Continental Airlines’ yields and traffic levels improve, but long and slow road to recovery


Continental reported an encouraging set of traffic results for January, with the smallest yield contraction in over 12 months, record load factors and improved traffic results.

Best PRASM performance since Dec-2008

During Jan-2010, consolidated passenger revenue per available seat mile (PRASM) is estimated to have decreased between 1.0% and 2.0%, while mainline PRASM is estimated to have decreased between 2.5% and 3.5%. However, Jan-2009 PRASM was already falling (by around 5%).

For Dec-2009, Continental Airlines confirmed that consolidated passenger RASM decreased by 4.1%, within the carrier's expectations of a 3.5% to 4.5% reduction, while mainline passenger RASM decreased by 4.8%, on the lower end of the carrier's estimates of a 4.5% to 5.5% reduction.

Continental Airlines consolidated PRASM (US cents per ASM): Feb-2008 to Jan-2010

Looking at a two-year range, there is a positive RASM trend.

Load factors remain strong, despite capacity increase

Also in Jan-2010, the airline reported a 3.1% increase in consolidated passenger numbers, to 4.7 million, with Mainline passengers up 2.0% to 3.5 million, and regional passengers up 6.3% to 1.3 million.

Continental reported a consolidated (mainline plus regional) load factor of 77.2%, a 4.0 ppts year-on-year improvement, with a mainline load factor of 78.0%, also up 4.0 ppts. Both January load factors were records for the month. Domestic load factors gained 1.6 ppts to 78.2%, with a record international mainline load factor of 77.8%, rising 6.1 ppts.

The load factor improvements occurred despite Continental increasing consolidated capacity (ASMs) by 2.8% in the month, while traffic (RPMs) was up by 8.5% (mainline capacity was up 3.1% with traffic up by 8.6%).

Single digit capacity growth in 2010; yield improvements likely following double-digit contractions in 2009

Looking forward, Continental expects consolidated capacity in 2010 to increase by 1-2%, with mainline capacity up in the 1.5% to 2.5% range, with mainline domestic capacity "about flat" year-on-year and mainline international capacity up 4% to 5% year-over-year.

The carrier also confirmed it is scheduled to take delivery of 12 B737 aircraft and two B777s in 2010, and expects to take delivery of one leased B757-300 aircraft in 1Q2010.

Continental also expects yield improvements in the year, following a 14.5% reduction in Mainline revenue per ASM, a 15.7% reduction in Mainline yield per RPM and 13.3% reduction in the Mainline average fare per revenue passenger in 2009. Chairman, President and CEO, Jeff Smisek, has commented that the carrier is seeing "some business traffic increasing", but cautioned that the carrier will "likely have a long and slow road to recovery".

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