Source: Associated Press
Author: Dave Carpenter

United Parent UAL Reports $274 Million 2Q Profit, Biggest Since 2000

CHICAGO (AP) -- United Airlines parent company UAL Corp. reported its biggest quarterly profit in seven years Tuesday, a $274 million gain that reflected fuller planes during a busy summer travel season and the benefits of cost reductions.

The second-quarter results easily topped Wall Street estimates and more than doubled the company's earnings from a year ago, when it finished in the black for the first time since 2000.

Net income for the April-through-June period amounted to $1.83 per share, up from $119 million, or 93 cents per share, in the same period a year earlier.

Revenue rose 2 percent to a record $5.21 billion from $5.11 billion. Revenue per average seat mile, a much-watched gauge of an airline's health, also climbed 2 percent.

Analysts surveyed by Thomson Financial had estimated a profit of $1.39 per share on revenue of $5.15 billion.

United registered improvement to its operating costs, which have been among the highest of any U.S. airline for years. Costs per average seat mile, excluding fuel and severance charges, declined 0.5 percent from the second quarter of 2006 and operating expenses were reduced by $177 million.

Chairman and CEO Glenn Tilton said the results showed solid performance momentum across the board.

"We delivered these results by maintaining good cost control, executing excellent revenue and capacity management and reducing interest expense by paying down and refinancing our debt," he said in a message to employees.

United has prospered in part by selectively cutting capacity, which has made existing flights more full of passengers. It filled 89.1 percent of its seats last month, the highest ever for June.

The second-largest U.S. carrier, which has gradually improved its financial situation since ending a three-year bankruptcy overhaul early last year, also increased its cash balance in the quarter by $895 million to $5.1 billion. The hefty stash of cash has prompted speculation that the company may initiate a stock buyback or add to its fleet in the near future.

United shares rose $1.74, or 3.7 percent, to $48.98 in premarket trading. They ended Monday's trading up 7 percent since the start of the year and 18 percent since they resumed trading out of bankruptcy 18 months ago.