The skies are starting to look a little friendlier to United Airlines (NASDAQ: UAUA). The airline reported a quarterly loss that was lower than expected. Third quarter traffic was off only 2.9%, but because United used discounts to fill seats, revenue fell 20.3% (to $4.43 billion). The key to a recovery will be getting passengers to shell out for more expensive seats. According to United's president, John Tague, "There's no opportunity here for a full revenue recovery until we get premium cabin pricing back." He doesn't know how long this is going to take, but does say that he's seen progress over the past few months.Nonetheless, it's important not to confuse "not so bad" with "making money." UAL lost $57 million (39 cents a share) last quarter. If it hadn't had some good news on fuel hedges and accounting issues, the loss would have been 43 cents a share. Again, this is better than analysts polled by Thomson Reuters expected: they were forecasting a loss of 94 cents per share. And, the third quarter loss was much better than last year's $792 million for the third quarter.
But, it all comes down to the bottom line, and a loss is a loss is a loss.
United sees business travel is crucial to its recovery, especially with its prominence in the United States-to-Asia market. As pressure from recessionary factors begin to ease, the airline's fortunes will begin to turn. Until then, United can continue to squeeze every dollar it can out of its existing passengers, who paid an average of $13 in additional fees for such "luxuries" as checked bags, better seats in the coach cabin and accelerated boarding. This added up to $289 million last quarter and was up 13% year-over-year.
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