EX-99.2 3 exhibit992.htm EXHIBIT 99.2 exhibit992.htm

EXHIBIT 99.2
DeAnne Gabel
Director - Investor Relations
 

Investor Update
             Issue Date:  July 21, 2009

This investor update provides information on Continental's guidance for the third quarter and the full year 2009, as well as certain historical information pertaining to the second quarter of 2009.

Advanced Booked Seat Factor (Percentage of Available Seats that are Sold)
 
As compared to the same period last year, for the next six weeks, mainline domestic advanced booked seat factor is running 2 - 3 points higher, mainline Latin advanced booked seat factor is running flat to down 1 point, Transatlantic advanced booked seat factor is running 1 - 2 points higher, Pacific advanced booked seat factor is running 4 - 5 points lower and regional advanced booked seat factor is running 3 to 4 points higher.
 
For the third quarter of 2009, the Company expects both its consolidated and mainline load factors to be up about 1 point year-over-year (“yoy”).

Unrestricted Cash, Cash Equivalents and Short Term Investments Balance
Continental anticipates ending the third quarter of 2009 with an unrestricted cash, cash equivalents and short-term investments balance of approximately $2.4 billion.

Cargo, Mail, and Other Revenue
The Company's Cargo, Mail, and Other Revenue for the third quarter 2009 is expected to be between $355 and $365 million.

     
2009 Estimate
Available Seat Miles (ASMs)
Year-over-Year % Change
     
3rd Qtr.
Full Year
Mainline
    
 
Domestic
(6.7%)
(7.7%)
 
Latin America
1.7%
(0.2%)
 
Transatlantic
(10.9%)
(9.1%)
 
Pacific
16.8%
8.4%
   
Total Mainline
(4.7%)
(5.6%)
         
Regional
(8.3%)
(7.2%)
         
Consolidated
    
 
Domestic
(7.1%)
(7.7%)
 
International
(2.8%)
(3.5%)
   
Total Consolidated
(5.1%)
(5.8%)

Load Factor
3rd Qtr. 2009 (E)
  
Full Year 2009 (E)
Domestic
86%
-
87%
  
83%
-
84%
Latin America
82%
-
83%
  
80%
-
81%
Transatlantic
82%
-
83%
  
77%
-
78%
Pacific
75%
-
76%
  
73%
-
74%
Total Mainline
83%
-
84%
  
80%
-
81%
               
Regional
78%
-
79%
  
75%
-
76%
               
Consolidated
82%
-
83%
  
80%
-
81%

Continental's month-to-date consolidated load factor is updated daily and can be found on continental.com on the Investor Relations page under the About Continental menu.


 
 
 

Second Quarter 2009 Domestic Performance on a Hub by Hub Basis
Continental’s second quarter 2009 consolidated domestic capacity at its New York Liberty hub was down 8.5%, with traffic down 8.0%, resulting in a load factor increase of 0.4 pts compared to the second quarter of 2008.  Transcon capacity, which is a subset of New York Liberty capacity, was down 3.4% yoy in the second quarter while traffic was down 1.6%, resulting in a load factor increase of 1.6 pts compared to the same period in 2008.  Consolidated domestic capacity at its Houston hub was down 8.2% yoy, with traffic down 6.3%, resulting in a load factor increase of 1.7 pts compared to the second quarter of 2008.  Consolidated domestic capacity at its Cleveland hub was down 23.3% yoy, with traffic down 21.0%, resulting in a second quarter load factor increase of 2.5 pts compared to the same period in 2008.

Pension Expense and Contributions
Year-to-date, the Company has contributed $120 million to its tax-qualified defined benefit pension plans. Continental's remaining minimum funding requirements during calendar year 2009 are approximately $30 million.

Continental estimates that its non-cash pension expense will be approximately $250 million for 2009.

CASM Mainline Operating Statistics
2009 Estimate (cents)
 
3rd Qtr.
  
