Continental posts profit as fares rise

NEW YORK (Reuters) - Continental Airlines Inc (CAL.N) on Thursday posted a fourth-quarter profit as higher fares and more international flights helped offset soaring fuel costs.

The fourth-largest U.S. carrier said pretax profit in the quarter was $71 million compared with a loss of $26 million a year ago.

Continental did not report a net profit figure because it said it had not yet finalized a special non-cash charge it expected to take in the fourth quarter.

The company said on Wednesday it expects that charge -- related mainly to changes in pension plan calculations -- to be between $70 million and $140 million.

Excluding one-time items, Continental said it posted a pre-tax profit of $24 million compared to a year-ago loss of $4 million.

Based on 98.1 million shares outstanding as of October 12, pretax profit was 72 cents per share, or 24 cents excluding items.

While there was no comparative figure expected by Wall Street analysts, they were, on average, forecasting Continental earnings of 2 cents per share, according to Reuters Estimates.

Continental said fourth-quarter operating revenue rose 12 percent to $3.52 billion, boosted by a 27.5 percent jump in trans-Atlantic passenger revenue.

Wall Street analysts, on average, expected Continental to post revenue of $3.51 billion, according to Reuters Estimates.

U.S. carriers are trying to rescue a fledgling recovery, which is threatened by record fuel prices and a slowing economy. American Airlines parent AMR Corp (AMR.N) on Wednesday posted a fourth-quarter loss as its fuel bill jumped 29 percent.

But Continental is benefiting from aggressive expansion into lucrative international markets and said demand is still robust enough to allow it to raise fares to offset its higher fuel bill, which jumped 32 percent in the fourth quarter.

"Demand throughout all regions remains strong," Continental said in a regulatory filing on Thursday. "The company has been able to recapture a portion of the rising cost of fuel through increased fares."

But the company noted that bookings on Transatlantic and Pacific flights over the next six weeks were running "slightly behind" last year.

Continental, which plans to sell planes as it cuts back capacity in the hard-fought U.S. market, said it will reduce mainline capacity by 0.5 percent in the domestic U.S. market in the first quarter.

Overall, it plans to increase capacity by 4.1 percent in the first quarter, boosted by a 10 percent rise in international flights and a 0.8 percent increase in regional U.S. flying.

Continental shares, which have fallen about 54 percent over the last 12 months, closed on Tuesday at $24.25.

(Reporting by Chris Reiter; Editing by Mark Porter)