United Reports Strong Quarterly Profit Growth

United Airlines reported a 51 percent rise in quarterly profit, helped by lower fuel and maintenance costs.

The airline earned USD$1.19 billion for the second quarter ended June 30, up from USD$789 million in the prior year period.

Total operating costs, including a charge, fell 10 percent to USD$8.47 billion. Fuel expense fell 32 percent to USD$2.11 billion.

The Chicago-based airline said it expects passenger unit revenue to decrease between 5 and 7 percent in the third quarter. Capacity will only grow between 1 and 1.5 percent in 2015 compared to a year earlier, it said, lowering a prior forecast for growth of 2 percent.

The airline said it expects a pre-tax profit margin between 13.5 percent and 15.5 percent in the third quarter, excluding special items.

United plans to buy back USD$3 billion of its stock.

"The USD$3 billion share repurchase... demonstrates the confidence we have in our future," chief executive Jeff Smisek said in a news release.

CHALLENGING ENVIRONMENT

Despite the profit rise, United's outlook reflects the challenging revenue environment that US airlines continue to face as the dollar lowers visitors' spending power in the United States.

There has also been an increase in capacity on some domestic flights, contributing to United's 3.4 percent unit revenue drop in the second quarter.

Delta said last week that it expects passenger revenue per available seat mile to decline between 4.5 and 6.5 percent in the third quarter.

Publicity about slowing capacity growth to match demand has raised eyes at the US Department of Justice. The regulator is investigating whether carriers have worked together illegally to keep air fares high.