RockBottom

United making money again

Updated 10/31/2006 2:08 PM ET

CHICAGO (AP) — United Airlines parent UAL (UAUA) reported third-quarter earnings Tuesday of $190 million, marking the first time it has posted back-to-back profits in more than six years.

Higher fares and lower costs as the result of its three-year bankruptcy restructuring helped keep the nation's No. 2 carrier modestly profitable despite still-lofty fuel costs.

The company's earnings of $119 million in the second quarter was its first true profit since 2000.

Net earnings for the three months ended Sept. 30 amounted to $1.30 per share, compared with a loss of $1.77 billion, or $15.26 per share, a year ago when the company was nearing the end of its three-year bankruptcy restructuring.

Revenue for the third quarter was $5.2 billion, up 11% from $4.7 billion a year ago.

Analysts surveyed by Thomson Financial had forecast quarterly earnings of $1.43 per share on revenue of $5.2 billion.

The Elk Grove Village, Ill.-based company said $60 million in income tax expense in the quarter reduced earnings by 43 cents a share.

But J.P. Morgan analyst Jamie Baker said United's results were better than expected, citing its "significant revenue momentum."

Operating profit was $335 million, up from $170 million a year earlier.

Like other U.S. airlines, United's bottom line benefited from increased fares despite the cost of fuel, which remains high by historic standards despite a recent decline. It said continuing revenue and productivity improvements more than offset a $293 million increase in fuel expenses during the quarter.

Chairman and CEO Glenn Tilton called the quarter "solid" and said United's revenue increase compared favorably to those of its industry peers.

He told employees in a recorded message that the results "demonstrate momentum on our core agenda of continuous improvement, controlling our costs, optimizing our revenue and improving our customer experience."

United lost billions of dollars from 2000 until earlier this year. The carrier officially reported a $22.9 billion on-paper gain for the first quarter of 2006, but that reflected a formal settling of accounts from bankruptcy and was not a true profit. Excluding those reorganization items, it lost $306 million in that period.

Year-to-date earnings results for 2006 and 2005 are not directly comparable because of its emergence from bankruptcy on Feb. 1. For the eight months after that, UAL said it had a profit of $86 million; a year earlier, it lost $4.3 billion for the full nine-month period.

Space Monkey

Now if I could just hear UAL taking apps and hiring again.......

hatetobreakit2u

ual managment should be thrown in jail for dumping pensions and now posting a profit.

i cant believe violence has erupted out against management

Space Monkey

Don't you mean Hasn't????

Kinda like JO wont be alone in a room with his pilot group....

hatetobreakit2u

ya, sorry, i was never good at grammar, thats why i became a pilot

FredtheGnome

Revenue of 5.2 Billion and company profits are 190 Million. Kind of puts things in perspective that the company has less than a 4% profit margin.

L'il J.Seinfeld

Excellent point. For a company that size, and even compared to other airlines, net profit should be 10% of revenue.

Booker

I don't have any old quarterlies/annuals in front of me, so I may be talking out of my elbow, but I thought that back before the legacies were called legacies ('97-ish) that a 4% margin was nominal if not impressive for a major. Can anyone confirm?

hatetobreakit2u

yes 4% sounds even a little high, a teacher told me something like that in one of my airline economics classes

FlyJSH

4% per quarter (if it continues) yields about 13% per year. Compare that to the S&P 500's historical return of about 11% per year and that makes UAL look pretty good (if it continues).