United Airlines optimistic despite disappointing cargo results

Profits for SAA's main airline alliance partner in the US, United Airlines, have been pulled down by a disappointing performance from its cargo division in the third quarter. Although United lost only $57 million, down from almost $800 million in the same period last year and less than analysts expected, cargo revenue fell 43% to $125 million as a result of lower volume and poor yields. The airline is predicting clearer financial skies ahead, with an executive telling employees the airline is beginning to see encouraging early signs among business and premium travellers, both domestically and internationally. Operating expenses fell by almost one-third while fuel costs were down by half. SAA is partnered with United in the Star Alliance network, which also includes US Airways. United’s optimism comes as Iata says business volume has reached “a turning point”. Its survey, published last week of forecasts by chief financial officers, shows that more than 70% expect profitability to improve in the next year while about 75% reckon cargo volumes will pick up in that time, a forecast that was made by only half in the previous survey. “Airfreight typically picks up early in the recovery cycle as businesses replenish inventories,” the association said. “A shift to holding less stock post-recession could also support airfreight activity as more frequent, albeit smaller, shipments would be required.” Iata still expects airlines to lose $11 billion this year and $4 billion in 2010.