Continental, Southwest hurt by high fuel costs

DALLAS -- High fuel costs that helped drive some marginal airlines into bankruptcy this spring are also taking a toll on two of the nation's healthiest carriers.

Continental Airlines Inc. slid to a first-quarter loss as fuel spending soared 53 percent, and Southwest Airlines Co. -- which hasn't lost money since 1991 -- saw its profit fall by two-thirds.

Both airlines say they will respond by slowing their once-ambitious growth plans, and they are raising fares.

At Continental, fuel costs rose by $364 million from last year, pushing the Houston-based carrier to a loss of $80 million, or 81 cents per share. A year ago, the company earned $22 million, or 21 cents per share.

Continental also posted a healthy increase in revenue -- up 12.3 percent to $3.57 billion. But costs rose even faster, by 16.7 percent.

Excluding a gain on airplane sales, Continental said it would have lost 86 cents per share in the first three months of this year. Thomson said analysts expected a loss of 93 cents per share.

Southwest reported Thursday that its earnings tumbled to $34 million, or 5 cents per share, in the January-March period, from $93 million, or 12 cents per share, a year earlier.

Merrill Lynch & Co.

NEW YORK -- Merrill Lynch & Co., the world's largest brokerage, on Thursday said it would cut another 3,000 jobs after more than $6.5 billion of fresh write-downs pushed it to a loss for the first quarter.

It marks the third straight quarterly loss for Merrill amid a global credit crisis that began last summer. Banks and brokerages have racked up nearly $200 billion of write-downs to date, with more feared to come.

Merrill Lynch lost $2.14 billion, or $2.19 per share, after paying preferred dividends, during the first quarter. This was well below the profit of $2.11 billion, or $2.26 per share, a year earlier. Total revenue fell to $2.93 billion from $9.6 billion a year earlier.

Google Inc.

SAN FRANCISCO -- Google Inc.'s first-quarter profit climbed 30 percent to surpass analysts' predictions in a performance that alleviated some of the economic worries that have hammered the Internet search leader's stock this year.

The news, released after the stock market closed Thursday, lifted Google's recently drooping shares more than 11 percent.

The Mountain View-based company said it earned $1.31 billion, or $4.12 per share, during the first three months of the year. That compared with $1 billion, or $3.18 per share, in the first quarter of 2007.

Google's showing indicates the Internet's advertising market remains robust. First-quarter revenue totaled $5.19 billion, up 42 percent from $3.66 billion a year ago.

Harley-Davidson Inc.

MILWAUKEE -- Harley-Davidson Inc., which has been slowing down for the past few years, has hit a serious rough patch as even its upwardly mobile customer base thinks twice about dropping thousands of dollars on a classic motorcycle.

The maker of one of America's most iconic rides said Thursday that it will cut its work force by 8 percent and trim bike shipments by the thousands with domestic sales falling nearly 13 percent in the first quarter.

Net income for the quarter ended March 30 was down 2.5 percent to $187.6 million, or 79 cents per share, compared with a profit of $192.3 million, or 74 cents per share, a year ago. Revenue increased 10.8 percent to $1.31 billion from $1.18 billion a year ago.

Worldwide retail sales of Harley-Davidson motorcycles fell 5.6 percent in the quarter. The U.S. heavyweight motorcycle market, of which Harley has about a 50 percent share, saw sales drop 14 percent in the quarter.

Overseas sales were up 16.8 percent in the first quarter, but that represents only about a third of all Harley shipments.