CORRECTED - UPDATE 2-UAL profit beats Wall St expectations

Tue Jul 20, 2010 10:16am EDT

(Corrects Thomson Reuters earnings estimate to $1.78 per share from $1.75 per share)

* United posts $1.95/shr vs. Wall St estimates $1.78/shr

* Revenue rises 28.4 pct to $5.16 billion

* First adjusted quarterly profit since 2007

* Shares up 3.5 pct (Recasts, CFO quote, background, details on traffic, outlook)

By Deepa Seetharaman

NEW YORK, July 20 (Reuters) - United Airlines parent UAL Corp UAUA.O reported its first quarterly operating profit since 2007 on Tuesday, boosted by a 26.2 percent jump in passenger revenue and its shares rose 3.5 percent.

Excluding items, earnings from operations were $430 million, or $1.95 per share in the second quarter, up from a loss of $321 million, or $2.21 per share a year earlier.

Analysts, on average, had expected the company to post earnings of $1.78 per share, according to Thomson Reuters I/B/E/S.

Operating revenue rose 28.4 percent to $5.16 billion.

Mainline unit revenue, or the revenue derived from the seats on plans that United flies, rose more than 28 percent as capacity fell 1.6 percent. International passenger revenue grew 43 percent.

"We expect our unit revenue growth to lead the industry again this quarter, reflecting service improvements, strong on-time performance and the capacity actions we have taken, all of which improved both our yields and load factors," Chief Financial Officer Kathryn Mikells said in a memo to employees.

Net income was $273 million, or $1.29 per share, compared with $28 million or 19 cents per share a year earlier.

The airline plans to merge with Continental Airlines Inc CAL.N by the end of 2010.

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

Airlines are widely expected to post better second-quarter results as air traffic recovers from the recession. Capacity cuts have positioned carriers to charge higher prices and operate fuller planes.

United expects its mainline capacity to be roughly flat, while its full-year capacity is expected to fall between 2.4 percent and 1.4 percent.

On a consolidated basis, which includes feeder airlines and regional affiliates, United expects capacity to rise as much as 2.6 percent in the third quarter, while being flat to up 1 percent for the year.

UAL's shares rose 74 cents, or 3.5 percent, to $21.92 in early Nasdaq trading.

On Monday, current industry leader Delta Air Lines Inc (DAL.N) posted its highest quarterly profit in a decade but revenue fell short of expectations and its third-quarter outlook disappointed [ID:nN15228630]. (Reporting by Deepa Seetharaman; additional reporting by Karen Jacobs in Atlanta, editing by Gerald E. McCormick and Derek Caney)

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