Full Year
CASM
10.32
-
10.37
  
10.63
-
10.68
 
Special Items per ASM (a)
0.00
  
0.05
CASM Less Special Items (b)
10.32
-
10.37
  
10.58
-
10.63
 
Aircraft Fuel & Related Taxes per ASM
(2.73)
  
(2.74)
CASM Less Special Items and Aircraft Fuel & Related Taxes (c)
7.59
-
7.64
  
7.84
-
7.89
                 
CASM Consolidated Operating Statistics
              
               
CASM
11.17
-
11.22
  
11.50
-
11.55
 
Special Items per ASM (a)
0.00
  
0.04
CASM Less Special Items (b)
11.17
-
11.22
  
11.46
-
11.51
 
Aircraft Fuel & Related Taxes per ASM
(2.93)
  
(2.94)
CASM Less Special Items and Aircraft Fuel & Related Taxes (c)
8.24
-
8.29
  
8.52
-
8.57

(a) Full Year special charges of $48 million include aircraft related charges and other special charges.
(b) These financial measures provide management and investors the ability to measure and monitor Continental's performance on a consistent basis.
(c) Cost per available seat mile excluding special items, fuel, and related taxes is computed by multiplying fuel price per gallon, including fuel taxes, by fuel gallons consumed and subtracting that amount from operating expenses excluding special items then dividing by available seat miles.  This statistic provides management and investors the ability to measure and monitor Continental's cost performance absent special items and fuel price volatility.  Both the cost and availability of fuel are subject to many economic and political factors beyond Continental's control.

Variable Compensation
Continental has granted profit based restricted stock unit ("RSU") awards pursuant to its Long-Term Incentive and RSU Program.  Expense for these awards is recognized ratably over the required service period, with changes in the price of the Company's common stock and the payment percentage (which is tied to varying levels of cumulative profit sharing) resulting in a corresponding increase or decrease in "Wages, Salaries, and Related Costs" in the Company's consolidated statements of operations.  The closing stock price of $8.86 on June 30, 2009 was used in estimating the expense impact of the awards for the Company's 2009 cost estimates included herein.  Based on the Company's current assumptions regarding payment percentages and the cumulative profit sharing targets to be achieved pursuant to the awards, the Company estimates that a $1 increase or decrease in the price of its common stock from June 30, 2009 will result in an increase or decrease of approximately $1 million in Wages, Salaries, and Related Costs attributable to the awards to be recognized in the third quarter 2009.  For more information regarding these awards, including performance periods and how the Company accrues for the awards, see the Company's 2008 Form 10-K.

Fuel Requirements (Gallons)
  
 
3rd Qtr.
Full Year
Mainline
 367 million
 1,382 million
Regional
 74 million
 285 million
     
Consolidated Fuel Price per Gallon (including fuel taxes and
$1.91
$1.92
impact of hedges)
    

Fuel Hedges - As of July 16, 2009
As of July 16, 2009, the Company's projected consolidated fuel requirements were hedged as follows:

 
Maximum Price
Minimum Price
 
% of
Expected
Consumption
Weighted Average Price (per gallon)
% of
Expected
Consumption
Weighted
Average Price
(per gallon)
Third Quarter 2009
        
WTI crude oil swaps
5%
  
$1.31
  
5%
  
$1.31
  
WTI crude oil collars
11%
  
$3.21
  
11%
  
$2.40
  
Gulf Coast jet fuel swaps
2%
  
$1.81
  
2%
  
$1.81
  
     Total                                            
18%
      
18%
      
Fourth Quarter 2009
        
WTI crude oil swaps
5%
  
$1.36
  
5%
  
$1.36
  
Gulf Coast jet fuel swaps
5%
  
$1.75
  
5%
  
$1.75
  
     Total                                            
10%
      
10%
      

Based on the forward curve for WTI as of July 16, 2009, the Company estimates that all of its fuel hedges would result in a net increase in fuel expense of $0.11 per gallon in the third quarter 2009 and $0.24 per gallon for the full year 2009.  For the un-hedged portion of its consolidated fuel requirements, the Company is assuming an average cost of jet fuel (including fuel taxes) of $1.80 for the third quarter and $1.68 for the full year 2009.

Selected Expense Amounts (Consolidated Expense)
2009 Estimate Amounts (millions)
 
3rd Qtr
Full Year
Aircraft Rent
$232
$933
Depreciation & Amortization
$121
$474
Net Interest Expense*
$82
$323
*Net Interest Expense includes interest expense, capitalized interest and interest income.

