United Airlines reports Q3 net loss of $779 million

— -- Citing nearly $1 billion in higher jet fuel costs, United Airlines Tuesday reported a third-quarter net loss of $779 million or $6.13 per share.

The Chicago-based airline's loss included $519 million in noncash losses on advance fuel "hedging" contracts, because prices of oil and jet fuel fell unexpectedly at the end of the quarter. Not including the special items, United lost $252 million. Its total net loss compared to a profit of $334 million in the third quarter last year, $2.21 per share.

"Oil prices reached unprecedented levels during the last quarter," said United CEO Glenn Tilton during a conference call with Wall Street analysts. "Failing financial institutions and tight credit markets are affecting us all."

Jet fuel cost United, the USA's second-biggest carrier after American Airlines, $946 million more in the third quarter than a year earlier, a nearly 65% increase. Tilton and chief operating officer John Tague said today's lower fuel prices, if they remain low, promise a better fourth-quarter for the carrier and the industry as a whole.

Because United — like most other carriers — has been cutting routes and flights to reduce costs, its total flying capacity shrank 3.6% year-over-year during the third quarter. Total passenger revenue rose 1.9%, while passenger revenue for every seat flown one mile rose 5.7%.

This (fourth) quarter, United's domestic and international flying capacity on full-size jets will be down at least 11.5% year-over-year.

The executives noted that passenger demand is softening on both domestic and international routes. The trend reflects the economic downturn as well as higher fares carriers have been charging. United has been hurt by economic softness in certain international regions where it flies. It had been aggressively expanding in mainland China, but it is reducing flying capacity to mainland China and halting its Los Angeles-Hong Kong route.

The nonstop route between Denver and London Heathrow will also be discontinued because of weak demand.