SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 18, 2000
CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-09781 74-2099724
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1600 Smith Street, Dept. HQSEO, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 324-2950
(Registrant's telephone number, including area code)
<PAGE>
Item 5.Other Events.
On January 18, 2000, Continental Airlines, Inc. issued a press
release, which is filed herewith as Exhibit 99.1 and incorporated
herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Continental Airlines, Inc. has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
CONTINENTAL AIRLINES, INC.
By /s/ Jeffery A. Smisek
Jeffery A. Smisek
Executive Vice President
and General Counsel
January 18, 2000
<PAGE>
EXHIBIT INDEX
99.1 Press release, dated January 18, 2000.
<PAGE>
Exhibit 99.1
CONTINENTAL AIRLINES REPORTS
FOURTH QUARTER RESULTS AND
FIFTH STRAIGHT YEAR OF PROFITS
Moves up in the rankings of 100 Best Companies to Work for in
America
HOUSTON, Jan. 18, 2000 -- Continental Airlines (NYSE: CAL and
CAL.A) today reported fourth quarter net income of $33 million
($0.48 basic and $0.47 diluted earnings per share), exclusive of
previously announced gains and charges. This exceeds First Call's
consensus estimate of $0.39 diluted earnings per share.
The company reported its fifth straight year of profits, with
annual net income of $359 million ($5.15 basic and $4.89 diluted
earnings per share), excluding special gains and charges.
Including special gains and charges, the company reported
fourth quarter net income of $167 million ($2.46 basic and $2.42
diluted earnings per share) and annual net income of $455 million
($6.54 basic and $6.20 diluted earnings per share).
The company ended the year with its stock having appreciated
32.5 percent, highest of all the major U.S. airlines.
"In spite of high fuel prices and a tough revenue
environment, we're the best positioned airline for the future,"
said Gordon Bethune, Continental Airlines' chairman and chief
executive officer. "The market has recognized Continental's
achievements and potential, as evidenced by our stock appreciation,
which during 1999 and over the last five years has outperformed the
industry."
Fourth Quarter Operating Results
(Exclusive of special gains and charges)
Fourth quarter passenger revenue rose 11.0 percent to $2.0
billion. Traffic growth continued to outpace capacity increases,
with a 13.3 percent increase in revenue passenger miles on a
capacity increase of 10.5 percent. This resulted in a record load
factor for the quarter of 71.3 percent.
Revenue per available seat mile (RASM) declined 1.0 percent
for the quarter, driven by continued yield pressure in the
transatlantic markets.
Domestic, Latin America and Micronesia operations recorded
year-over-year increases in RASM. Detailed statistics by
geographic region are shown below:
<TABLE>
Fourth Quarter 1999 vs. Fourth Quarter 1998
<CAPTION>
Passenger Revenue RASM
<S> <C> <C>
Domestic 6.4% 1.2%
Transatlantic 22.4% (14.1%)
Latin America 7.8% 6.8%
Micronesia (8.3%) 20.7%
Transpacific --- Not comparable ---
</TABLE>
Continental continued to enjoy domestic yield and length-
of-haul adjusted RASM premiums to the industry. Five years ago,
Continental lagged behind the industry average in both of these
measures.
Over each of the last eleven quarters, Continental Express'
traffic growth has exceeded capacity increases (on a quarter-
over-quarter basis) by a strong margin. In the fourth quarter,
Continental Express' capacity increased 35.5 percent while
traffic jumped 43.9 percent, resulting in a load factor increase
of 3.7 percentage points.
As previously announced, Continental is early retiring six
DC-10-30 aircraft (bringing to 13 the total DC-10-30 aircraft
that will have been early retired by the end of this year), and
replacing certain of those aircraft with narrowbody aircraft in
select European markets which have been underperforming in the
current revenue environment.
"We're pleased with the way our traffic growth exceeded our
1999 capacity additions," said Greg Brenneman, Continental's
president and chief operating officer. "However, we have been
unable to recover the dramatic increase in fuel prices in our
revenues."
