United registers 2Q profit – first time since 2000

© United Airlines

It has been a very, very long dry spell. For the first time since 2000, UAL Corp., the parent company of United Airlines, has recorded a second-quarter profit. That net profit of $119 million compares with a $1.43 billion loss one year ago. At that time, United was struggling to emerge from Chapter 11 bankruptcy.

United managed the feat despite record fuel prices. Fuel costs during the second quarter of 2006 were almost a third higher than they were for the comparable period a year ago.

What’s behind United’s showing? Cost controls, higher fares, and reduced capacity (fewer flights). United received a real boost earlier this year when Independence Air folded. The discount airline operated out of Washington Dulles (IAD), which is also United’s main East Coast hub. Independence’s demise meant less low-fare competition out of Dulles for United.

While higher airfares may not be something travelers welcome, it appears to be the price they’re going to have to pay for a healthy United States airline industry. Keeping the industry healthy - avoiding further bankruptcies and more liquidated carriers - is essential. The idea is to maintain competitive balance especially among the major “network carriers”, such as American Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines, and US Airways.

© Cheapflights Ltd Jerry Chandler

Comments

[Debbie]

It doesn't hurt that they're refusing to give ticket refunds in a reasonable amount of time to military members whose Iraq tour of duty was extended from 12 months to 16+ months on July 26, either.

My son, who was supposed to be home on August 4 (had already purchased his round-trip ticket to fly to his wife and kids) was informed, along with the rest of his company on July 26, that he wouldn't be returning to the States for at least another 120 days. He has been trying, since that time, to get a refund for his purchase from United. They just keep giving us the runaround. This wasn't a $200 ticket, either. We're talking round-trip, cross country from Alaska.