Continental outlines special charges ahead of earnings

Washington DC
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Continental Airlines today outlined special charges for the fourth quarter of 2007 totalling $170 million.

The carrier recorded a net $40 million expense in operating special charges that included a $44 million pension settlement and $1 million related to severance packages. Included in that grouping was $5 million net gain on aircraft sales.

Continental says during the fourth quarter it sold two owned Boeing 737-500s and arranged for the sale of three leased -500s for a $7 million net gain. A $2 million charge for future lease rates on a -500 permanently grounded in the fourth quarter brought the net profit for the aircraft transactions to $5 million.

During the fourth quarter the parent company that arranged some of Continental's fuel derivative contracts declared bankruptcy. Continental altered the fair value of those contracts resulting in a $125 million charge. The carrier also during the quarter recorded a $5 million charge in the write-down of some auction rate securities.

Continental reports fourth quarter and full-year 2008 financial results on 29 January.