×

United Airlines raises profit margin forecast for 3rd quarter

Passengers check-in for flights with United Airlines at O'Hare Airport.
Getty Images
Passengers check-in for flights with United Airlines at O'Hare Airport.

United Continental on Thursday said it expects a higher pre-tax profit margin for the just-ended third quarter than it had previously forecast, thanks in part to extra revenue from a credit card agreement for frequent fliers.

The Chicago-based airline said its pre-tax margin will be between 16 percent and 17 percent, compared with a prior forecast of between 13.5 percent and 15.5 percent, excluding special charges. That reflects about $100 million in revenue from changes to marketing agreements with JPMorgan Chase's Chase Bank USA and Visa's U.S. subsidiary.

United also narrowed its outlook for a decline in passenger unit revenue, seeing a decline between 5.5 percent and 6 percent, compared with prior guidance of a drop between 5 percent and 7 percent.

Rival Delta Air Lines reported a similar improvement last week, suggesting that U.S. airlines may start to emerge from a months-long unit-revenue slump. A strong dollar has lowered demand from travelers outside the United States, and smaller surcharges in international markets have decreased the value of sales.

Sterne Agee CRT analyst Adam Hackel said the updated guidance indicated a solid third quarter.

United said it canceled fewer flights in the quarter than it had anticipated, resulting in a 2.1 percent capacity increase from a year earlier. It had forecast capacity would rise between 1.25 percent and 2.25 percent.