UAL Corp , parent of United Airlines, reported a quarterly profit on Tuesday after big gains from fuel hedges, but said it would cut its international flying capacity by 7 percent to offset sagging demand.

Second-quarter profit was $28 million, or 19 cents per share, compared with a loss of $2.74 billion, or $21.57 per share, a year earlier.

The airline industry has struggled lately against falling demand as the recession erodes travel budgets. UAL said its international capacity cut would be made in the last four months of 2009.

Excluding non-cash, net mark-to-market hedge gains and accounting charges, UAL posted a second-quarter loss of $2.23 per share. On that basis, analysts had expected a loss of $2.56, according to Reuters Estimates.

The company said operating revenue fell 25.2 percent to $4.02 billion.

UAL ended the quarter with $2.8 billion in total cash, of which $2.6 billion was unrestricted.

(Reporting by Kyle Peterson; editing by John Wallace)

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