NEW YORK (CNNfn) - Continental Airlines' second-quarter profits plunged due to a drop in business travel, but it still stayed above Wall Street forecasts for a period likely fill the air with red ink from other major carriers.|
The nation's No. 5 airline said it earned net income of $42 million, or 74 cents a diluted share, down from the $153 million, or $2.46 a diluted share, a year earlier, when the industry was far more profitable. Analysts surveyed by earnings tracker First Call expected Continental (CAL: Research, Estimates) to earn 58 cents a share in the most recent period.
Houston-based Continental was more affected by tropical storm Allison during the quarter than most other airlines, and it also had a nearly 8 cent increase in fuel prices compared with the year-earlier period. But the biggest problem it faced was the general fall-off in business travel and the resulting downward pressure on fares across the industry.
Sales slipped slightly to $2.56 billion from $2.57 billion. Miles traveled by paying passengers increased 3.4 percent in the period to 17.1 billion, but the average fare paid by those passengers fell 4.9 percent to 12.73 cents per mile from 13.38 cents per mile.
Continental was helped by a rise in Latin America travel as well as troubles at other major carriers.
No. 2 carrier American Airlines, a unit of AMR Corp. (AMR: Research, Estimates), as well as No. 3 Delta Air Lines (DAL: Research, Estimates) and No. 4 Northwest Airlines (NWAC: Research, Estimates) all were hit either by work stoppages or the threat of work stoppages during the quarter, and No. 1 United Airlines, a unit of UAL Corp. (UAL: Research, Estimates), still is struggling to recapture business travelers lost during flight disruptions during labor negotiations last year.
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Because of the general economic slowdown and a variety of labor problems at other carriers, Continental and discount carrier Southwest Airlines (LUV: Research, Estimates) are the only carriers among the nation's nine largest that are expect to post profits in the second quarter. Southwest reports later this week, and analysts expect its earnings per share to slip to 22 cents from 24 cents a year ago, giving it a shot at being the only carrier to either meet or beat year-ago results.
Continental stock rose 20 cents to $51 Friday.