Another week and another lesson in bankruptcy economics.

United Airlines reported earnings today, and just as we saw with Delta Air Lines, a stay in bankruptcy court can do wonders for an airline’s numbers.

Almost as good as a spa treatment.

Parent company UAL Corp. announced better than expected quarterly results today, as it announced third quarter earnings of  $295 million, or $1.96 per share adjusted to exclude one-time items, on $5.5 billion in revenue. Consensus had the airline coming in at $1.88 a share.

No surprise that while about half of United’s revenue comes from North America, international flights are providing the fastest growth. Revenue from trans-Atlantic flights soared 17.4% from a year earlier, while Pacific passenger revenue climbed 14.8%.

Interesting that the airline posted such strong trans-Atlantic numbers — especially after we saw American Airlines report weak trans-Atlantic numbers last week. They look even that much weaker now.

But, don’t break out the party hats yet.

The airline said during its call that costs are rising faster than they had anticipated.  As a result, it told analysts this morning that CASM is now expected to rise about 6% in the fourth quarter. YIKES.

The reason for the increase? The airline says it is because of higher maintenance expenditures and higher IT outsourcing costs.

(Reminds me of the latest conversation that PBB subscribers and I are having on the topic of airline IT.)

Not surprisingly, given the airline’s double-digit increases in international revenue, the airline said today that it expects to cut the number of U.S. seats by about 3.5% in 2008. International seats will rise 6% next year.

Ticker: (UAUA:NYSE), (AMR:NYSE)

Technorati Tags: airline earnings, airlines, American Airlines, United Airlines