Surging fuel prices drove Continental's cost per available
seat mile 3.2 percent higher in the fourth quarter as compared to
the prior year. On a constant fuel price basis, the company was
able to hold unit costs flat year-over-year, as newer, more fuel-
efficient aircraft entered the fleet.
"If fuel costs for the fourth quarter of 1999 remained as
they were in the fourth quarter of 1998, our pre-tax income would
have exceeded last year's results," said Larry Kellner,
Continental's executive vice president and chief financial
officer. "However, if high fuel costs continue without an
improvement in the revenue environment, the company may not post
a profit in the first quarter of 2000, as we have in the past
four years."
During the fourth quarter, Continental announced a joint
marketing initiative with KLM Royal Dutch Airlines, moving one
step closer to forming a global strategic alliance. The company
also acquired a 28 percent stake in Gulfstream International
Airlines, a privately held regional carrier serving Florida and
the Caribbean.
Additionally, Continental launched non-stop service from
Houston to Sao Paulo, Brazil, and Continental Express added
service to Saltillo and Torreon, Mexico.
Continental also entered into an agreement with Northwest,
Delta and United airlines to create an independently owned travel
website. To date, 27 U.S. and foreign carriers, including
American and US Airways, have signed up to join the web-based
travel service.
Continental's own website continued to gain momentum, with
online bookings increasing 174 percent year-over-year and e-
ticket sales as a percent of total sales increasing to 47 percent
during the fourth quarter.
Fourth Quarter Financial Accomplishments
During the fourth quarter, Continental continued its
previously announced $1.2 billion stock repurchase program. To
date, the company has repurchased 18.7 million shares of Class B
common stock for $799 million.
In connection with its stock repurchase program,
Continental has held preliminary discussions with Northwest
Airlines concerning the acquisition by Continental of all the
Class A stock of Continental currently held by Northwest. The
alliance between Continental and Northwest is beneficial to both
carriers, and any transaction would be designed to preserve and
strengthen the benefits of the alliance. Continental desires to
simplify its equity capital structure and is committed to
continuing to repurchase outstanding equity. The company ended
the year with cash and short-term investments of $1.6 billion.
1999 Achievements
While posting its fifth straight year of profits, the
company continued to receive top billing in customer satisfaction
polls and achieved other significant milestones.
- For the second year in a row, Fortune Magazine ranked
Continental among the 100 Best Companies to Work for in
America, with the carrier moving up 17 positions on the
list to No. 23 from No. 40. In addition, Continental was
the largest employer of the top 42 corporations and was
one of only two airlines to place on the list.
- In addition to being rated one of the most admired global
airlines, Continental again won the J.D. Power award for
customer satisfaction.
- During 1999, Continental took delivery of 58 new Boeing
jets and currently flies the youngest jet fleet in the
industry. The company retired 61 aircraft in 1999.
- A record 46 million passengers flew Continental last
year, boosting the load factor to an all-time record high
of 73.2 percent.
- E-ticket sales soared to new heights. For all of 1999,
e-ticket sales accounted for 41 percent of total sales.
Continental's website is rated No. 1 among airline
websites in consumer polls, including the prestigious
Forrester poll.
- The company continued to deliver on its promise to bring
employees up to industry-standard wages. Additionally,
the company paid employees $26 million in on-time
performance bonuses and gave away 16 new Ford Explorers
for perfect attendance. On Feb. 14, the company will
distribute approximately $62 million (4.3 percent of
eligible wages) in 1999 profit sharing to its employees.
Corporate Background
Continental Airlines is the fifth largest airline in the
U.S., offering more than 2,200 departures daily to 136 domestic
and 87 international destinations. Operating major hubs in New
York, Houston and Cleveland, Continental (www.continental.com)
has extensive service throughout the Americas, and to Europe and
Asia.
