Houston-based Continental Airlines reported a net loss for the third quarter on Tuesday as high fuel prices and competition from low-cost carriers continued to savage the “legacy carrier” segment of the airline industry. In announcing the loss, the fifth-largest U.S. airline in terms of passenger traffic predicted that it expects to report a significant loss for this year and will do the same next year if conditions persist
As with other reeling legacy carriers such as United Airlines and Delta Airlines, Continental continues to fare badly in competing with the widespread fare discounting of such low-cost carriers as JetBlue Airways and Southwest Airlines. Continental has slashed costs through layoffs and negotiating better deals with suppliers, but it has had insufficient liquid reserves to be able to hedge high fuel prices and now there there is not much they can do about the soaring fuel costs.
Despite the loss, Continental is actually faring better than many of its traditional competitors, which are expected to report even steeper losses later this week. Continental’s revenue continues to grow at a steady rate because its hubs such as Newark, N.J. have particularly strong local traffic bases. Revenue in the latest quarter rose 8.4% to $2.56 billion as Continental boosted capacity, flew more miles and filled more of its seats.
Continental’s unit costs, which are expenses spread over each seat mile flown, rose 4.9% to 9.45 cents mostly because of a higher fuel bill. Had fuel prices been at year-earlier levels, Continental’s unit costs would have fallen 2.1%.