United Airlines parent UAL Corp. said it has finally made a real profit, announcing today that it expects to report $119 million in net income for its second quarter.
That would make it United’s first truly profitable quarter since the second quarter of 2000.
Airlines have profited from fare increases and full planes this year while they continue to try to cut costs to cope with high fuel prices.
United expects to report 93 cents in diluted earnings per share for the second quarter, or $1.01 in basic earnings per share.
“We are making good progress in strengthening our core business; our focus continues to be on driving down costs,” said United chief executive Glenn Tilton in a written statement.
Other airlines have also reported profits in the second quarter, including Southwest, American and Continental – all of which reported larger profits than United.
“In the airline industry any earnings are a time for celebration and champagne. However, the numbers raise a lot of concerns,” said Evergreen-based aviation consultant Mike Boyd. “United Airlines still has higher costs than American.”
UAL emerged from more than three years of Chapter 11 bankruptcy protection in February. United is the largest carrier at Denver International Airport and has about 56,500 employees, including about 5,100 in Denver.
The company will officially announce its earnings July 31, but it reported the preliminary results to give guidance to investors before issuing $726 million of convertible notes to trusts for employees, which its reorganization plan called for.
The preliminary results are better than analysts’ average estimated earnings per share, which was 46 cents, according to Zacks Investment Research.
“They’re moving in the right direction,” said Calyon Securities analyst Ray Neidl.
United had a $22.9 billion on-paper profit in the first quarter this year, but United said the more representative figure for that quarter was a $306 million loss before reorganization items – making the second quarter preliminary results the first true profit.
United expects to report $5.1 billion in operating revenues for the second quarter, up 16 percent from $4.4 billion a year ago.
UAL shares closed at $28.20 today, up 4.6 percent.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or at kyamanouchi@denverpost.com.
