US airline returns to profit

CHICAGO - UAL, parent of No 2 US carrier United Airlines, today posted its first quarterly profit since 2000, helped by a sharp increase in revenues and cost cuts.

The strong second-quarter performance by UAL, which emerged from bankruptcy in February, is another sign that the long-suffering airline industry is recovering. But it remains to be seen whether the sector can maintain its momentum in the second half, which is traditionally weaker than the summer months.

UAL's profit was more than double Wall Street estimates and matched its preliminary second-quarter report last week. Still, UAL stock fell 3.7 per cent after rising last Monday, when it issued its first report.

UAL said profit amounted to US$119 million ($194.3 million), or 93 cents per share, reversing a loss in the second quarter of 2005. Excluding one-time severance charges of US$22 million, earnings per share were US$1.09 a share.

Airlines in recent months have restrained their capacity and flown fuller planes.

Analysts said that if carriers can keep capacity restricted, they may enjoy revenue growth beyond the peak North American summer travel season.

- REUTERS