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Aug 20, 2002
Continental Posts Second-Quarter Profit

HOUSTON (AP) - Continental Airlines swung to a profit in the second quarter thanks to reimbursements of security fees related to terrorism.

The Houston-based airline said Thursday it earned $79 million, or $1.10 per share, which includes a $111 million after-tax reimbursement for terrorism security costs. It also includes an $8 million after-tax charge related to Monday''s announcement that Continental will defer by three years the delivery of 36 Boeing Co. airplanes because of continued weakness in the industry.

In the second quarter 2002, Continental lost $139 million, or $2.18 per share.

Operating income for April-June period was $238 million, compared to a $115 million loss a year ago. Analysts surveyed by Thomson First Call expected a loss of 83 cents per share for the latest quarter. Continental said First Call''s consensus, adjusted for the security fee reimbursement and the special charge, was a profit of 69 cents per share.

Revenues rose 1.1 percent to $2.2 billion from $2.1 billion. Passenger revenues dropped 1.7 percent to $2 billion. Capacity decreased 6.8 percent, largely because of the suspension of many international flights related to the SARS virus as well as decreased demand because of SARS fears and the war in Iraq.

``We''ve improved our operating income compared to last year in spite of higher fuel costs and lower passenger revenue,'''' said Gordon Bethune, Continental''s chairman and chief executive officer. ``I believe we''re doing the right things to be a survivor.''''

In the first six months of the year Continental lost $142 million, or $2.18 per share, compared with a loss of $305 million, or $4.79 per share in the year-ago period.

Continental said the airline is making progress on its plan to cut costs by $500 million by 2004 and expects to realize more than $150 million of those savings in 2003.

``We continue to focus on achieving efficiencies and savings that will result in a stable, long-term competitive cost structure,'''' said Jeff Misner, senior vice president and chief financial officer.

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