-- tables attached --
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
FINANCIAL SUMMARY - EXCLUDING SPECIAL GAINS AND CHARGES
(In millions of dollars)
<CAPTION>
%
Three Months Ended Three Months Ended Increase/
December 31, 1999 December 31, 1998 (Decrease)
<S> <C> <C> <C>
Operating Revenue:
Passenger. . . . . . . . . . . $2,016 $1,817 11.0 %
Cargo and mail . . . . . . . . 90 73 23.3 %
Other. . . . . . . . . . . . . 52 49 6.1 %
2,158 1,939 11.3 %
Operating Expenses:
Wages, salaries and
related costs . . . . . . . 628 619 1.5 %
Aircraft fuel. . . . . . . . . 259 173 49.7 %
Aircraft rentals . . . . . . . 201 177 13.6 %
Maintenance,
materials and
repairs . . . . . . . . . . 149 127 17.3 %
Commissions. . . . . . . . . . 137 135 1.5 %
Other rentals and
landing fees. . . . . . . . 132 104 26.9 %
Depreciation and
amortization. . . . . . . . 94 79 19.0 %
Other. . . . . . . . . . . . . 473 397 19.1 %
2,073 1,811 14.5 %
Operating Income . . . . . . . . . 85 128 (33.6) %
Nonoperating Income
(Expense):
Net interest
expense . . . . . . . . . . (27) (17) 58.8 %
Other, net . . . . . . . . . . (4) - NM
(31) (17) 82.4 %
Income before Income
Taxes. . . . . . . . . . . . . 54 111 (51.4)%
Income Tax Provision . . . . . . . (21) (42) (50.0)%
Distributions on
Preferred Securities
of Trust, Net of
Tax. . . . . . . . . . . . . . - (3) NM
Net Income, excluding
special gains and
charges. . . . . . . . . . . . $ 33 $ 66 (50.0)%
</TABLE>
Note: Results for the three months ended December 31, 1999 exclude the
positive impact to net income of $134 million from the net gains on the
sales of Amadeus Global Travel Distribution, S.A., Equant N.V. and other
assets, the fleet disposition/impairment loss for the DC10-30's and
other items, and the effect of the change in accounting for the sale of
frequent flyer mileage credits.
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
FINANCIAL SUMMARY
(In millions of dollars)
<CAPTION>
%
Three Months Ended Three Months Ended Increase/
December 31, 1999 December 31, 1998 (Decrease)
<S> <C> <C> <C>
Operating Revenue:
Passenger. . . . . . . . . . . $2,010 $1,817 10.6 %
Cargo and mail . . . . . . . . 90 73 23.3 %
Other. . . . . . . . . . . . . 52 49 6.1 %
2,152 1,939 11.0 %
Operating Expenses:
Wages, salaries and related
costs . . . . . . . . . . . 628 619 1.5 %
Aircraft fuel. . . . . . . . . 259 173 49.7 %
Aircraft rentals . . . . . . . 201 177 13.6 %
Maintenance, materials and
repairs . . . . . . . . . . 149 127 17.3 %
Commissions. . . . . . . . . . 137 135 1.5 %
Other rentals and landing
fees. . . . . . . . . . . . 132 104 26.9 %
Depreciation and
amortization. . . . . . . . 94 79 19.0 %
Fleet disposition/impairment
losses. . . . . . . . . . . 81 - NM
Other. . . . . . . . . . . . . 473 397 19.1 %
2,154 1,811 18.9 %
Operating Income
(Loss) . . . . . . . . . . . . (2) 128 NM
Nonoperating Income (Expense):
Net interest
expense . . . . . . . . . . (27) (17) 58.8 %
Gain on sale of
Amadeus . . . . . . . . . . 297 - NM
Other, net . . . . . . . . . . 5 - NM
275 (17) NM
Income before Income
Taxes. . . . . . . . . . . . . 273 111 NM
Income Tax Provision . . . . . . . (106) (42) NM
Distributions on Preferred
Securities of Trust,
Net of Tax . . . . . . . . . . - (3) NM
Net Income . . . . . . . . . . . . $ 167 $ 66 NM
</TABLE>
Note: Certain reclassifications have been made to prior year's financial
results to conform to current year presentation.
