Continental's Transcontinental Gains: Fool by Numbers (CAL.DL)

Continental's Transcontinental Gains: Fool by Numbers

On Thursday, Continental Airlines (NYSE: CAL ) released earnings for the second quarter ended June 30.

Revenue from trans-Atlantic flights soared 20.9%, helping Continental book a 7.8% gain in operating income.
Per-share earnings suffered from a $7 million charge related to a pension settlement with pilots.
Yet I am encouraged to see Continental assert some control over expenses. Fuel costs rose just 3.8%, for example. A record 83.2% load factor -- resulting in fuller aircraft -- more than offset the added cost.
Those following the airline in our Motley Fool CAPS investor-intelligence database aren't as impressed. On the whole, they give the airline just one star. And 34 of 79 All-Star stock pickers in CAPS say Continental will underperform the S&P 500.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q2 2007	Q2 2006	Change
Sales	$3,710	$3,507	5.8%
Net Profit	$228	$198	15.2%
EPS	$2.03	$1.84	10.3%
Diluted Shares	115	111	3.6%

Get back to basics with a look at the income statement.

Margin Checkup

	Q2 2007	Q2 2006	Change*
Gross Margin	31.40%	30.57%	0.83
Operating Margin	7.09%	6.96%	0.13
Net Margin	6.15%	5.65%	0.50

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q2 2007	Q2 2006	Change
Cash + ST Invest.	$3,176	$2,472	28.5%
Accounts Rec.	$758	$687	10.3%

Liabilities	Q2 2007	Q2 2006	Change
Accounts Payable	$1,204	$1,084	11.1%
Long-Term Debt	$4,767	$4,626	3.0%

The balance sheet reflects the company's health.

Cash Flow Highlights

	YTD 2007	YTD 2006	Change
Cash From Ops.	$968	$978	(1.0%)
Capital Expenditures	$155	$163	(4.9%)
Free Cash Flow	$813	$815	(0.2%)

Free cash flow is a Fool's best friend.

Other Operating Metrics

	Q2 2007	Q2 2006	Change
ASM (in Millions)	26,415	24,885	6.1%
RASM (in Cents)	11.85	11.61	2.1%
CASM (in Cents)	10.82	10.72	0.9%
Load factor	83.2%	82.7%	(0.5*)

*Expressed in percentage points

Find out more about airline operating metrics.

Related Foolishness:

Last year brought thoughts of heavenly bliss for Continental and UAL Corp.'s (Nasdaq: UAUA ) United.
Now, we're wondering if airlines might finally take off.

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Tim Beyers usually flies coach but will take first class any time he can get it. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. The Motley Fool's disclosure policy always adds up.

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