Fuel Prices Leave Continental and Southwest Hard Hit

High fuel costs were cited as the main reason behind a sharp decline in first quarter results at two of the nation's healthiest carriers.

Continental Airlines Inc. reported a loss in the quarter, followed by American Airlines parent AMR Corp. on Wednesday, and then Southwest Airlines Co. report a lower-than-expected profit on Thursday.

Both Continental and Southwest Airlines said they will slow their once-ambitious growth plans, and are raising fares.

Most airlines have been raising fares and fuel surcharges this year. Continental, United, Delta and AMR Corp.'s American have hiked up their prices about a dozen increases this year, including last weeks increase of $10 to $20 per round trip. The latest Southwest increase was $6 to $20 per round trip.

The Houston, Tx.-based Continental reported a net loss of US$85-million, or 85 cents a share, excluding a one-time tax gain, down from a US$22-million profit in the first quarter of last year.

Meanwhile, Southwest Airlines Co., which hasn't lost money since 1991, saw its profit fall by two-thirds. The Dallas-based airline reported first quarter net income of $34-million, or 5 cents per share, compared to 12¢ share last year. Sales rose 15 percent to US$2.5-billion during the quarter.

Southwest said it will do a "rigorous review" of its flight schedule and cut down on "non-productive flying." It also said it plans to add no more than 14 aircraft to its fleet in 2009, half its original estimates.