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

Continental Airlines’ yields 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).