Continental Posts Second-Quarter Loss
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Continental Airlines posted a steeper second-quarter loss Tuesday as the slump in business travel and fears about the H1N1 virus hurt revenue, and said it will cut its workforce by 4 percent.
The airline also increased its domestic checked bag fee by USD$5, effective August 19, for those not prepaying online.
The net loss widened to USD$213 million, or USD$1.72 per share, from USD$5 million, or 5 cents per share, a year ago.
Excluding USD$44 million in special charges from the declining value of its aircraft, Continental lost USD$169 million.
Revenue dropped 22.7 percent to USD$3.1 billion as business travelers cut back on travel or bought cheaper economy class tickets. The H1N1 virus, once known as swine flu, cost the carrier about USD$50 million in passenger revenue.
Continental will cut 1,700 jobs and increase the bag fee as it grapples with the sharp revenue decline.
The carrier aims to generate about USD$100 million in annual benefits when the measures are fully implemented in 2010.
In addition to the bag fee, Continental increased its phone reservation service charge by USD$5, effective immediately. The company said other revenue initiatives will be coming.
The new round of planned job cuts come after it eliminated 500 reservation agent positions. The company also offered leaves of absence for 700 flight attendants as well as employee voluntary layoff programs.
Mainline passenger revenue fell 22.9 percent on lower fares and a decline in passenger traffic. Mainline capacity shrank 7.3 percent in the quarter.
Continental is expecting delivery of seven Boeing 737 aircraft in the second half of 2009. The company looks to remove 29 additional Boeing 737s from service by January 2010.
