"With Flights Fewer but More Full, JetBlue and United Report Surprising Gains"

Tuesday, October 23, 2007

With Flights Fewer but More Full, JetBlue and United Report Surprising Gains

The Associated Press


CHICAGO, (AP) - Packed planes brought in better-than-expected profit for two
airlines Tuesday, as both the UAL Corporation and JetBlue Airways surprised
Wall Street with improved third-quarter earnings.

Shares of both companies climbed as the industry showed glimmers of
resurgence, at least temporarily.

At UAL, the Chicago-based parent company of United Airlines, pared-down
costs and better passenger revenue helped raise earnings nearly 76 percent
to $334 million, the company's best quarterly profit in more than seven
years.

The low-cost carrier JetBlue, based in Forest Hills, Queens, reported its
first third-quarter profit in two years. 

But the carrier also warned that it would drop service to Columbus, Ohio,
and to Nashville, as well as a flight connecting Fort Lauderdale, Fla., to
Oakland, Calif.

JetBlue's profit for the three months that ended Sept. 30 was $23 million,
or 12 cents a share. A year earlier, JetBlue lost $500,000, breaking even
per share. Revenue rose to $765 million, from $628 million a year earlier.

On average, analysts surveyed by Thomson Financial had expected earnings of
7 cents a share on revenue of $767.4 million.

At UAL, earnings for the July-through-September quarter amounted to $2.21 a
share, up from $1.30 a share, or $190 million, in the period a year earlier.

Excluding special items, many related to UAL's emergence from federal
bankruptcy protection in February 2006, the company earned $295 million, or
$1.96 a share, easily topping Wall Street forecasts. Revenue climbed 6.8
percent, to $5.53 billion.

On average, analysts surveyed by Thomson Financial forecast earnings of
$1.88 a share on revenue of $5.36 billion.

Part of the airlines' performance was attributed to a push in the industry
to scale back capacity on domestic flights, meaning few empty seats and
greater profitability.

"You're going to see fuller planes and less flights domestically, or at
least with less frequency," said a Morningstar analyst, Brian Nelson.
"That's their plan to optimize and really drive higher load factors on the
planes that are in the air."

UAL said reductions in North American capacity would continue, declining as
much as 3.5 percent by the end of 2007 and up to another 4 percent in 2008.

At the same time, UAL said it would increase capacity on its more profitable
international trips, by up to 3.5 percent this year and 6.5 percent in 2008.

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