
pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
16.74
|
17.44
|
(4.0)%
|
15.59
|
18.14
|
(14.1)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
21.59
|
23.33
|
(7.5)%
|
20.34
|
23.83
|
(14.6)%
|
|||
|
Aircraft
in fleet at end of period (C)
|
264
|
282
|
(6.4)%
|
264
|
282
|
(6.4)%
|
|||
|
Consolidated
Operations (Mainline and Regional):
|
|||||||||
|
Passengers
(thousands)
|
15,258
|
15,183
|
0.5 %
|
62,809
|
66,692
|
(5.8)%
|
|||
|
Revenue
passenger miles (millions)
|
21,562
|
20,825
|
3.5 %
|
89,136
|
92,686
|
(3.8)%
|
|||
|
Available
seat miles (millions)
|
26,290
|
26,448
|
(0.6)%
|
109,554
|
115,511
|
(5.2)%
|
|||
|
Passenger
load factor
|
82.0%
|
78.7%
|
3.3 pts.
|
81.4%
|
80.2%
|
1.2 pts.
|
|||
|
Passenger
revenue per available seat mile (cents)
|
10.68
|
11.73
|
(9.0)%
|
10.17
|
11.89
|
(14.5)%
|
|||
|
Average
yield per revenue passenger mile (cents)
|
13.02
|
14.90
|
(12.6)%
|
12.50
|
14.82
|
(15.7)%
|
|||
|
Average
price per gallon of fuel including fuel taxes
|
$2.00
|
$2.91
|
(31.3)%
|
$1.97
|
$3.27
|
(39.8)%
|
|||
|
Fuel
gallons consumed (millions)
|
405
|
411
|
(1.5)%
|
1,681
|
1,809
|
(7.1)%
|
|||
|
(A)
|
Includes
impact of special charges.
|
|
(B)
|
Excludes
ten grounded Boeing 737-300 aircraft, seven grounded Boeing 737-500
aircraft and two leased Boeing 757-300 aircraft delivered but not yet
placed in service at December 31, 2009.
|
|
(C)
|
Consists
of aircraft operated under capacity purchase agreements with Continental's
regional carriers ExpressJet, Colgan, Chautauqua and
CommutAir. Excludes 25 EMB-135 that are temporarily grounded
aircraft and 32 ERJ-145 aircraft and five EMB-135 aircraft subleased to
other operators but are not operated on the company’s behalf at December
31, 2009.
|
CONTINENTAL
AIRLINES, INC. AND SUBSIDIARIES
NON-GAAP
FINANCIAL MEASURES
|
Net
Income (Loss) (in millions)
|
Three
Months Ended
December 31, 2009
|
Year
Ended
December 31, 2009
|
||
|
Net
income (loss)
|
$ 85
|
$(282)
|
||
|
Special
items:
|
||||
|
Special
charges (net of tax of $0)
|
77
|
145
|
||
|
Income
tax benefit
|
(158)
|
(158)
|
||
|
Net
income (loss), excluding special items (A)
|
$ 4
|
$(295)
|
||
|
Earnings
(Loss) per Share
|
Three
Months Ended
December 31, 2009
|
Year Ended
December 31, 2009
|
|||
|
Diluted
earnings (loss) per share
|
$ 0.60
|
$(2.18)
|
|||
|
Special
items:
|
|||||
|
Special
charges
|
0.54
|
1.12
|
|||
|
Income
tax benefit
|
(1.11)
|
(1.22)
|
|||
|
Diluted
earnings (loss) per share, excluding
special
items (A)
|
$ 0.03
|
$(2.28)
|
|||
|
2009
|
2008
|
2009
|
2008
|
|||||||||
|
Cost
per available seat mile (CASM)
|
11.22
|
12.27
|
(8.6)%
|
10.75
|
12.44
|
(13.6)%
|
||||||
|
Less: Special
charges
|
(0.28)
|
(0.17)
|
NM
|
(0.13)
|
(0.15)
|
NM
|
||||||
|
CASM,
excluding special charges (A)
|
10.94
|
12.10
|
(9.6)%
|
10.62
|
12.29
|
(13.6)%
|
||||||
|
Less: Current
year fuel cost per available
seat
mile (B)
|
(2.86)
|
-
|
NM
|
(2.83)
|
-
|
NM
|
||||||
|
Add: Current
year fuel cost at prior year
fuel
price per available seat mile (B)
|
4.19
|
-
|
NM
|
4.69
|
-
|
NM
|
||||||
|
CASM,
holding fuel rate constant and excluding
special
charges (A)
|
12.27
|
12.10
|
1.4 %
|
12.48
|
12.29
|
1.5 %
|
||||||
|
(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: January 21, 2010
|
This
investor update provides information on Continental's guidance for the first
quarter and full year 2010, as well as certain historical information pertaining
to the fourth 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 down 1 to 2 points, mainline Latin advanced booked
seat factor is running flat to up 1 point, Transatlantic advanced booked seat
factor is running 10 to 11 points higher, Pacific advanced booked seat factor is
up 2 to 3 points, and regional advanced booked seat factor is running 1 to 2
points lower.
