Houston-based Continental Airlines Inc. earned a surprising profit in the fourth quarter thanks to higher traffic and lower fuel spending.
Continental said Thursday that it earned $85 million in the quarter.
Without some special items, including an income tax gain, the company would have earned $4 million, or 3 cents per share. Analysts expected a loss of 7 cents per share.
The biggest difference from a year ago was spending on fuel, which plunged by about one-third, as prices were much lower than they were in late 2008. The airline spent $388 million less on fuel than it did a year earlier.
Continental, the nation's fourth-largest airline, boosted passenger traffic by 3.5 percent in the quarter including its commuter airline affiliates.
But revenue fell 8.3 percent, to $3.18 billion, because of a decline in high-paying customers, who were sidelined by the recession.
Passenger revenue per available seat mile, a closely watched indicator for airlines, fell 9 percent. Still, that was much better than the 17.9 percent and 17.7 percent declines of the previous two quarters, and a sign that deep discounting of fares may be slowing.
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Chairman and CEO Jeff Smisek said some business traffic is increasing, but "we likely have a long and slow road to recovery."
Big U.S. airlines have been hit hard by the recession, which led to a slump in traffic in the U.S. and on trans-Atlantic routes. Continental's surprising profit comes a day after American Airlines said international bookings were running ahead of last year's pace and high-paying customers may be returning, raising hopes for a recovery in travel.
Continental and other airlines have also been helped by fees for checking baggage and other services, which made up for some of the decline in ticket revenue. This month, Continental raised its checked-bag fees.
The fourth-quarter profit provided an upbeat ending to Continental's second straight money-losing year.
For all of 2009, Continental lost $282 million, or $2.18 per share, as revenue plunged 17.4 percent, to $12.59 billion.
The company includes Continental Express and Continental Connection commuter airlines.
There was little premarket activity in Continental shares, which closed 19 cents higher Wednesday at $20.62.
