United Continental, the world's biggest airline, posted a small quarterly profit as revenue fell and expenses rose.Net income came to USD$6 million in the third quarter, down from USD$653 million a year earlier.The latest quarter included a charge of USD$454 million tied to an agreement in principle on a new labour contract with the pilots' union and USD$60 million in merger integration costs.Revenue fell 2.6 percent to USD$9.91 billion. Unit revenue fell 1.3 percent.Operating costs rose 5 percent, with fuel expenses up 1 percent.The company, formed when United bought Continental Airlines in 2010, said it was out to win back customers who turned to competitors after technology changes hurt service and revenue performance over the summer.United "clearly had a bad quarter operationally," said Avondale Partners airline analyst Fred Lowrance.As United shifted to a single reservations system and implemented other new processes, on-time arrivals suffered and mishandled baggage rates went up. The company said those measures and customer satisfaction scores had improved, but it forecast flat unit revenue for October.Lowrance said the coming months would indicate if United's issues have really been fixed. "We'll see how it plays out over the next couple months," he said.United Continental was the last of the major US carriers to report third-quarter results. Delta and US Airways posted higher earnings earlier this week and said revenue trends looked to be improving after a soft September.Performance in unit revenue, a measure of pricing power and how full planes are, weakened at many US carriers toward the end of the third quarter, a period in which airlines typically benefit from some summer travel."It looks like September is proving more the exception than the rule, that demand is still strong and trending in the right direction," Lowrance said.Delta forecast a rise of 4 percent to 5 percent in October unit revenue. Southwest Airlines said last week its unit revenue was trending about 4 percent stronger for October compared with a year earlier.United has been taking a number of steps to improve its appeal to passengers, including upgrading the seating in its economy, first and business-class cabins, and offering new menu choices on international flights.The airline recently took delivery of its first Boeing 787 Dreamliner, and this summer it ordered 150 Boeing 737s to replace older, less-efficient jets.United still has work to do to complete its merger.Ray Neidl, an aerospace analyst with Maxim Group, cited the need for joint labour contracts among the unions that represented workers at the former Continental and United. The airline said on Thursday it expects to finalise contract language soon with its pilots."The longer this drags out, the longer it may take to realise the full benefits of the merger," Neidl said in a note to clients.Source:Reuters
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