Continental Airlines, Inc. Tax Computation
The Company's ability to record a tax benefit on net losses is limited by its net deferred tax position.  The Company previously recorded the maximum available deferred tax benefit permitted by its prior net deferred tax liability position.  Subsequent losses will generally not be benefitted until the Company re-establishes a net deferred tax liability.  Subsequent pretax income, when considered along with subsequent other comprehensive income, will generally not carry tax expense until the Company exhausts its beginning unbenefitted net deferred tax assets via release of valuation allowance.

Debt and Capital Leases
Scheduled debt and capital lease payments for the full year 2009 are estimated to total $597 million, with $98 million and $71 million paid in the first and second quarters, respectively, and approximately $368 million and $60 million to be paid in the third and fourth quarters of 2009, respectively.

Cash Capital Expenditures ($Millions)
2009 Estimate
Fleet Related
$190
Non-Fleet
120
Rotable Parts & Capitalized Interest
             56
 
Total
$366
Net Purchase Deposits Paid/(Refunded)
             (30)
Total Cash Capital Expenditures
$336


 
 
 

EPS Estimated Share Count
Share count estimates for calculating basic and diluted earnings per share at different income levels are as follows:

Third Quarter 2009 (Millions)
Quarterly
Number of Shares
Interest addback (net of applicable profit
Earnings Level
Basic
Diluted
sharing and income taxes impact)
Over $117
124
137
$9
Between $76 - $117
124
132
$5
Under $76
124
124
--
Net Loss
124
124
--

Full Year 2009 (Millions)
Year-to-date
Number of Shares
Interest addback (net of applicable profit
Earnings Level
Basic
Diluted
sharing and income taxes impact)
Over $313
124
137
$24
Between $202 - $313
124
133
$14
Under $202
124
124
--
Net Loss
124
124
--

These share count charts are based upon several assumptions including market stock price and number of shares outstanding.  The number of shares used in the actual EPS calculation will likely be different than those set forth above.
 
This update contains forward-looking statements that are not limited to historical facts, but reflect the Company’s current beliefs, expectations or intentions regarding future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. For examples of such risks and uncertainties, please see the risk factors set forth in the Company’s 2008 Form 10-K and its other securities filings, including any amendments thereto, which identify important matters such as the significant volatility in the cost of aircraft fuel, its transition to a new global alliance, the consequences of its high leverage and other significant capital commitments, its high labor and pension costs, delays in scheduled aircraft deliveries, service interruptions at one of its hub airports, disruptions to the operations of its regional operators, disruptions in its computer systems, and industry conditions, including the recession in the U.S. and global economies, the airline pricing environment, terrorist attacks, regulatory matters, excessive taxation, industry consolidation, the availability and cost of insurance, public health threats and the seasonal nature of the airline business. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this update, except as required by applicable law.

 

 
 
 


Continental Airlines Fleet Plan

Includes Aircraft Operated by the Company or Operated on the
Company's Behalf Under a Capacity Purchase Agreement

July 16, 2009
 
Total
Qtr End
2Q09
Net Inductions
and Exits
Total
Year
End 2009E
Net Inductions
 and Exits
Total
Year
End 2010E
 
3Q09E
4Q09E
1Q10E
2Q10E
3Q10E
4Q10E
 
Mainline
              
777-200ER
767-400ER
767-200ER
757-300
757-200
737-900ER
737-900
737-800
737-700
737-500*
737-300*
 20
 16
 10
 17
 41
 22
12
117
36
40
20
-
-
-
-
-
6
-
-
-
(6)
(12)
-
-
-
-
-
2
-
-
-
-
(4)
 20
 16
 10
 17
 41
30
 12
117
36
34
4
-
-
-
3
-
-
-
4
-
(3)
(4)
2
-
-
1
-
-
-
4
-
-
 -
-
-
-
-
-
2
-
1
-
-
 -
-
-
-
-
-
-
-
-
-
-
-
 22
 16
 10
 21
 41
32
12
126
36
31
 -
     Total
351
(12)
(2)
337
-
7
3
-
347
               
 
Regional
              
ERJ-145
ERJ-135
CRJ200LR
Q400
Q200
229
-
7
14
16
-
-
-
-
-
-
-
-
-
-
  229
-
  7
14
16
-
-
(7)
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
5
-
229
  -
  -
20
16
     Total
266
-
-
266
(7)
-
1
5
 265
               
Total Count
617
(12)
(2)
603
(7)
7
4
5
 612

* Final quantity and timing of 737-300 / 737-500 exits subject to change