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American and US Airways investors take note: United has yet to demonstrate the savings and power expected after its merger with Continental.

The parent company of United Airlines is expected to post a first-quarter loss on Thursday, for a period when travel slowed and costs rose. Investors will want to know what United will do about that.

WHAT TO WATCH FOR: It’s not unusual for airlines to lose money in the first quarter, the weakest travel season of the year. During the most recent quarter, airlines generally reported strong revenue gains in January and February, but then saw a drop-off in March.

Several analysts lowered their expectations for United Continental Holdings Inc. in recent weeks after the March slowdown. Barclays analyst David E. Fintzen noted that United’s non-fuel costs rose as much as 12.4 percent in the quarter, compared to the company’s guidance of around 9 percent.

Airlines, including United, are getting some help now from lower fuel prices and by keeping a lid on any flying expansion.

WHY IT MATTERS: United is still working through its 2010 merger with Continental. During that time its financial results have trailed those of rival Delta Air Lines, which posted a small first-quarter profit on Tuesday. Delta has buttoned up its 2008 purchase of Northwest Airlines, has bought a refinery to lower its fuel costs and is paying down debt. United is a slightly bigger airline, but shareholders care more about profitability than size.

WHAT’S EXPECTED: A loss of $1.09 per share on revenue of $8.7 billion, according to analysts surveyed by FactSet.

LAST YEAR’S QUARTER: A loss of $1.36 per share as United struggled with technology issues tied to its merger with Continental, during a quarter that tends to be slow for airlines anyway. Revenue was $8.6 billion.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. 

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Tags: earnings, united airlines

Photo credit: A United Airlines passenger jet taxis to a runway at San Francisco International Airport in San Francisco. Robert Galbraith / Reuters

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