Earnings Preview: Loss Expected at United; Back to Black for AirTran

United Airlines parent UAL Corp. (UAUA) and AirTran Airways (AAI) will be the latest carriers to land with fourth-quarter earnings Wednesday, and both are expected to post improved results, helped by lower jet fuel costs and decreasing declines in demand.United, based in Chicago, is expected to post a loss of $1.47 a share, according to Thomson Reuters, narrower than last year's quarterly loss $4.22. Revenue is forecast to decline 10% to $4.09 billion.

With its greater dependence on international routes and premium-paying business travelers, United has been hit especially hard by the global economic downturn, but that also means it's poised to rebound more robustly once international air travel improves. That's helped shares quadruple from a 52-week low set last summer.

United has beaten the Street's profit estimates for six consecutive quarters, and on Monday Standard & Poor's analyst Jim Corridore told clients he expects the company to report improving demand for business and premium travel.

As for AirTran, the Orlando, Fla.-based discount carrier is expected to join the elite group of airlines posting quarterly profits. Analysts surveyed by Thomson Reuters forecast adjusted earnings of 3 cents a share versus a year-ago loss of 14 cents. That would mark the fourth consecutive quarter in which the carrier maintained profitability. Revenue is expected to fall fractionally to $585.4 million.

Corridore of S&P expects earnings to come in at a Street-beating 6 cents a share, mainly from lower fuel costs. For 2010, the analyst sees AirTran's revenue rising 9% on stronger passenger demand and higher pricing. Shares in AirTran have gained 17% over the last 52 weeks, underperforming the broader market by nearly 15 percentage points.

Airlines appear to have put the worst of the slowdown behind them after suffering a deep plunge in passenger traffic last spring. On Tuesday, Delta Air Lines's (DAL) narrower loss missed Street forecasts, but its pace of revenue declines slowed sharply from the previous three quarters. Other airlines have shown similar sequential improvements. Of the carriers reporting quarterly results so far, Delta today and American Airlines' parent AMR Corp. (AMR) last week missed estimates, while Continental (CAL) and Southwest (LUV) swung back to Street-beating profitability.

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