US Airways posts profit; new United has a loss

US Airways Group Inc. said today that it swung to a fourth-quarter profit, while United Continental Holdings Inc. posted a fourth-quarter loss.

Both airlines surpassed analyst estimates.

Higher fares and increased traffic during the holidays helped the airline industry report better fourth-quarter results, but rising fuel prices are a concern to sustaining profits this year.

Tempe, Aziz.-based US Airways, Philadelphia's dominant carrier, posted a fourth-quarter profit of $28 million, or 17 cents a share, from a loss of $79 million, or 49 cents a share, in the year-ago quarter. It was US Airways' first profitable fourth quarter since 2006, the airline said.

Analysts polled by Thomson Reuters expected earnings of 6 cents a share.

Operating revenue rose nearly 11 percent to $2.91 billion from $2.63 billion. Excluding fuel and special items, unit costs fell 1.7 percent.

"2008 and 2009 were extraordinarily difficult years for our industry," US Airways chief executive Doug Parker said. "US Airways took decisive actions to manage through those challenges - including reducing capacity, realigning our network to focus on key markets, introducing new revenue streams, controlling costs, and maintaining a commitment to exceptional operating reliability."

"These steps, combined with 2010's improving economic environment, have now put US Airways back on the path to sustained profitability," Parker said.

Airline analyst James Higgins with Soleil Securities said in a client update that US Airways revenues were "slightly better and non-fuel operating expenses considerably lower" than expected. A risk to the future, though, is that US Airways does not purchase fuel hedges, or contracts that lock in fuel prices. "That makes US Airways more vulnerable than other airlines to fuel price spikes," Higgins said.

United Continental, the world's largest airline, said it lost $325 million in the latest quarter because of costs in combining United and Continental Airlines on Oct. 1.

Excluding $485 million in merger-related costs, the new United earned $160 million, or 44 cents per share, topping analysts' expectations of 23 cents per share, according to Thomson Reuters.

The fourth-quarter net loss was $325 million, or $1.01 a share, compared with a loss of $266 million, or 85 cents a share, a year earlier.

Revenue rose 15 percent to $8.4 billion, from $7.3 billion a year earlier. Operating expenses also rose 15 percent, with fuel costs rising nearly 27 percent, the airline said.