U.S. carriers United Airlines and AirTran posted better-than-expected quarterly results on Wednesday, citing improving revenue trends aided in part by returning business travelers.

United parent UAL Corp posted a smaller quarterly loss as it cut costs to cope with declining travel demand, and said international demand was also ticking up.

While the environment continues to be marked by reduced demand and volatile fuel prices, we are pleased to see signs of the economy and business travel improving, UAL CEO Glenn Tilton said during a conference call.

SET FOR RECOVERY

The start of an uptick in business travel points to a better outlook for major U.S. carriers, which have cut jobs and reduced capacity in the past two years as the recession battered demand for flying.

U.S. airlines raised cash in 2009 and now have lower cost structures, said Morningstar analyst Basili Alukos. In that respect, they are all set up for recovery.

The UAL commentary was similar to that from Delta Air Lines Inc , which on Tuesday posted a smaller quarterly loss and said its corporate contract bookings were trending up about 10 percent this month from the year ago.

Last week, Continental Airlines and Southwest Airlines posted profits after year-earlier losses and also said business travel was coming back.

We think the meetings and convention sector, which was really hit hard last year, will recover as well, AirTran Chief Executive Bob Fornaro said.

Still, recovery will take its time. The International Air Transport Association said on Wednesday that aviation would face a tough 2010 making up for lost demand in 2009 and handling new security concerns.

This is not going to be a quick rebound, Fornaro said. The rebound doesn't happen in one fell swoop; it happens over a couple of years.

PROFIT AT AIRTRAN

AirTran Holdings Inc swung to a profit against a year-earlier loss, and also said it expected unit revenue to improve in February and March after dipping in January. The low-cost carrier also said business markets were trending positive.

At AirTran, net income was $17.1 million, or 11 cents a diluted share, for the fourth quarter, compared with a loss of $121.6 million, or $1.03 a share, a year earlier.

Capacity, measured in available seat miles, was up 8.1 percent, while AirTran traffic, measured by revenue passenger miles, rose 6.9 percent.

UAL said its fourth-quarter net loss narrowed to $240 million, or $1.44 per share, from $1.32 billion, or $10 per share, a year earlier.

Excluding items, UAL said its quarterly loss was $176 million, or $1.05 a share. Analysts expected a loss of $1.47 a share, according to Thomson Reuters I/B/E/S.

UAL said consolidated passenger revenue per available seat mile, a key airline measure, fell 5.2 percent in the fourth quarter, improving over the third quarter's 14.7 percent drop.

During its conference call, UAL also cited signs of recovery in the cargo market and said it was beginning to see its credit spreads narrow, enabling it to gain future financing at lower rates.

Shares of UAL closed up 4 cents to $12.83, while AirTran gained 1.5 percent.

(Additional reporting by Kyle Peterson in Chicago; Editing by Tim Dobbyn, Leslie Gevirtz)

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