"U.S. Airlines See Big Increases In Revenue"

Friday, October 20, 2006

Airlines See Big Increases In Revenue
By DAVID KOENIG
The Associated Press


DALLAS - Travelers packed planes operated by Continental Airlines and
Southwest Airlines during the summer, but Continental's third-quarter profit
grew while Southwest's earnings fell in another sign that traditional
carriers are narrowing the gap with low-cost rivals.

Investors pushed up shares of Continental, while Southwest's stock fell 3
percent after Thursday's reports.

Continental Airlines Inc. said it earned $237 million, or $2.17 per share,
in the July-September period, compared with $61 million, or 80 cents per
share, a year earlier. Excluding gains from selling stock in Panama's Copa
Airlines, Continental said it would have earned $146 million, or $1.36 per
share.

Excluding one-time items, Continental beat the $1.22 per share forecast of
analysts surveyed by Thomson Financial.

Southwest Airlines Co. earned $48 million, or 6 cents per share, in the
third quarter, compared with $210 million, or 26 cents per share, a year
earlier.

Excluding a write-down of fuel price-hedging contracts, Southwest said it
would have earned $154 million, or 19 cents per share. On that basis,
analysts were looking for 20 cents per share, according to Thomson.

Both airlines reported big increases in revenue. Continental said sales rose
17 percent to $3.52 billion, and Southwest said revenue grew 17.7 percent,
to $2.34 billion.

Analysts had expected a bit more from each carrier, and company executives
blamed the shortfall on a dip in travel after British authorities discovered
a plot to blow up airliners.

Shares of Continental gained 41 cents Thursday to close at $32.65, while
Southwest shares fell 52 cents, or 3.1 percent, to close at $16.02 on the
New York Stock Exchange.

Continental jets flew 82.7 percent full on average, up from 81.7 percent a
year earlier, and the airline benefited from several recent fare increases.

Fuel costs remained a problem, even though they began to fall during the
quarter. Still, Continental said its fuel bill rose 25.4 percent to $858
million - more than labor, which is usually an airline's biggest expense.

At Southwest, an eagle eye on cost-cutting helped the Dallas carrier post
its record 62nd straight profitable quarter.

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