Earnings Preview: Continental Airlines

Continental Airlines (CAL) is expected to report Q1 earnings before market open Thursday, with a conference call scheduled for 10:30 am ET.

Guidance

Analysts are looking for an EPS of (85c) on revenue of $3.57B. The consensus range is ($1.05) to (60c) for EPS, and revenue of $3.55B to $3.6B, according to First Call.

High oil prices and the weakening economy have caused trouble for the U.S. airline industry, leading many of the major U.S. airlines to consider merger agreements. Continental Airlines has been in merger talks with United Airlines (UAUA) since early February, and in mid-February it was reported Continental was talking with American Airlines (AMR) as well. So far no agreements have been reached with either company.

Analyst Views

Continental, like many other airlines, has had its shares downgraded in recent months. JP Morgan downgraded the company to Neutral from Overweight, on March 12, citing 2008 losses and potential deal closure risk in 2009 for the changes.

Continental was also downgraded at UBS Financial to Neutral from Buy on March 20. UBS said it can no longer recommend airline stocks due to weakening economy, high fuel prices, and less likely industry consolidation.