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UPDATE 2-United Airlines profit falls, sees margin decline this quarter

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Oct 18 (Reuters) - United Airlines on Wednesday said its third-quarter net income fell slightly less than investors had feared as the third-largest U.S. carrier was hit by $185 million in pretax losses caused by canceled flights during the Atlantic hurricane season.

Looking forward, it forecast a pre-tax margin of between 3 percent and 5 percent for the current quarter, a steep drop from 9.8 percent a year ago, largely due to an increasingly competitive fare war in key markets against low-cost carriers Spirit Airlines Inc, Frontier Airlines and others.

United has acknowledged the short-term impact on profit from matching sharply discounted fares against its competitors, but has said it would continue matching until it could outpace low-cost rivals.

United's shares hovered around the unchanged mark in after-hours trading.

The Chicago-based airline said passenger revenue per available seat mile, a closely watched measurement of an airline's performance, fell 3.7 percent, about 1 percentage point of which was attributable to disruptions caused by storms.

For the current quarter, United forecast that passenger revenue per available seat mile would decline by 1 percent to 3 percent.

It reported net income of $637 million, down 34 percent from $965 million in the year-ago quarter.

Excluding some special charges, United reported earnings per share of $2.22 per share. That beat Wall Street's average forecast of $2.16, according to Thomson Reuters I/B/E/S. (Reporting by Alana Wise; Editing by Bill Rigby)