Last year
at this time, due to declining business mix and weakness in yields, the Company
made the decision to make more domestic leisure inventory available for sale
earlier in the booking curve. This year the Company has seen a modest
improvement in business demand and therefore has returned to a more normal
management of the domestic booking curve.
For the
first quarter of 2010, the Company expects both its consolidated and mainline
load factors to be up approximately 3.0 points year-over-year (“yoy”) compared
to the same period in 2009.
Unrestricted Cash, Cash
Equivalents and Short Term Investments Balance
The
Company anticipates ending the first quarter of 2010 with an unrestricted cash,
cash equivalents and short-term investments balance of between $2.9 and $3.0
billion.
Cargo, Mail, and Other
Revenue
The
Company's Cargo, Mail, and Other Revenue for the first quarter of 2010 is
expected to be between $355 and $365 million.
|
Available Seat Miles (ASMs)
|
2010
Estimate
|
|||
|
Year-over-Year % Change
|
||||
|
1st
Qtr.
|
||||
|
Mainline
|
||||
|
Domestic
|
(0.6%)
|
|||
|
Latin
America
|
5.2%
|
|||
|
Transatlantic
|
(4.4%)
|
|||
|
Pacific
|
16.3%
|
|||
|
Total
Mainline
|
1.0%
|
|||
|
Regional
|
(0.2%)
|
|||
|
Consolidated
|
||||
|
Domestic
|
(0.3%)
|
|||
|
International
|
2.2%
|
|||
|
Total
Consolidated
|
0.9%
|
|||
For the
full year 2010, Continental expects its consolidated capacity to be up 1% to 2%
yoy. The Company expects its mainline capacity to be up 1.5% to 2.5%
yoy, with its mainline domestic capacity about flat yoy and its mainline
international capacity up 4% to 5% 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 last year related to H1N1.
|
Load Factor
|
1st Qtr. 2010 (E)
|
Full Year 2010 (E)
|
|||||
|
Domestic
|
79%
|
-
|
80%
|
83%
|
-
|
84%
|
|
|
Latin
America
|
79%
|
-
|
80%
|
80%
|
-
|
81%
|
|
|
Transatlantic
|
76%
|
-
|
77%
|
79%
|
-
|
80%
|
|
|
Pacific
|
76%
|
-
|
77%
|
76%
|
-
|
77%
|
|
|
Total
Mainline
|
78%
|
-
|
79%
|
81%
|
-
|
82%
|
|
|
Regional
|
72%
|
-
|
73%
|
76%
|
-
|
77%
|
|
|
Consolidated
|
78%
|
-
|
79%
|
80%
|
-
|
81%
|
|
Continental's
month-to-date consolidated load factor is updated daily and can be found on
continental.com on the Investor Relations page under the About Continental
menu.
|
CASM Mainline Operating
Statistics
|
2010 Estimate (cents)
|
|||||||
|
1st Qtr.
|
Full Year
|
|||||||
|
CASM
|
11.11
|
-
|
11.16
|
11.08
|
-
|
11.13
|
||
|
Special
Items per ASM
|
0.00
|
0.00
|
||||||
|
CASM
Less Special Items (a)
|
11.11
|
-
|
11.16
|
11.08
|
-
|
11.13
|
||
|
Aircraft
Fuel & Related Taxes per ASM
|
(2.99)
|
(3.21)
|
||||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.12
|
-
|
8.17
|
7.87
|
-
|
7.92
|
||
|
CASM Consolidated Operating
Statistics
|
||||||||
|
CASM
|
12.00
|
-
|
12.05
|
11.96
|
-
|
12.01
|
||
|
Special
Items per ASM
|
0.00
|
0.00
|
||||||
|
CASM
Less Special Items (a)
|
12.00
|
-
|
12.05
|
11.96
|
-
|
12.01
|
||
|
Aircraft
Fuel & Related Taxes per ASM
|
(3.21)
|
(3.43)
|
||||||
|
CASM
Less Special Items and Aircraft Fuel & Related Taxes
(b)
|
8.79
|
-
|
8.84
|
8.53
|
-
|
8.58
|
||
(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 and aircraft fuel and related taxes
is computed by dividing operating expenses excluding special charges and
aircraft fuel and related taxes 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 $17.92
on December 31, 2009 was used in estimating the expense impact of the awards for
the Company's 2010 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 December
31, 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 first quarter 2010. 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)
|
2010 Estimate
|
|
|
1st Qtr.
