News Release
Continental Airlines Reports Earnings Per Share Increase of 56 Percent
Record Third Quarter EPS of $2.24 per share
HOUSTON, October 16, 2000 -- Continental Airlines (NYSE: CAL and CAL.A) today reported third quarter diluted earnings per share of $2.24 (before an extraordinary charge) a 56 percent increase over the same period in 1999. This marks the 22nd consecutive profitable quarter for Continental, and the highest third quarter earnings per share in company history. These results exceed the First Call consensus of $2.19 per share.
Third quarter 2000 net income was $137 million (excluding a $2 million extraordinary charge for early debt repayment), which exceeds 1999 third quarter net income of $104 million ($1.44 diluted earnings per share) by 32 percent.
"Our consistent approach to employee satisfaction has generated tremendous customer loyalty and record profitability," said Gordon Bethune, Continental Airlines' chairman and chief executive officer. "We succeed year after year by remaining focused on the fundamentals of our business."
Third Quarter Operating Results
Third quarter passenger revenue rose 16 percent to a record $2.5 billion, driven by a record third quarter yield of 12.98¢ and an all time record quarterly load factor of 77.5 percent. Revenue per available seat mile (RASM) increased 11 percent in the third quarter.
RASM increased for all geographic markets as shown below:
| Third Quarter 2000 vs. Third Quarter 1999 | |||
|---|---|---|---|
| Passenger Revenue | RASM | ||
| Domestic | 12.2% | 11.0% | |
| Latin America | 15.7% | 4.3% | |
| Transatlantic | 27.9% | 13.8% | |
| Pacific | 13.4% | 19.8% | |
Continental continues to enjoy significant domestic length-of-haul adjusted yield and RASM premiums to the industry.
Despite a difficult summer of adverse weather and record traffic, Continental improved its on-time performance by more than 6 percentage points year-over-year to 77 percent. These results contributed to Continental continuing to out-perform the competition in consumer satisfaction polls. During the quarter, the airline was named the top U.S.-based global carrier in Fortune magazine's "World's Most Admired Companies" list. Continental also ranked No. 1 in a customer loyalty survey conducted by Brand Keys, a New York-based customer loyalty research firm.
"Our employees consistently deliver an industry leading product," said Greg Brenneman, Continental's president and chief operating officer. "As a result, we're able to attract more business customers to our airline and significantly increase our revenue and profitability."
The positive trend in online bookings growth continued in the quarter, with a 101 percent increase year-over-year. Additionally, E-ticket sales continue to grow, and now represent 54 percent of total sales, while eService Center check-ins account for approximately 20 percent of eligible E-Ticket customer check-ins. The Continental Airlines Web site (www.continental.com) continues to take top honors, recently being named as the No. 1 airline site by Forrester PowerRankings™, and No. 1 in customer satisfaction by NPD New Media Services.
In the third quarter the airline launched service between New York and Oakland, making it the only carrier providing nonstop service to all three of California's Bay area airports from New York. Additionally, Continental Express began service from LaGuardia to Buffalo, N.Y. and Richmond, Va.
Third Quarter Financial Results
The company achieved its goal of a 10 percent operating margin again in the third quarter, in spite of fuel prices increasing more than 70 percent. Cost per available seat mile increased 9 percent, compared to the same period in 1999. Keeping fuel prices constant, however, unit costs were up only 3 percent year-over-year.
"Continental recorded $27 million in fuel hedge gains in the quarter, bringing the cumulative fuel hedge gains realized since 1995 to approximately $180 million," said Larry Kellner, Continental's executive vice president and chief financial officer. "When you take the talents of our fuel hedging group, the greater fuel efficiency of our modern fleet, and our outstanding customer base, you can see that we have the ability to offset the entire fuel price hike."
