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Continental yield contractions continue, but stabilise, in Aug-2009

2-Sep-2009
Continental Airlines Chairman and CEO, Jeff Smisek
Continental Airlines Chairman and CEO, Jeff Smisek

Continental Airlinesyields appear to have bottomed out, despite seeing the seventh consecutive month of double digit declines (and eight consecutive months of declines) in Aug-2009.

In Aug-2009, the Houston-based carrier estimates that consolidated passenger revenue per available seat mile (RASM) was down by 16.5% to 17.5% (mainline RASM down by 17.0-18.0%), although this was the smallest contraction since Apr-2009.

For July-2009, the carrier confirmed that consolidated PRASM decreased 17.4% year-on-year, on the higher end of its estimates (mainline down 18.3%), after reductions of 19.9% in both May-2009 and Jun-2009.  

Continental Airlines’ consolidated PRASM growth (% change year-on-year): Jun-2008 to Aug-2009

Load factors remain strong

In other traffic developments in the month, Continental Airlines reported a consolidated (mainline plus regional) load factor of 85.8%, a 1.9 ppt year-on-year improvement, with a mainline load factor of 86.6% (+1.7 ppts). Domestic load factors gained 2.5 ppts to 88.8% with international mainline load factors up 0.3 ppts to 85.3% and regional load factors up 2.8 ppts to 79.2%, for the only segment to see a load factor below 80%.

The load factor improvement occurred as the carrier reduced consolidated capacity (ASMs) by 6.0% in the month, while traffic (RPMs) was down by 3.9% (mainline capacity was down 5.6% with traffic falling by 3.6%).

Yield contractions expected to continue in Sep-2009

Despite a trend of slow improvement in Continental’s year-on-year yield trends, Continental’s yield contractions for Sep-2009 are likely to remain deeply negative, as they will come off significant growth of 12.4% in Sep-2008 (comparatively, Aug-2009’s and Jul-2009's contractions came off growth of 5.3% and 4.8% in the previous corresponding periods).


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