|
Full Year
|
|
|
Mainline
|
330
million
|
1,423
million
|
|
Regional
|
70
million
|
283
million
|
|
Consolidated
Fuel Price per Gallon (including fuel
taxes and
|
$2.13
|
$2.25
|
|
impact
of hedges)
|
||
Fuel Hedges - As of January
20, 2010
As of
January 20, 2010, 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)
|
|||||
|
First Quarter 2010
|
||||||||
|
Gulf
Coast jet fuel swaps
|
5%
|
$1.94
|
5%
|
$1.94
|
||||
|
WTI
crude oil swaps
|
11%
|
$1.86
|
11%
|
$1.86
|
||||
|
WTI
crude call options
|
4%
|
$2.11
|
n/a
|
n/a
|
||||
|
Total
|
20%
|
16%
|
||||||
|
Second Quarter 2010
|
||||||||
|
WTI
crude oil swaps
|
1%
|
$1.95
|
1%
|
$1.95
|
||||
|
WTI
crude call options
|
9%
|
$2.20
|
n/a
|
n/a
|
||||
|
Total
|
10%
|
1%
|
||||||
|
Third Quarter 2010
|
||||||||
|
WTI
crude call options
|
7%
|
$2.25
|
n/a
|
n/a
|
||||
|
Total
|
7%
|
|||||||
|
Fourth Quarter 2010
|
||||||||
|
WTI
crude call options
|
7%
|
$2.31
|
n/a
|
n/a
|
||||
|
Total
|
7%
|
|||||||
|
Full Year 2010
|
||||||||
|
Gulf
Coast jet fuel swaps
|
1%
|
$1.94
|
1%
|
$1.94
|
||||
|
WTI
crude oil swaps
|
3%
|
$1.87
|
3%
|
$1.87
|
||||
|
WTI
crude call options
|
7%
|
$2.23
|
n/a
|
n/a
|
||||
|
Total
|
11%
|
4%
|
||||||
|
Selected Expense Amounts (Consolidated
Expense)
|
2010 Estimate Amounts
(millions)
|
|
|
1st Qtr.
|
Full Year
|
|
|
Aircraft
Rent
|
$231
|
$924
|
|
Depreciation
& Amortization
|
$120
|
$495
|
|
Net
Interest Expense*
|
$85
|
$338
|
|
*Net
Interest Expense includes interest expense, capitalized interest and
interest income.
|
||
Fourth Quarter 2009 Domestic
Performance on a Hub-by-Hub Basis
Continental’s
fourth quarter 2009 consolidated domestic capacity at its New York Liberty hub
was down 2.5%, with traffic up 1.6%, resulting in a load factor increase of 3.3
pts, compared to the fourth quarter of 2008. Transcon capacity, which
is a subset of New York Liberty capacity, was up 4.3% yoy in the fourth quarter
while traffic was up 7.0%, resulting in a load factor increase of 2.2 pts,
compared to the same period in 2008. Consolidated domestic capacity
at its Houston hub was up 2.2% yoy, with traffic up 3.8%, resulting in a load
factor increase of 1.3 pts, compared to the fourth quarter of
2008. Consolidated domestic capacity at its Cleveland hub was down
2.5% yoy, with traffic up 0.6%, resulting in a fourth quarter load factor
increase of 2.5 pt, compared to the same period in 2008.
Pension Expense and
Contributions
Earlier
this month, the Company contributed $34 million to its defined benefit pension
plans. The Company estimates its remaining minimum funding
requirements for calendar year 2010 are approximately $85 million.
The
Company estimates that its non-cash pension expense will be approximately $215
million for 2010. This amount excludes non-cash settlement charges
related to lump-sum distributions. Settlement charges are possible
during 2010, but the Company is not able at this time to estimate the amount of
these charges.
Continental Airlines, Inc.
Tax Computation
Generally,
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.
An
exception to this general rule exists in the event the Company generates a loss
from continuing operations while generating other comprehensive
income. Under this circumstance, accounting rules require the Company
to record a tax benefit on the loss from continuing operations and a tax expense
on other comprehensive income. The tax benefit is non-cash and is
reported on the income statement while the tax expense non-cash and is recorded
directly to other comprehensive income, which is a component of stockholders’
equity. Items of other comprehensive income broadly include changes
in the fair value of the Company’s hedging instruments and changes in the
Company’s pension liability resulting from, among other things, changes in
actuarial assumptions and the fair value of the pension plan
assets. Because these items are generally not known until late in the
year, this exception would only likely be recorded during the fourth
quarter.