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
FINANCIAL SUMMARY - EXCLUDING SPECIAL GAINS AND CHARGES
(In millions of dollars)
%
<CAPTION>
Year Ended Year Ended Increase/
December 31, 1999 December 31, 1998 (Decrease)
<S> <C> <C> <C>
Operating Revenue:
Passenger. . . . . . . . . . . $8,148 $7,456 9.3 %
Cargo and mail . . . . . . . . 303 275 10.2 %
Other. . . . . . . . . . . . . 220 196 12.2 %
8,671 7,927 9.4 %
Operating Expenses:
Wages, salaries and related
costs . . . . . . . . . . . 2,510 2,218 13.2 %
Aircraft fuel. . . . . . . . . 771 727 6.1 %
Aircraft rentals . . . . . . . 771 659 17.0 %
Maintenance, materials and
repairs . . . . . . . . . . 603 582 3.6 %
Commissions. . . . . . . . . . 576 583 (1.2)%
Other rentals and landing
fees. . . . . . . . . . . . 497 414 20.0 %
Depreciation and
amortization. . . . . . . . 360 294 22.4 %
Other. . . . . . . . . . . . . 1,870 1,627 14.9 %
7,958 7,104 12.0 %
Operating Income . . . . . . . . . 713 823 (13.4)%
Nonoperating Income (Expense):
Net interest
expense . . . . . . . . . . (107) (64) 67.2 %
Other, net . . . . . . . . . . (21) 11 NM
(128) (53) NM
Income before Income
Taxes. . . . . . . . . . . . . 585 770 (24.0)%
Income Tax Provision . . . . . . . (226) (293) (22.9)%
Distributions on Preferred
Securities of Trust,
Net of Tax . . . . . . . . . . - (13) NM
Net Income, excluding special
gains and charges. . . . . . . $ 359 $ 464 (22.6)%
</TABLE>
Note: Results for the year ended December 31, 1999 exclude the positive
impact to net income of $96 million from the net gains on the sales of
Amadeus, Equant and other assets, the fleet disposition/impairment loss
for the DC10-30's and other items, and the effect of the changes in
accounting for start-up costs and the sale of frequent flyer mileage
credits.
Results for the year ended December 31, 1998 exclude the negative impact
to net income of $81 million from the fleet disposition/impairment
charge for the early retirement of certain jet and turboprop aircraft
and the extraordinary loss on early extinguishment of debt.
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
FINANCIAL SUMMARY
(In millions of dollars)
%
<CAPTION>
Year Ended Year Ended Increase/
December 31, 1999 December 31, 1998 (Decrease)
<S> <C> <C> <C>
Operating Revenue:
Passenger. . . . . . . . . . . $8,116 $7,456 8.9 %
Cargo and mail . . . . . . . . 303 275 10.2 %
Other. . . . . . . . . . . . . 220 196 12.2 %
8,639 7,927 9.0 %
Operating Expenses:
Wages, salaries and related
costs . . . . . . . . . . . 2,510 2,218 13.2 %
Aircraft fuel. . . . . . . . . 771 727 6.1 %
Aircraft rentals . . . . . . . 771 659 17.0 %
Maintenance, materials and
repairs . . . . . . . . . . 603 582 3.6 %
Commissions. . . . . . . . . . 576 583 (1.2)%
Other rentals and landing
fees. . . . . . . . . . . . 497 414 20.0 %
Depreciation and
amortization. . . . . . . . 360 294 22.4 %
Fleet dispositions/impairment
losses. . . . . . . . . . . 81 122 (33.6)%
Other. . . . . . . . . . . . . 1,870 1,627 14.9 %
8,039 7,226 11.3 %
Operating Income . . . . . . . . . 600 701 (14.4)%
Nonoperating Income (Expense):
Net interest
expense . . . . . (107) (64) 67.2 %
Gain on sale of
Amadeus . . . . . . . . . . 297 - NM
Other, net . . . . . . . . . . 8 11 (27.3)%
198 (53) NM
Income before Income Taxes,
Cumulative Effect of Accounting
Changes and Extraordinary
Charge . . . . . . . . . . . . 798 648 23.1 %
Income Tax Provision . . . . . . . (310) (248) 25.0 %
Distributions on Preferred
Securities of Trust,
Net of Tax . . . . . . . . . . - (13) NM
Income before Cumulative Effect
of Accounting Changes
and Extraordinary
Charge . . . . . . . . . . . . 488 387 26.1 %
Cumulative Effect of Accounting
Changes, Net of
Tax. . . . . . . . . . . . . . (33) - NM
Extraordinary Charge, Net of
Tax. . . . . . . . . . . . . . - (4) NM
Net Income . . . . . . . . . . . . $ 455 $ 383 18.8 %
</TABLE>
Note: Certain reclassifications have been made to the prior year's
financial results to conform to current year presentation.
