Continental, like many other legacy carriers, has been hit hard by the global recession that has consumers flying less. In October 2008, Continental's traffic fell 7.6%, slightly more than its 7.3% reduction in capacity.
The competitive fare environment of the airline industry makes it very difficult to pass along increased fuel costs. The volatility of oil prices leads to higher operating expenses for Continental. For example, Continental paid an average $2.18 per gallon of fuel in 2007, one of the highest in the airline industry.
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