Continental Airlines Posts 3rd-Quarter Profit
Continental Airlines Inc. on Wednesday avoided a loss in the third quarter, due only to financial aid from the U.S. government, but the fifth-largest carrier warned that it won’t be profitable in the fourth quarter unless travel demand increases.
Separately, America West Holdings Corp., which operates America West Airlines, posted a loss and sales declined 17% as it began lowering fares last month to try to boost demand.
The results follow the pattern of mixed profits and losses for U.S. carriers that have reported third-quarter results. The airlines’ trade group reported that passenger traffic, measured in miles flown by paying passengers, fell 32% in September as a result of the terrorist attacks.
But a survey released today showed that 91% of the passengers who have flown since Sept. 11 believe air travel is safe, according to airplane maker Boeing Co., which did the polling with Wirthlin Worldwide Surveys.
The companies, which surveyed more than 1,000 travelers in the first week of October, also found that 92% of the respondents believe air travel will return to normal within a year.
“We are encouraged by these numbers,” said spokesman Tom Ryan of Boeing, which commissioned the study to help the airline industry gauge the public’s mood about flying again. “We’re trying to do all we can to support our airline customers and felt this was one way to do it.”
When passenger traffic plunged after Sept. 11, the airlines dramatically scaled back their operations. Many carriers deferred taking delivery of new aircraft and postponed new orders.
As a result, Boeing has predicted a sharp decline in its airplane deliveries for the next couple of years, which is why the Chicago-based aerospace giant has slashed about 30,000 jobs since the attacks.
Meanwhile, Delta Air Lines Inc. said it would lay off fewer employees after 11,000 workers decided to leave the company through early retirement or voluntary leave programs. Atlanta-based Delta plans to lay off 2,000 out of an initially targeted 13,000.
Net income at Continental fell to $3 million, or 5 cents a share, from $135 million, or $2.21, a year earlier.
America West said its loss was $31.7 million, or 94 cents a share, compared with net income of $1.3 million, or 4 cents.
Continental, based in Houston, said revenue fell 15% to $2.22 billion from $2.62 billion. The airline received $243 million, or $154 million after taxes, in U.S. government aid.
Continental Chairman Gordon Bethune said the carrier won’t be profitable in this quarter and he’s looking for rising travel demand to lift fares next year.
“I’m looking for a rebound in the spring, and I think it’s going to materialize,” Bethune told Bloomberg Television.
America West’s results include $60 million in pretax federal aid. Sales declined 17% to $491.4 million. Excluding federal aid, America West had a loss of $69.2million, or $2.05 a share.
On the New York Stock Exchange, Continental shares rose 84 cents to close at $17.49. America West closed unchanged at $1.99, and Delta rose 11 cents to $22.86.
