21-Jul-2010

July 20, 2010

United Airlines parent UAL reported its first quarterly operating profit since 2007 on Tuesday, boosted by a 26.2 percent jump in passenger revenue and lower-than-expected costs.

Excluding items, earnings from operations were USD$430 million in the second quarter, up from a loss of USD$321 million a year earlier.

"Compared to our model, cargo and regional revenue were stronger and non-fuel costs were lower," UBS analyst Kevin Crissey said in a research note.

Operating revenue rose 28.4 percent to USD$5.16 billion, with a 57 percent jump in cargo revenue and 36.3 percent rise in revenue from United's regional affiliates. Operating expenses rose 21 percent to USD$4.73 billion.

Excluding fuel and expenses associated with United's proposed merger with Continental Airlines, costs rose 1.9 percent.

Net income was USD$273 million, compared with USD$28 million a year earlier.

Mainline unit revenue, or the revenue derived from the seats on planes that United flies, rose more than 28 percent.

Q3 COST OUTLOOK PROMPTS CONCERN

Airlines are widely expected to post better second-quarter results as air traffic recovers from the recession. Capacity cuts have positioned carriers to operate fuller planes, helping them to increase fares.

United last reported an adjusted quarterly profit in the third quarter of 2007.

United's report comes on the heels of Delta Air Lines' quarterly scorecard. The airline posted its highest quarterly profit in a decade but its third-quarter outlook disappointed investors.

(Reuters)