Continental Air Reports Loss of $88.3 Million

Continental Airlines Holdings, which considered bankruptcy two weeks ago, said Tuesday that it lost $88.3 million in the third quarter on revenue of $1.5 billion.

Continental, the Houston-based parent of Continental and Eastern airlines, blamed high fuel costs and soft travel demand for much of the loss. Continental’s results were also hurt by a $17-million severance payment to former Chairman Frank Lorenzo, who agreed in August to sell his Continental stock and options to Scandinavian Airlines Systems at nearly three times the market price.

The airline said its results were hurt by a $15-million expense related to the SAS transaction.

Airline industry analysts said Tuesday that Continental’s results were in line with expectations. Other airlines, including Delta and USAir, have reported large fuel-related third-quarter losses.

Continental Chairman Hollis Harris said in a statement that fuel costs “exacerbated our losses.” He said fuel had surpassed wages as the airline’s greatest expense, and that Continental’s fuel bill in October was $70 million higher than in normal times. Jet fuel prices have risen dramatically since Iraq’s Aug. 2 invasion of Kuwait.

Continental’s difficult financial situation caused it to consider, but reject, a bankruptcy filing two weeks ago. The company instead said it would sell assets to raise money and look for help from a possible investor.

On Tuesday, however, the airline said it was taking its valuable Honolulu-Tokyo route off the market. The airline had said earlier that it might sell its Air Micronesia unit, which holds the governmental authority to fly from Honolulu to Tokyo.

Continental’s third-quarter loss doesn’t include results of its Eastern Airlines subsidiary. Eastern, which is in bankruptcy proceedings, has been run by a court-appointed trustee since April 10. Continental lost $158 million on revenue of $1.7 billion in the third quarter of 1989, a period when Eastern posted huge losses.

For the first nine months of 1990, the company lost $97 million on revenue of $4.9 billion. That compares to a loss of $522.8 million on revenue of $5 billion in the first nine months of 1989. Continental released the earnings statement after the markets closed. The company’s stock closed up 12 1/2 cents at $2.75 a share on the American Stock Exchange on Tuesday.