How you interpret the earnings news from Continental Airlines
The Optimist: Consolidated fourth-quarter revenue soared 16.7%, and the net loss per share fell 83.1% compared with the comparable year-ago quarter.
The Pessimist: The company lost money in the fourth quarter and for the year. The quarterly loss per share was "helped" by a 21.9% increase in shares outstanding in 2005; Continental sold 18 million shares for $11.35 per stub in October. If only the company had waited three months -- the stock hit a 52-week high of $22.27 last week.
The Optimist: The company notes that it is "growing and hiring new employees, in stark contrast to most of our competitors."
The Pessimist: The same press release notes: "The price of oil still hovers at record-high prices, JetBlue
The Optimist: Also from the press release: "Continental and the entire airline industry continue to suffer the burden of excessive fees and non-income-related taxes."
The Pessimist: Hey, the fees are what the fees are. Focus on what you can control.
The Optimist: In December, Continental withdrew 69 of 274 regional aircraft operated by ExpressJet
The Pessimist: Add up all the good news and analyst optimism about 2006, and you get projected 2006 earnings of $1.35 a share -- or 12.7 times forward earnings.
Count me among the pessimists
Although Continental has skirted bankruptcy, it still has to contend with long-term oil prices, increased competition in Newark, the competitiveness of major airlines using bankruptcy to restructure, and nearly $6 billion in total debt. And don't count on the company to turn things around. As late as last April, Continental was expected to break even in 2005 -- and it didn't happen.
I get the point that Continental is expanding into what is currently more profitable international markets while it reduces its operating costs. And although the company didn't mention it today, the long-term move to use Boeing's
But while Continental says the grass is greener internationally, Southwest
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