The company recently announced an increase in the size of its stock repurchase program by the amount of cash proceeds paid to the company under the company's employee stock purchase and stock option plans. Since the beginning of this year, these amounts total approximately $80 million. Including that increase and one-half of this quarter's net income, the total amount authorized for share repurchases aggregates $1.45 billion, of which approximately $260 million remains. To date, the company has repurchased 27.9 million shares of Class B common stock for $1.19 billion.
The company ended the quarter with $1.16 billion in cash, the 10th consecutive quarter the company has ended with a cash balance in excess of its $1 billion cash target. During the quarter, Continental redeemed the remaining $54 million of its 9.5 percent senior unsecured notes, and prepaid an additional $160 million of long-term debt, bringing the total early debt repayments for the year to more than $400 million.
During the third quarter, Continental took delivery of the company's first two 767- 400ER extended range aircraft, 11 Boeing 737-800s, and one Boeing 757-200 aircraft, and retired five Boeing 727-200s, three MD-80s and one DC-10-30 aircraft.
Corporate Background
Continental Airlines is the fifth largest airline in the U.S., offering more than 2,400 departures daily to 138 domestic and 92 international destinations. Operating hubs in Newark, Houston, Cleveland and Guam, Continental (<www.continental.com>) serves more international cities than any other U.S. carrier, including extensive service throughout the Americas, Europe and Asia.
Continental Airlines will conduct a regular quarterly telephone briefing today to discuss these results at 9:30 a.m. CDT/10:30 a.m. EDT. To listen to a live broadcast of the conference call via the World Wide Web, go to www.continental.com/corporate.
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In millions of dollars, except per share data) (Unaudited) Three Months Ended Three Months Ended % Increase/ September 30, September 30, (Decrease) 2000 1999 Operating Revenue: Passenger $2,469 $2,132 15.8% Cargo and mail 93 76 22.4% Other 60 56 7.1% 2,622 2,264 15.8% Operating Expenses: Wages, salaries and related costs 740 644 14.9% Aircraft fuel 363 208 74.5% Aircraft rentals 215 197 9.1% Maintenance, materials and repairs 167 156 7.1% Commissions 138 154 (10.4)% Landing fees and other rentals 133 130 2.3% Reservations and sales 117 107 9.4% Depreciation and amortization 102 93 9.7% Other 393 373 5.4% 2,368 2,062 14.8% Operating Income 254 202 25.7% Nonoperating Income (Expense): Net interest expense (23) (29) (20.7)% Other, net (7) (6) 16.7% (30) (35) (14.3)% Income before Income Taxes and Extraordinary Charge 224 167 34.1% Income Tax Provision (87) (63) 38.1% Extraordinary Charge, Net of Tax (2) -- NM Net Income $ 135 $ 104 29.8% CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES FINANCIAL SUMMARY (In millions of dollars, except per share data) (Unaudited) Nine Months Ended Nine Months Ended % Increase/ September 30, September 30, (Decrease) 2000 1999 Operating Revenue: Passenger $7,030 $6,106 15.1% Cargo and mail 266 213 24.9% Other 174 168 3.6% 7,470 6,487 15.2% Operating Expenses: Wages, salaries and related costs 2,117 1,882 12.5% Aircraft fuel 1,026 512 100.4% Aircraft rentals 631 570 10.7% Maintenance, materials and repairs 497 454 9.5% Commissions 412 439 (6.2)% Landing fees and other rentals 400 365 9.6% Reservation and sales 352 314 12.1% Depreciation and amortization 295 266 