News Release
Continental Airlines Reports Record Earnings Per Share and 21st Consecutive Profitable Quarter
Quarter-over-quarter EPS up 42 percent
HOUSTON, July 18, 2000 -- Continental Airlines (NYSE: CAL and CAL.A) today reported record quarterly diluted earnings per share of $2.46, before extraordinary charges. This marks the 21st consecutive profitable quarter and the highest diluted earnings per share in company history. This significantly exceeds the First Call consensus of $2.05 diluted earnings per share.
Second quarter 2000 net income was $153 million (excluding a $4 million extraordinary charge for early debt repayment), which exceeds 1999 second quarter net income of $132 million ($1.85 basic and $1.73 diluted earnings per share) by 16 percent.
"Record traffic and yields have more than offset fuel increases," said Gordon Bethune, Continental Airlines' chairman and chief executive officer. "We have a lot of momentum going into the last half of what promises to be another record year for us."
Second Quarter Operating Results
Second quarter passenger revenue rose 18 percent to a record $2.4 billion. Revenue per available seat mile (RASM) increased 10 percent on 6 percent more capacity. This is the carrier's first double-digit RASM increase since 1996. A large contributing factor was the increase in business traffic on the airline. Business traffic represented 48 percent of total domestic revenue in the second quarter, up from 46 percent in second quarter 1999 and 41 percent in second quarter 1995.
All markets recorded year-over-year increases in RASM in the second quarter. Statistics by geographic market are shown below:
Second Quarter 2000 vs. Second Quarter 1999 Passenger Revenue RASM Domestic 12.9% 10.5% Latin America 22.2% 11.5% Transatlantic 34.5% 4.8% Pacific 11.4% 21.2%
Continental continues to enjoy significant domestic length-of-haul adjusted yield and RASM premiums to the industry. In addition, Continental's load factor in June was an all-time record 80 percent, the highest in company history.
"Thanks to the hard work of our co-workers, our operation has never run better," said Greg Brenneman, Continental's president and chief operating officer. "Our revenue growth confirms that we've become the preferred airline of business travelers."
Continental Express' traffic growth continued to outpace its significant capacity increases. Traffic on the regional carrier jumped 44 percent on 41 percent more capacity, resulting in a 66 percent load factor.
Online bookings continued to grow during the second quarter, increasing 160 percent year-over-year. E-ticket sales as a percentage of total sales increased from 39 percent in the second quarter 1999 to 53 percent in the second quarter 2000. Continental once again out-performed the competition in consumer satisfaction polls. During the quarter, the airline swept the J.D. Power awards for long and short-haul service, and now holds more of these awards than any other airline in history. In addition, for the third year in a row, Condé Nast Traveler magazine has named Continental as having the Best Transatlantic Business Class and Best Transpacific Business Class of all U.S. airlines.
The airline added a second daily non-stop Boeing 777 flight to its successful New York-Tel Aviv route. Additionally, Continental Express launched its long-awaited Cleveland to Dallas–Love Field service during the second quarter, and added two new international destinations: Puebla and Aguascalientes, Mexico.
Second Quarter Financial Results
The company's operating margin exceeded 10 percent for the first time this year. On a constant fuel price basis, unit costs were only 3 percent higher year-over-year. However, higher fuel prices, which continued throughout the second quarter, drove up the cost per available seat mile by 10 percent, compared to the same period in 1999.
"Our cost performance excluding fuel rate was excellent," said Larry Kellner, Continental's executive vice president and chief financial officer. "Continental's core cost structure remains well within our targeted range."
During the quarter, the company repurchased 3 million shares of outstanding Class B common stock. Since the stock repurchase program's inception in 1998, the company has expended $1.0 billion to reduce its diluted share count by approximately 24 percent. The company has $274 million remaining in its stock repurchase program, and intends to use one half of future net income, plus all the proceeds from the sale of non-strategic assets, to repurchase common stock.
The company ended the quarter with $1.3 billion in cash. Since the beginning of the year, Continental has also repurchased $188 million of its 9.5 percent senior unsecured notes.
Continental took delivery of two new 777-200 and two new 737-800 aircraft and retired three DC-10-30s in the second quarter. Continental Express took delivery of 11 new regional jets and opened a new $25 million state-of-the art training facility to train its pilots and flight attendants.
Corporate Background
Continental Airlines is the fifth largest airline in the U.S., offering more than 2,300 departures daily to 138 domestic and 94 international destinations. Operating major hubs in New York, Houston and Cleveland, Continental (www.continental.com) has extensive service throughout the Americas and to Europe and Asia.