Debt and Capital
Leases
Continental’s
total Debt and Capital Leases balance at year end 2009 was $6.3 billion of which
$6.1 billion was debt.
As of
January 21, 2010, scheduled debt and capital lease payments for the full year
2010 are $975 million, with approximately $135 million, $459 million, $77
million and $304 million scheduled in the first, second, third and fourth
quarters of 2010, respectively.
|
Cash Capital
Expenditures
($Millions)
|
2010 Estimate
|
|
|
Fleet
Related
|
$265
|
|
|
Non-Fleet
|
140
|
|
|
Net
Capital Expenditures*
|
$405
|
|
|
Net
Purchase Deposits Paid/(Refunded)
|
25
|
|
|
Total
Cash Expenditures
|
$430
|
|
*Includes
rotable parts and capitalized interest.
EPS Estimated Share
Count
Share
count estimates for calculating basic and diluted earnings per share at
different income levels are as follows:
First
Quarter 2010 (Millions)
|
Quarterly
|
Number
of Shares
|
Interest addback (net of applicable
profit
|
|
|
Earnings Level
|
Basic
|
Diluted
|
sharing and income taxes
impact)
|
|
Over
$138
|
139
|
165
|
$12
|
|
Between
$92 - $138
|
139
|
161
|
$8
|
|
Between
$35 - $92
|
139
|
152
|
$3
|
|
Under
$35
|
139
|
141
|
--
|
|
Net
Loss
|
139
|
139
|
--
|
Full
Year 2010 (Millions)
|
Year-to-date
|
Number
of Shares
|
Interest addback (net of applicable
profit
|
|
|
Earnings Level
|
Basic
|
Diluted
|
sharing and income taxes
impact)
|
|
Over
$465
|
140
|
162
|
$31
|
|
Between
$289 - $465
|
140
|
158
|
$18
|
|
Between
$118 - $289
|
140
|
153
|
$10
|
|
Under
$118
|
140
|
142
|
--
|
|
Net
Loss
|
140
|
140
|
--
|
These
share count charts are based upon several assumptions including market stock
price and number of shares outstanding. Share counts also assume that
the Company’s $175 million 5% convertible notes that are puttable in June 2010
are paid in cash. 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
January
21, 2010
|
Total
|
Total
|
|||||
|
Year
End
|
Net
Inductions and Exits
|
Year
End
|
||||
|
2009
|
1Q10E
|
2Q10E
|
3Q10E
|
4Q10E
|
2010E
|
|
|
Mainline
|
||||||
|
777-200ER
|
20
|
-
|
2
|
-
|
-
|
22
|
|
767-400ER
|
16
|
-
|
-
|
-
|
-
|
16
|
|
767-200ER
|
10
|
-
|
-
|
-
|
-
|
10
|
|
757-300
|
18
|
3
|
-
|
-
|
-
|
21
|
|
757-200
|
41
|
-
|
-
|
-
|
-
|
41
|
|
737-900ER
|
30
|
-
|
-
|
-
|
2
|
32
|
|
737-900
|
12
|
-
|
-
|
-
|
-
|
12
|
|
737-800*
|
117
|
-
|
8
|
1
|
-
|
126
|
|
737-700
|
36
|
-
|
-
|
-
|
-
|
36
|
|
737-300
|
3
|
(3)
|
-
|
-
|
-
|
-
|
|
737-500
|
34
|
(3)
|
-
|
-
|
-
|
31
|
|
Total
|
337
|
(3)
|
10
|
1
|
2
|
347
|
|
Regional
|
||||||
|
ERJ-145
|
227
|
(4)
|
(2)
|
-
|
-
|
221
|
|
ERJ-135
|
-
|
-
|
-
|
-
|
-
|
-
|
|
CRJ200LR
|
7
|
(7)
|
-
|
-
|
-
|
-
|
|
Q400
|
14
|
-
|
-
|
1
|
5
|
20
|
|
Q200
|
16
|
-
|
-
|
-
|
-
|
16
|
|
Total
|
264
|
(11)
|
(2)
|
1
|
5
|
257
|
|
Total
Count
|
601
|
(14)
|
8
|
2
|
7
|
604
|
*Excludes
one aircraft scheduled for delivery in December 2010 that is expected to enter
service in 2011
The
following aircraft are currently scheduled for delivery from Boeing in
2011:
|
-
|
Six
787-8s (four in 3Q11 and two in
4Q11)
|
|
-
|
Four
737-900ERs (four in 2Q11)
|
|
-
|
Three
737-800s (two in 1Q11, one in 3Q11)
|
