Continental Airlines (CAL)

Airlines have a very high fixed and the competitive fare environment makes it very difficult to pass along increased fuel costs. $100+ oil will definitely hurt CALs bottom line.

A fixed *what*? A complete sentence would be helpful :)

Continental led the airline sector lower as it reported more empty seats in June.

The load factor, or average percentage of seats filled, fell 2% to 84.1% with miles flown by paying passengers down 0.9%. The carrier has been

raising fares and charges to offset record jet-fuel prices. But the decrease traffic in June makes analysts wonder whether those raises backfired.

Worse, Continental will have additional costs in the next quarter related to its capacity reductions, including lease expense for grounded planes and severance payments. The airline didn’t give its estimate for the costs but it had $3.41 billion in unrestricted cash and short-term investments at the of May.

Goldman downgrades the sector

Goldman Sachs also raised concerns for the airline industry, removing UAL (UAUA) from its conviction buy list and cutting target prices for U.S. airlines they cover by an average of 42%. The analyst wrote that the airline industry “will be unable to raise fares enough to offset the spike in jet fuel, especially give a lukewarm macroeconomic backdrop.”

Continental Airlines has announced a stock offering that could raise about $160 million to build a bigger cash cushion against rising oil prices.

The Houston-based carrier made a public offering Thursday of 11 million shares of its Class B common stock at $14.80 per share.

With fuel costs rising sharply in recent months, airlines are looking for any hedge against high oil prices. They are raising fares, adding luggage fees and other charges, reducing capacity in secondary markets and streamlining fleets