Continental falls as it cuts key revenue forecast

The airline said late Monday it now expects mainline domestic revenue per available seat mile for November 2008 to grow 4 percent to 6 percent, down significantly from previous expectations for growth in the "low-to-mid teens." A revenue passenger mile is an industry unit measuring one paying passenger flown one mile.

The carrier blamed lower yields, or the average price a passenger pays to fly one mile. Yield is seen as a key indicator of market and pricing trends.

In midday trading, Continental shares declined $2.60, or 12.7 percent, to $17.85 even as the broader markets staged an Election Day rally.

In a client note, JPMorgan analyst Jaime Baker said that while the revision was "hardly a surprise," it led him to sharply reduce his fourth-quarter forecast. He now expects the company to report a loss of 56 cents per share, compared with prior expectations for profit of 40 cents per share. Analysts polled by Thomson Reuters, on average, expect the company to report a profit of 10 cents per share.

"Frankly, it was only a question of when, not if, the global economy would catch up to the U.S. airline industry, though we readily admit we thought we had another month or two before the inevitable would manifest," Baker wrote.

For October, Continental Airlines said its consolidated traffic, which includes both mainline and regional service, fell 7.3 percent to 7.14 billion revenue passenger miles from 7.69 billion on October 2007.

Capacity fell 6.7 percent to 9.04 billion available seat miles, from 9.68 billion in the same month a year earlier.

The carrier's load factor, an industry measure of occupancy, fell 0.5 percentage points to 79 percent.

So far this year, traffic is down by 0.2 percent to 79 billion revenue passenger miles, from 79.19 billion in the first 10 months of last year.