Continental Airlines issued its traffic report for April late Tuesday and if you still believe those who forecast 2007 was going to be a blockbuster year for the airlines, I’m afraid the report only added to the evidence that no, this is probably not going to be the case.

Continental reported that mainline RASM was up 0.5% to 1.5%. As Mike Linenberg, analyst at Merrill Lynch said in a note this morning, the street’s forecasts had been quite varied, with some analysts looking for a 2% to 3% increase while others were looking for a PRASM decline this month.  On a consolidated basis, PRASM was flat.

Mainline load factor fell slightly to 82.7% (vs. 82.9% a year ago).

Analyst Jamie Baker with JP Morgan writes this morning that “Continental consolidated RASM was flat in April, slightly below our forecast though seemingly sufficient for achieving our quarterly outlook. However, Continental demand guidance seems potentially below that given just 12 days ago.”

He went on to say, “New guidance? In its release, Continental sighted expected quarterly loads to “keep pace with last year”. But absent any positive yield offset, this statement appears potentially at odds with recent guidance for a flattish yield and <+1.5 LF performance in the quarter. Given the hour of Continental’s traffic release, we have not yet been able to reconcile this apparent inconsistency with management.”

No surprise to us. While we knew April revenue comps were going to be difficult (Easter was later last year), the either direct or more indirect signals we’ve heard expressed from almost all airline managements over the last three weeks have indicated to us that passenger demand continues to lag domestically and that the usual push-up towards the summer booking season may still happen — but I’m betting it is going to happen at lower overall fare levels than the airlines would like.