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July 21 (Bloomberg) -- Continental Airlines Inc., the fourth-largest U.S. carrier, said it will trim 1,700 additional jobs and increase some fees after reporting a $213 million second-quarter loss as demand and fares declined.

The deficit of $1.72 a share widened from a loss of $5 million, or 5 cents, a year earlier, the Houston-based airline said today. Sales fell 23 percent to $3.13 billion.

The job cuts, which represent 3.9 percent of Continental’s workforce, reflect the pressure on the industry from the collapse of business travel in the recession and fare sales to fill planes. The reductions are on top of 1,200 eliminated positions the carrier has announced since May. Continental’s quarterly loss was its seventh in a row.

“We must take aggressive steps to increase revenue and reduce costs,” said Chief Executive Officer Larry Kellner, 50, who is stepping down and being succeeded on Jan. 1 by President and Chief Operating Officer Jeff Smisek.

The job reductions and fee changes will produce $100 million in annual benefits when fully implemented next year, Continental said. The carrier will add $5 to checked-bag fees for customers who do not prepay online and increase by $5 the cost to make a telephone reservation.

Severance Costs

Excluding $44 million in costs for severance, terminated contracts and a drop in value of Boeing Co. 737 jets that are being retired, Continental’s loss was $1.36 a share. On that basis, the loss was 1 cent more than the average forecast of 10 analyst estimates compiled by Bloomberg.

Continental asked 700 flight attendants last month to accept leaves beginning Sept. 1 as U.S. summer travel wanes. It eliminated about 500 reservations jobs when it shut a Florida call center last week. The carrier cut 3,000 jobs in 2008 as fuel prices rose to record highs.

Also releasing results today are UAL Corp., whose United Airlines is the third-biggest in the U.S., and fifth-largest Southwest Airlines Co. American Airlines parent AMR Corp. posted a second-quarter loss excluding one-time expenses of $319 million, or $1.14 a share, on July 15.

Combined losses excluding one-time costs at the eight biggest U.S. airlines may be $1.2 billion, according to Michael Linenberg, a Bank of America Corp. analyst in New York.

In June, Continental increased its target for shrinking seating capacity this year to 6 percent from 5 percent. The carrier has suffered from waning corporate-travel demand because it has about 50 percent of its seating capacity in international markets, the most among major U.S. carriers.

Flu Outbreak

An outbreak of the H1N1 virus, also known as swine flu, reduced revenue by about $50 million for Continental and its regional airline partners. Continental, with the most flights to Mexico of any U.S. airline, cut its seating capacity between the U.S. and Mexico in half during May as demand collapsed.

The airline’s yield, or average fare per mile, tumbled more than 18 percent in its main jet operations, led by a 24 percent drop on flights across the Atlantic. Revenue for each seat flown a mile, which reflects demand and fares, fell 17 percent, as miles flown by paying passengers dropped 5.7 percent.

Continental paid $762 million less for jet fuel than a year earlier as the price per gallon dropped 40 percent. Costs for each seat flown a mile, a measure of efficiency, fell 13 percent.

Second-quarter costs for pulling Boeing 737s out of service were related to Continental’s decision last year to park 73 mainline planes and an unspecified number of regional jets in 2008 and 2009 to lower operating costs.

Continental ended the quarter with $2.77 billion in unrestricted cash, cash equivalents and short-term investments.

Kellner’s plan to step down to start a private-investment firm was announced by Continental on July 16. He became CEO in December 2004.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

Last Updated: July 21, 2009 07:35 EDT




the question posed:

how are ya sister? how bout that big news today?!?! was looking at your profile and it sounds like you are so unhappy with the job - and i'm just curious to know as to why you are so unhappy with it?

my answer after thought:

hey gorgeous!! I am well, the good part about not working a lot is that i at least get to enjoy nyc all summer.
i thought about your question last night and have come up with this answer.
craig, you and i have different jobs. yes we are both cabin crew for the same airlines but i live my life in fear.
i fear that i won't be able to pay rent next month because i don't control my schedule.
i fear that if i do give in and make plans, that i will have to cancel them do to scheduling messing with me and i will have to break a commitment.
i fear that if i pick up a trip (with the only control i think i have) that it will be taken away for me.
i fear that i will miss the phone ring on a 24 hour call out and i will be in trouble with my supervisor.
i fear that my life is not my own.
i can handle all of this in the winter because i know it will happen but now, when we are supposed to be busy?
it is more of a mind suck than anything, and there is only so much that an intelligent adult can deal with.
i have come too far to quit, so i am riding out the wave for a reward to the almost year of not being busy.
i would love a furlough, if i don't receive a cola...i need a mental break from the fear.