Houston-based Continental Airlines says it had a pretax profit of $71 million for the quarter on better-than-expected revenue of $3.52 billion. Continental said its pretax profit for the October-December period contrasted to a loss of $26 million a year earlier. It says it's still working on calculating its final quarterly and full-year financial results. But the carrier is delaying its report of its net income figures while it decides on how big a non-cash accounting charge to take in the last three months of the year related to pilot pension liabilities. Continental expects to make that determination by mid-February and report final results for 2007 in its annual report. Revenue grew nearly 12 percent to $3.52 billion, helped by a 27.5 percent jump in passenger revenue from trans-Atlantic flights and a nearly ten percent rise from domestic flights. Excluding previously disclosed one-time items, the company said the pretax profit was $24 million, versus a loss of $4 million in the 2006 period. For the year, Continental reports pretax profit grew 53 percent to $566 million. Excluding charges and gains, pretax earnings rose 78 percent to $542 million. Revenue climbed eight percent to $14.23 billion, with increases across all regions driving strong passenger revenue. Analysts surveyed by Thomson Financial expected revenue of $3.51 billion for the quarter and $14.22 billion for the year.
Southwest Airlines announced its board has authorized the company to buy back $500 million in stock. Chief Executive Gary Kelly says the move demonstrated the Dallas-based company's confidence in its future and interest in boosting shareholder value. Southwest has about 735 million shares of common stock outstanding.
Merrill Lynch reports a loss of nearly $10 billion in the last three months of 2007. It's Merrill's biggest quarterly loss since being founded 94 years ago, after writing down more than $14 billion of investments because of the credit crisis. Merrill became the third of the five biggest Wall Street investment banks to post a loss for the quarter after taking massive write-offs related to the shrinking value of securities backed by mortgages that have soured as borrowers have been unable to make payments on time. The huge housing-driven shortfalls come as weak economic data have intensified fears of a recession, and have increased pressure on the government for an economic stimulus plan. The brokerage giant marked down $11.5 billion from mortgage-backed securities, and an additional $3.1 billion in adjustments to hedge positions on them.
Bank of America's plan to acquire Countrywide Financial means it would assume Countrywide's agreement to create 7,500 new jobs in Texas. Details are in a copy of the contract obtained by the Associated Press. Bank spokesman Scott Silvestri says they're at a very early stage in the process and have just begun to review Countrywide's commitments. Countrywide in 2004 entered into the job creation agreement with the Texas Enterprise Fund. The deal gave Countrywide $20 million in taxpayer money--in exchange for creating 7,500 new jobs by the end of 2010. The contract says it "shall survive any sale, change of control or similar transaction involving Countrywide.'' An aide to Governor Rick Perry says a compliance team will review terms of the Countrywide acquisition to make sure BOA is aware of its obligations to Texas.
The American Petroleum Institute reports that gasoline demand actually dropped about a half percentage point in the fourth quarter of 2007, compared to the previous year. It dropped 1.3 percent in December, with demand dropping from 9.338 million barrels a day to 9.221 million barrels. The trade group blames the slowdown of the U.S. economy and higher prices at the pump. But for the year, gasoline demand rose about a half percentage point compared to 2006.
Workers are removing about 40 feet of track at a rail siding in Mount Vernon to remove soil contaminated by a 500-gallon oil spill. The Ecology Department reports the used oil overflowed Tuesday from a car owned by a recycling company, Safety-Kleen Systems of Plano. It's paying for the clean-up work. The spill did not reach the nearby Skagit River.
President Bush and Federal Reserve Chairman Ben Bernanke are both embracing calls for an economic stimulus package to avert recession. At the White House, a spokesman said Bush believes that "over the short term,'' a "boost'' is needed to "deal with the softening of the economy.'' A short time later, the Fed chief was on Capitol Hill, where his prepared remarks said any stimulus plan should be quickly implemented, and temporary. He says it shouldn't be allowed to complicate any longer-term fiscal challenges. Bernanke says an economic stimulus plan that would put money into the hands of low- and moderate-income families would be more effective than other strategies to jump-start the economy. Bernanke says such a package would help because lower-income people tend to spend money more quickly. He also says temporary expensing and depreciation provisions for business could spur spending. He's suggesting Congress consider a "diversified mix of elements'' as it puts together a package. At the same time, Bernanke is warning Congress against having a "huge list of things'' that would gum up legislation and not do much to help the economy. In his testimony, he says, "fiscal action could be helpful in principle,'' and may provide "broader support for the economy'' than the Fed can furnish alone through cuts in interest rates.