Continental Airlines, the fifth-largest carrier in the US, yesterday posted a quarterly profit, helped by $243 million (€270 million) in federal grants aimed at staving off the sharp decline in air travel after the attacks of September 11th.

Continental reported an operating loss of $97 million, compared with a profit of $135 million a year earlier. Including $243 million in cash payments from a US government rescue package, Continental reported quarterly profit after tax of $3 million.

Quarterly revenues fell to $2.22 billion, from $2.62 billion a year earlier. Continental ended the quarter with $1.2 billion in cash.

The airline also said it was in talks with Boeing about the deferral of some of its firm aircraft orders - scheduled for delivery between 2002 and 2005.

US airlines are expected to report as much as $5 billion in losses this year as the attacks on New York and the Washington area curtailed travel and further weakened revenues hurt by business spending cuts.