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Continental Airlines’ yields, cash outlook and traffic levels improve in Dec-2009. Shares soar

Continental Airlines Chairman and CEO, Jeff Smisek
Continental Airlines Chairman and CEO, Jeff Smisek

Continental Airlines reported an encouraging set of traffic results for Dec-2009, with the smallest yield contraction in 12 months, and improved cash balances, traffic and record load factors.

Following the release of the traffic results, Continental Airlines’ stock climbed to its highest level in almost 12 months in New York trading. 

Best PRASM performance since Dec-2008

During Dec-2009, consolidated passenger revenue per available seat mile (PRASM) is estimated to have decreased between 3.5% and 4.5%, while mainline RASM is estimated to have decreased between 4.5% and 5.5%.

For Nov-2009, Continental Airlines confirmed that consolidated passenger RASM decreased by 8.5%, at the higher end of the carrier’s estimate of a 7-9% reduction, while mainline passenger RASM decreased by 9.8%, also at the higher end of its estimate of a 8-10% reduction.

Continental Airlines consolidated PRASM (US cents per ASM): Feb-2008 to Dec-2009

Looking at a two-year range, Continental’s Dec-2009 RASM was back in positive territory for the first time in 12 months. 

Continental Airlines’ consolidated PRASM growth (two year range): Feb-2009 to Dec-2009

Increasing cash balance

Continental ended 4Q2009 with an unrestricted cash, cash equivalents and short-term investments balance of approximately USD2.85 billion (up from USD2.55 billion at the end of 3Q2009 and USD2.77 billion at the end of Jun-2009). This is ahead of the carrier’s previous expectations, reported only one month ago, that it would end 2009 with a balance of approximately USD2.5 billion.

Load factors remain strong, despite capacity increase

Also in Dec-2009, Continental reported a consolidated (mainline plus regional) load factor of 83.0%, a 3.1 ppts year-on-year improvement, with a mainline load factor of 83.5%, up 3.1 ppts.

Domestic load factors gained 1.1 ppts to 85.1%, with international mainline load factors rising 5.2 ppts to 81.9%, meaning that all four Dec-2009 load factors were records for the month.

The load factor improvements occurred despite Continental increasing consolidated capacity (ASMs) by 2.1% in the month, while traffic (RPMs) was up by 6.0% (mainline capacity was up 2.3% with traffic up by 6.3%).

For the full year, the carrier reported an average consolidated load factor of 81.4% (a 1.2 ppt year-on-year improvement and ahead of the carrier’s expectation) and an average mainline load factor of 81.9% (up 1.1 ppts), which was in line with the carrier’s previous forecasts. 

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