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
STATISTICS - EXCLUDING SPECIAL GAINS AND CHARGES
(jet operations only) (a)
<CAPTION>
Three Months %
Ended December 31, Increase/
1999 1998 (Decrease)
<S> <C> <C> <C>
Enplanements (thousands) . . . . . . . . . . 11,347 10,637 6.7 %
Revenue passenger miles
(millions) . . . . . . . . . . . . . . . . 14,972 13,219 13.3 %
Available seat miles
(millions) . . . . . . . . . . . . . . . . 20,985 18,988 10.5 %
Passenger load factor. . . . . . . . . . . . 71.3% 69.6% 1.7 pts.
Breakeven passenger load
factor . . . . . . . . . . . . . . . . . . 68.4% 63.2% 5.2 pts.
Passenger revenue per
available seat mile
(cents). . . . . . . . . . . . . . . . . . 8.73 8.82 (1.0)%
Total revenue per available
seat mile (cents). . . . . . . . . . . . . 9.53 9.56 (0.3)%
Cost per available seat
mile (cents) . . . . . . . . . . . . . . . 9.16 8.88 3.2 %
Average yield per revenue
passenger mile (cents) . . . . . . . . . . 12.23 12.66 (3.4) %
Average price per gallon of
fuel, excluding fuel
taxes (cents). . . . . . . . . . . . . . . 63.45 44.36 43.0 %
Average price per gallon of
fuel, including fuel
taxes (cents). . . . . . . . . . . . . . . 67.42 48.40 39.3 %
Fuel gallons consumed
(millions) . . . . . . . . . . . . . . . . 384 372 3.2 %
Actual aircraft in fleet
at end of period (b) . . . . . . . . . . . 363 363 -
Average stage length . . . . . . . . . . . . 1,128 1,057 6.7 %
</TABLE>
<TABLE>
<CAPTION>
Year %
Ended December 31, Increase/
1999 1998 (Decrease)
<S> <C> <C> <C>
Enplanements (thousands) . . . . . . . . . . 45,540 43,625 4.4 %
Revenue passenger miles
(millions) . . . . . . . . . . . . . . . . 60,022 53,910 11.3 %
Available seat miles
(millions) . . . . . . . . . . . . . . . . 81,946 74,727 9.7 %
Passenger load factor. . . . . . . . . . . . 73.2% 72.1% 1.1 pts.
Breakeven passenger load
factor . . . . . . . . . . . . . . . . . . 65.2% 61.6% 3.6 pts.
