How is Continental generating over $200,000 per day in additional revenue?

Jul 23, 2010

Continental Airlines has reported second quarter 2010 net income of $233 million. Excluding $24 million of merger-related costs and other special charges, Continental recorded second quarter net income of $257 million.

Published: 23 Jul 2010

Continental Airlines has reported second quarter 2010 net income of $233 million. Excluding $24 million of merger-related costs and other special charges, Continental recorded second quarter net income of $257 million.

Operating income for the second quarter of 2010 was $328 million, up $482 million compared to the same period of 2009.

Generating additional $200,000 per day

“These results were largely driven by improvement in the revenue environment. Business traffic is coming back, though slowly. Leisure demand has been strong and we expect it will remain so throughout the remainder of the summer,” said Jeff Smisek, Continental’s chairman, president and CEO (according to transcript of quarterly results on Seeking Alpha). “This demand strength, together with the capacity reductions over the last couple of years have helped us to manage yields up.”

He added, “We have also been growing our ancillary revenue streams, our customers are taking advantage of the additional options we have begun to offer such as day of departure upgrades and premium seating. Together, these two initiatives are currently generating over $200,000 per day in additional revenue.”

In May, Continental and United chose to merge. In the second quarter of 2010, Continental recorded $18 million of merger-related costs, relating to financial advisor, legal, accounting and consultant fees and communication costs.

The merger is expected to deliver $1.0 billion to $1.2 billion in net annual synergies by 2013, including between $800 million and $900 million of incremental annual revenues, in large part from expanded customer options resulting from the greater scope and scale of the network, and additional international service enabled by the broader network of the combined carrier.