10.9% Other 1,153 1,083 6.5% 6,883 5,885 17.0% Operating Income 587 602 (2.5)% Nonoperating Income (Expense): Net interest expense (80) (80) -- Other, net (10) 3 NM (90) (77) 16.9% Income before Income Taxes, Cumulative Effect of Accounting Changes and Extraordinary Charge 497 525 (5.3)% Income Tax Provision (193) (204) (5.4)% Income before Cumulative Effect of Accounting Changes and Extraordinary Charge 304 321 (5.3)% Cumulative Effect of Accounting Changes, Net of Tax -- (33) NM Extraordinary Charge, Net of Tax (6) -- NM Net Income $ 298 $ 288 3.5% STATISTICS (jet operations only)(a) Three Months % Ended September 30, Increase/ 2000 1999 (Decrease) Enplanements (thousands) 12,155 11,922 2.0% Revenue passenger miles (millions) 17,325 16,394 5.7% Available seat miles (millions) 22,356 21,573 3.6% Passenger load factor 77.5% 76.0% 1.5 pts. Breakeven passenger load factor 65.6% 66.1% (0.5) pts. Passenger revenue per available seat mile 10.06¢ 9.07¢ 10.9% Total revenue per available seat mile 10.89¢ 9.78¢ 11.4% Cost per available seat mile 9.65¢ 8.83¢ 9.3% Average yield per revenue passenger mile 12.98¢ 11.93¢ 8.8% Average price per gallon of fuel, excluding fuel taxes 84.18¢ 48.70¢ 72.9% Average price per gallon of fuel, including fuel taxes 88.41¢ 52.76¢ 67.6% Fuel gallons consumed (millions) 399 404 (1.2)% Actual aircraft in fleet at end of period (b) 367 359 2.2% Average stage length 1,187 1,141 4.0% Nine Months % Ended September 30, Increase/ 2000 1999 (Decrease) Enplanements (thousands) 35,440 34,193 3.7% Revenue passenger miles (millions) 48,821 45,050 8.4% Available seat miles (millions) 64,691 60,961 6.1% Passenger load factor 75.5% 73.9% 1.6 pts. Breakeven passenger load factor 66.3% 63.6% 2.7 pts. Passenger revenue per available seat mile 9.91¢ 9.24¢ 7.3% Total revenue per available seat mile 10.73¢ 9.97¢ 7.6% Cost per available seat mile 9.73¢ 8.95¢ 8.7% Average yield per revenue passenger mile 13.13¢ 12.51¢ 5.0% Average price per gallon of fuel, excluding fuel taxes 82.10¢ 41.97¢ 95.6% Average price per gallon of fuel, including fuel taxes 86.32¢ 46.25¢ 86.6% Fuel gallons consumed (millions) 1,162 1,158 0.4% Actual aircraft in fleet at end of period (b) 367 359 2.2% Average stage length 1,158 1,110 4.3% 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 four all-cargo 727 aircraft at CMI in 1999 CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES EARNINGS PER SHARE (In millions of dollars, except per share data) (Unaudited) Three Months Ended Three Months Ended % Increase/ September 30, September 30, (Decrease) 2000 1999 Earnings per Common Share: Income Before Extraordinary Charge $ 2.29 $ 1.47 55.8% Extraordinary Charge (0.03) -- NM Net Income $ 2.26 $ 1.47 53.7% Earnings per Common Share Assuming Dilution: Income Before Extraordinary Charge $ 2.24 $ 1.44 55.6% Extraordinary Charge (0.03) -- NM Net Income $ 2.21 $ 1.44 53.5% Shares used for Computation: Basic 59.7 70.8 (15.7)% Diluted 61.1 72.1 (15.3)% Nine Months Ended Nine Months Ended % Increase/ September 30, September 30, (Decrease) 2000 1999 Earnings per Common Share: Income Before Extraordinary Charge and Accounting Changes $ 4.95 $ 4.58 8.1% Extraordinary Charge (0.10) -- NM Accounting Changes -- (0.47) NM Net Income $ 4.85 $ 4.11 18.0% Earnings per Common Share Assuming Dilution: Income Before Extraordinary Charge and Accounting Changes $ 4.85 $ 4.29 13.1% Extraordinary Charge (0.09) -- NM Accounting Changes -- (0.43) NM Net Income $ 4.76 $ 3.86 23.3% Shares used for Computation: Basic 61.3 70.1 (12.6)% Diluted 62.5 75.5 (17.2)%