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Earnings Preview: United Continental Holdings

CHICAGO (AP) -- The parent company of United Airlines reports third-quarter results on Thursday, and investors will be looking for an update on its absorption of Continental Airlines, as well as how it is responding to new competition.

WHAT TO WATCH FOR: United and Continental combined in 2010, and big pieces of the consolidation are done. But it's still running behind the pace set by Delta in its 2008 acquisition of Northwest.

United's growth in monthly passenger revenue has been lagging Delta's. In September, its revenue for each seat flown one mile was flat, compared to a 5.5 percent gain for Delta and a 6 percent gain for US Airways. Wall Street wants to see United close that gap.

WHY IT MATTERS: Buckingham Research Group analyst Daniel McKenzie says United has short-term issues but that over the long term, meaning two to three years, it can get back to an 8 percent operating margin. The company "is a fundamentally improving story," he wrote in a note on Friday.

But in the short term, competition in China as well as in certain domestic and international markets is hurting revenue, he wrote.

One thing that may help is that United pilots now have union agreements that will allow the airline to begin scheduling them as one group, instead of working separately with those who came from United and those who came from Continental.

WHAT'S EXPECTED: Analysts surveyed by FactSet are expecting an adjusted profit of $1.54 per share. United Continental Holdings Inc. has already said it will have special charges of $177 million, including $127 million for a new labor agreement and $50 million for the costs of absorbing Continental. Analysts are expecting revenue of $10.28 billion.

LAST YEAR'S QUARTER: Net income of $6 million, or 2 cents per share. Revenue was $9.91 billion.