Continental Airlines (NYSE:CAL) management has to be hoping that sky-high costs will ease and allow the company to come back safely to Earth. Although the world's sixth-largest air carrier did pretty well for itself on a revenue basis, high costs walloped the bottom line once again.

Revenue for the first quarter climbed 8.6% over last year, as the airline surpassed industry averages for revenue growth in domestic, trans-Atlantic, and other international routes.

Expenses were the story again, though, as fuel costs rose nearly 40% from last year. Not only have crude oil prices continued to climb higher on a year-over-year basis, but also the crack spread for jet fuel (the cost of jet fuel relative to the cost of oil) doubled from the levels seen in the second half of 2004.

I have to admit that I'm tempted to ask Continental management why it hasn't hedged any of its fuel expenses. Given that fuel is such a major cost for airlines, locking in prices would make sense. By the same token, I suppose you could argue that locking in an unprofitably high price doesn't really help matters much and that hoping that prices would somehow decline made just about as much sense.

While the company improved its load factor to 76.8% (from 71.7%) and achieved a first-quarter record, the breakeven level for March was 84.4%. That's a depressing statement on the present-day realities of the airline business -- not even record results are good enough.

To its credit, management is doing what it can to control the aspects of the business that are within its control. Costs per available seat mile (the number of seats available multiplied by how many miles the seats fly) were up only 0.4% if fuel costs are held steady. What's more, labor costs were up only 3.9% for the quarter, and the company has successfully completed labor negotiations that will save $418 million a year, though negotiations with the attendants are still ongoing.

Continental has traditionally been one of the best-run major airlines in the country, and it's probably fair to assume it they will be among the first to return to profitability. The company does not have the liquidity problems that are troubling other airlines like Delta (NYSE:DAL), and even if a cash crunch should arise, Continental still has assets like its holdings in ExpressJet (NYSE:XJT) that could be sold to raise cash.

Even though I consider Continental -- along with Southwest Airlines (NYSE:LUV) -- to be the least-worst among airlines in terms of service and quality, I'm not sure when a recovery in the business will come. As I see it, there isn't much room for additional fare increase, particularly in the wake of Delta's fare changes, and so oil prices have to not just stop rising but actually decline for Continental to see profitability once again. What's more, it is likely that we'll see further bankruptcies and/or consolidation in the industry before things get better.

Patience could be rewarded in these shares, so long as investors can wait long enough. Given that Continental's bonds trade at par, nobody seems too worried about the chances of bankruptcy or other liquidity problems. Oil prices will probably ease someday, and if that happens, Continental share could once again soar upward.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).