Continental Air posts larger-than-expected loss

The Houston-based airline said its loss widened to $146 million, or $1.05 per share, from $136 million, or $1.10 per share, a year earlier, when there were fewer outstanding shares.

The No. 4 U.S. airline by traffic saw a loss of 98 cents per share, excluding $10 million of severance and aircraft-related special charges.

Analysts, on average, had expected the company to report a loss of 86 cents, according to Thomson Reuters I/B/E/S.

"I'm disappointed with our first-quarter results, which were impacted by the weak economy and the challenges we experienced with weather related closures of our Newark Liberty hub," CONTINENTAL (CON.XE)Chief Executive Jeff Smisek said in a statement.

Revenue rose 7 percent to $3.17 billion, helped by a greater demand for travel and benefits from its shift to the Star Alliance network.

Star Alliance is headed by UAL Corp's United Airlines, who is reportedly in merger talks with both Continental and fellow alliance partner US Airways . None of the airlines has publicly confirmed the discussions.

Average fares rose 5.7 percent in the quarter. Unit revenue rose 5.4 percent. Expenses rose 6.7 percent to $3.22 billion.

Heavy snowstorms that hit the East Coast of the United States forced the airline to shut down operations at its Newark Liberty International Airport hub twice in February. This cut first-quarter consolidated revenue by about $25 million.

Higher fuel costs also helped push Continental's cost per available seat mile 7.4 percent higher in the quarter. The average price per gallon of fuel increased about 17 percent.

Continental's shares closed at $21.46 on Wednesday.

(Reporting by Deepa Seetharaman; Editing by Lisa Von Ahn and Maureen Bavdek)

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