Continental narrows loss as fares help offset costs

Continental Airlines Inc. said its fourth-quarter loss narrowed by 40% as strong fare pricing helped offset increased fuel and labor costs, capping a profitable year that was the carrier’s best since 2000.

But in a regulatory filing Thursday afternoon, Continental hinted its U.S. business was softening. The company said it expected first-quarter yield -- a key measurement of revenue per miles flown by passengers -- would be slightly lower for domestic travel and higher on international routes compared with the same period last year.

Continental shares, which rose during morning trading, closed down $1.77 at $48.23.

The carrier said it lost $26 million in the quarter, or 29 cents a share, compared with a loss of $43 million, or 53 cents, a year earlier.

Excluding a charge of $22 million related to lump-sum payments to retiring pilots, the company said it would have lost $4 million, or 4 cents a share.

On that basis, analysts expected a loss of 15 cents a share, according to a survey by Thomson Financial.

Revenue rose 11% to $3.16 billion, meeting analysts’ expectations and surpassing the $2.85 billion of a year earlier. Sales were driven by double-digit growth in international markets.

For all of 2006, Continental earned $343 million, or $3.30 a share, compared with a loss of $68 million, or 97 cents, in 2005.

It was Continental’s second profitable year since 2000; it earned $38 million in 2003. The report came just a day after American Airlines’ parent, AMR Corp., announced its first moneymaking year since 2000.