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In millions of dollars, except per share data) (Unaudited) Three Months Three Months % Ended Ended Increase/ June 30, June 30, (Decrease) 2000 1999 Operating Revenue: Passenger $2,424 $2,054 18.0 % Cargo and mail 89 70 27.1 % Other 58 57 1.8 % 2,571 2,181 17.9 % Operating Expenses: Wages, salaries and related costs 712 622 14.5 % Aircraft fuel 320 154 107.8 % Aircraft rentals 210 189 11.1 % Maintenance, materials and repairs 171 155 10.3 % Commissions 141 142 (0.7)% Other rentals and landing fees 138 121 14.0 % Depreciation and amortization 98 88 11.4 % Other 502 463 8.4 % 2,292 1,934 18.5 % Operating Income 279 247 13.0 % Nonoperating Income (Expense): Net interest expense (27) (26) 3.8 % Other, net (2) (4) (50.0)% (29) (30) (3.3)% Income before Income Taxes and Extraordinary Charge 250 217 15.2 % Income Tax Provision (97) (85) 14.1 % Income before Extraordinary Charge 153 132 15.9 % Extraordinary Charge, Net of Tax (4) --- NM Net Income $ 149 $ 132 12.9 % CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In millions of dollars, except per share data) (Unaudited) Six Months Six Months % Ended Ended Increase/ June 30, June 30, (Decrease) 2000 1999 Operating Revenue: Passenger $4,561 $3,974 14.8 % Cargo and mail 173 137 26.3 % Other 114 112 1.8 % 4,848 4,223 14.8 % Operating Expenses: Wages, salaries and related costs 1,377 1,238 11.2 % Aircraft fuel 663 304 118.1 % Aircraft rentals 416 373 11.5 % Maintenance, materials and repairs 330 298 10.7 % Commissions 274 285 (3.9)% Other rentals and landing fees 267 235 13.6 % Depreciation and amortization 193 173 11.6 % Other 995 917 8.5 % 4,515 3,823 18.1 % Operating Income 333 400 (16.8)% Nonoperating Income (Expense): Net interest expense (57) (51) 11.8 % Other, net (3) 9 NM (60) (42) 42.9 % Income before Income Taxes, Cumulative Effect of Accounting Changes and Extraordinary Charge 273 358 (23.7)% Income Tax Provision (106) (141) (24.8)% Income before Cumulative Effect of Accounting Changes and Extraordinary Charge 167 217 (23.0)% Cumulative Effect of Accounting Changes, Net of Tax --- (33) NM Extraordinary Charge, Net of Tax (4) --- NM Net Income $ 163 $ 184 (11.4)% STATISTICS (jet operations only)(A) Three Months % Ended June 30, Increase/ 2000 1999 (Decrease) Enplanements (thousands) 12,084 11,493 5.1 % Revenue passenger miles (millions) 16,491 14,919 10.5 % Available seat miles (millions) 21,384 20,163 6.1 % Passenger load factor 77.1 % 74.0 % 3.1pts. Breakeven passenger load factor 65.0 % 61.9 % 3.1pts. Passenger revenue per available seat mile 10.32¢ 9.39¢ 9.9 % Total revenue per available seat mile 11.14¢ 10.12¢ 10.1 % Cost per available seat mile 9.85¢ 8.93¢ 10.3 % Average yield per revenue passenger mile 13.38¢ 12.69¢ 5.4 % Average price per gallon of fuel excluding fuel taxes 76.98¢ 38.13¢ 101.9 % Average price per gallon of fuel including fuel taxes 81.17¢ 42.59¢ 90.6 % Fuel gallons consumed (millions) 386 383 0.8 % Actual aircraft in fleet at end of period (B) 363 360 0.8 % Average stage length 1,156 1,104 4.7 % Six Months % Ended June 30, Increase/ 2000 1999 (Decrease) Enplanements (thousands) 23,285 22,271 4.6 % Revenue passenger miles (millions) 31,496 28,656 9.9 % Available seat miles (millions) 42,334 39,388 7.5 % Passenger load factor 74.4% 72.8% 1.6pts. Breakeven passenger load factor 67.0% 62.7% 4.3pts. Passenger revenue per available seat mile 9.83¢ 9.34¢ 5.2 % Total revenue per available seat mile 10.64¢ 10.07¢ 5.7 % Cost per available seat mile 9.81¢ 9.05¢ 8.4 % Average yield per revenue passenger mile 13.21¢ 12.84¢ 2.9 % Average price per gallon of fuel excluding fuel taxes 81.00¢ 38.37¢ 111.1 % Average price gallon of fuel including fuel taxes 85.24¢ 42.76¢ 99.3 % Fuel gallons consumed (millions) 763 754 1.2 % Actual aircraft in fleet at end of period (B) 363 360 0.8 % Average stage length 1,143 1,093 4.6 % Continental has entered into block space arrangements with certain other carriers whereby one or more of the parties is obligated to purchase capacity on the other carrier. The tables above do not include the statistics for the capacity that was purchased by another carrier. (A) Excludes regional jets operated by Continental Express (B) Excludes six all-cargo 727 aircraft at CMI in 1999. CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES EARNINGS PER SHARE (In millions, except per share data) (Unaudited) Three Months Three Months Ended Ended % June 30, June 30, Increase/ 2000 1999 (Decrease) Earnings per Common Share: Income Before Extraordinary Charge $ 2.52 $ 1.85 36.2 % Extraordinary Charge (0.08) --- NM Net Income $ 2.44 $ 1.85 31.9 % Earnings per Common Share Assuming Dilution: Income Before Extraordinary Charge $ 2.46 $ 1.73 42.2 % Extraordinary Charge (0.07) --- NM Net Income $ 2.39 $ 1.73 38.2 % Shares used for Computation: Basic 60.9 70.9 (14.1)% Diluted 62.2 76.8 (19.0)% Six Months Six Months Ended Ended % June 30, June 30, Increase/ 2000 1999 (Decrease) Earnings per Common Share: Income Before Extraordinary Charge and Accounting Changes $ 2.68 $ 3.11 (13.8)% Extraordinary Charge (0.07) --- NM Accounting Changes --- (0.47) NM Net Income $ 2.61 $ 2.64 (1.1)% Earnings per Common Share Assuming Dilution: Income Before Extraordinary Charge and Accounting Changes $ 2.64 $ 2.85 (7.4)% Extraordinary Charge (0.07) --- NM Accounting Changes --- (0.42) NM Net Income $ 2.57 $ 2.43 5.8 % Shares used for Computation: Basic 62.1 69.7 (10.9)% Diluted 63.2 77.2 (18.1)%