United Continental 2Q profit drops 11.9%

United Continental's second-quarter profit fell 11.9 percent as fuel costs rose sharply and travel to Japan dropped.

The airline company still reported net income of $538 million, or $1.39 per share, for the second quarter. It spent $145 million on integration costs as it continues to merge United and Continental airlines into what will be the world's largest carrier. Without special one-time items, it would have earned $1.49 per share.

Revenue rose 10.3 percent to $9.81 billion. That was $100 million more than expected by analysts polled by FactSet. Adjusted profit was 3 cents per share higher than analysts expected, too.

Fuel expenses rose more than $1 billion — 45 percent higher than a year ago. Hedging gains of $278 million took away some of the sting.

United said revenue was reduced by $100 million because of the drop-off in travel to Japan after the earthquake disaster there in March. It cut flying to Japan 11.8 percent during the quarter.

Traffic on the airline was nearly flat. Capacity rose 1 percent during the quarter. A key measure that looks at how much the airline collects for each seat flown one mile rose 9.1 percent compared to a year earlier.

Airlines have generally been raising fares to keep up with higher fuel expenses, although an attempted fare hike by United earlier this month failed to catch on.

On Wednesday, American Airlines parent AMR Corp. reported a quarterly loss of $286 million, although profits are expected at the other big airlines.

For the first half of the year, United Continental Holdings Inc. earned $325 million, down by 24.1 percent from a year earlier. Earnings per share fell to 88 cents from $1.19 a year ago. Revenue in the first half rose 10.6 percent to $18.01 billion.