Continental Airlines (CAL)

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.

CAL admitted to a $213m loss between April and June, it’s going to have to make some switches and cuts, including the following:

-1,700 job cuts -A price hike for checked luggage -Another price hike for reservations made over the phone

While Continental will doubtlessly save some money by chopping its work force down to a more manageable - and payable - size, who knows if that’s going to be enough in the end.

And one way or the other, right now, if we read the economy through a Continental lens, things aren’t just shaky: They’re flat out miserable.

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.

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