Continental Projects 2005 Loss on Fuel Cost
{{#rendered}} {{/rendered}}Continental Airlines Inc. (CAL) on Friday reiterated that it expects to post a significant loss for the year due to record high fuel prices, but maintained its forecast for a healthy year-end cash balance.
Continental and its U.S. rivals have been struggling with soaring fuel prices and competition from low-cost rivals. The International Air Transport Association (search), a Geneva-based trade group, has predicted global losses for airlines of $6 billion in 2005, with much of that coming in the U.S.
In a letter to investors, the carrier also forecast it would end the third quarter with an unrestricted cash and short-term investments balance of $1.9 billion to $2 billion. It expects to end the year with a balance of $1.5 billion.
{{#rendered}} {{/rendered}}That matches previous forecasts, in a sign that the recent spike in fuel prices has not worsened its liquidity outlook. Continental is one of the industry's healthier carriers.
Continental shares are down 6.9 percent so far this year, but they have still outperformed the beleaguered U.S. airline sector by 23 percent.
Houston-based Continental said it expects to achieve $300 million in savings in 2005 from pay and benefit reductions agreed with all of its unions except the one representing flight attendants, with which it is still negotiating.
{{#rendered}} {{/rendered}}It said it expects available seats to increase by 9.7 percent in the third quarter and 7.1 percent for the full year, led by increased flights to Asia, including new service between Newark, New Jersey, and Beijing.
Fuel costs should be about $840 million in the third quarter — more than double the year-ago figure — and $2.9 billion for the full year, compared with $1.6 billion for 2004, it said.