Passenger revenue per
available seat mile
(cents). . . . . . . . . . . . . . . . . . 9.10 9.23 (1.4) %
Total revenue per
available seat mile
(cents). . . . . . . . . . . . . . . . . . 9.85 9.95 (1.0) %
Cost per available
seat mile (cents) . . . . . . . . . . . . 9.03 8.89 1.6 %
Average yield per revenue
passenger mile
(cents). . . . . . . . . . . . . . . . . . 12.43 12.79 (2.8)%
Average price per gallon of
fuel, excluding fuel
taxes (cents). . . . . . . . . . . . . . . 47.31 46.83 1.0 %
Average price per gallon
of fuel, including fuel
taxes (cents). . . . . . . . . . . . . . . 51.51 51.20 0.6 %
Fuel gallons consumed
(millions) . . . . . . . . . . . . . . . . 1,542 1,487 3.7 %
Actual aircraft in fleet
at end of period (b) . . . . . . . . . . . 363 363 -
Average stage length . . . . . . . . . . . . 1,114 1,044 6.7 %
</TABLE>
Note: Continental has entered into block space arrangements with
certain other carriers whereby one or more of the Parties is obligated
to purchase capacity on the other carrier. The tables above do not
include the statistics for the capacity that was purchased by another
carrier.
(a) Excludes regional jets operated by Continental Express
(b) Excludes four and six all-cargo 727 aircraft at CMI in 1999 and
1998, respectively
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
EARNINGS PER SHARE - EXCLUDING SPECIAL GAINS AND CHARGES
(In millions, except per share data)
<CAPTION>
Three Months Ended Three Months Ended
December 31, 1999 December 31, 1998
Basic Diluted Basic Diluted
EPS EPS EPS EPS
<S> <C> <C> <C> <C>
Net Income $167 $167 $ 66 $ 66
Special Gains and Charges (134) (134) - -
Net Income excluding
Special Gains and
Charges 33 33 66 66
Net Interest Added Back on
Convertible Securities - - - 5
Adjusted Net Income 33 33 66 71
Shares Used for
Computation 67.7 68.9 61.3 78.3
Earnings Per Share
Excluding Special
Gains and Charges $0.48 $0.47 $1.08 $0.91
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
Basic Diluted Basic Diluted
EPS EPS EPS EPS
<S> <C> <C> <C> <C>
Net Income $455 $455 $383 $383
Special Gains and Charges (96) (96) 81 81
Net Income excluding
Special Gains and
Charges 359 359 464 464
Net Interest Added Back on
Convertible Securities - 4 - 20
Adjusted Net Income 359 363 464 484
Shares Used for
Computation 69.5 73.9 60.3 80.3
Earnings Per Share
Excluding Special
Gains and Charges $ 5.15 $ 4.89 $ 7.68 $ 6.03
</TABLE>
<TABLE>
CONTINENTAL AIRLINES, INC. AND SUBSIDIARIES
EARNINGS PER SHARE
(In millions, except per share data)
%
<CAPTION>
Three Months Ended Three Months Ended Increase/
December 31, 1999 December 31, 1998 (Decrease)
<S> <C> <C> <C>
Earnings per Common
Share $ 2.46 $ 1.08 127.8 %
Earnings per Common Share
Assuming Dilution $ 2.42 $ 0.91 165.9 %
Shares used for Computation:
Basic 67.7 61.3 10.4 %
Diluted 68.9 78.3 (12.0)%
</TABLE>
<TABLE>
<CAPTION>
%
Year Ended Year Ended Increase/
December 31, 1999 December 31, 1998 (Decrease)
<S> <C> <C> <C>
Earnings per Common Share:
Income Before Cumulative
Effect of Accounting
Changes and Extra-
ordinary Charge $ 7.02 $ 6.40 9.7 %
Cumulative Effect of
Accounting Changes (0.48) - NM
Extraordinary Charge - (0.06) NM
Net Income $ 6.54 $ 6.34 3.2 %
Earnings per Common Share
Assuming Dilution:
Income Before Cumulative
Effect of Accounting
Changes and Extra-
ordinary Charge $ 6.64 $ 5.06 31.2 %
Cumulative Effect of
Accounting Changes (0.44) - NM
Extraordinary Charge - (0.04) NM
Net Income $ 6.20 $ 5.02 23.5 %
Shares used for Computation:
Basic 69.5 60.3 15.3 %
Diluted 73.9 80.3 (8.0)%
</TABLE>
###
