MINNEAPOLIS (AP) — United Airlines parent UAL Corp. yesterday reported a third-quarter loss of $779 million, squeezed by high jet fuel prices through much of the quarter and falling oil prices which hurt its hedging positions.

The Chicago-based carrier said its loss totalled $6.13 per share, compared with profit of $334 million, or $2.21 per share, a year ago.

UAL said it would have lost $252 million, or $1.99 per share, if not for accounting charges and $519 million in non-cash fuel hedge charges resulting from the drop-off in oil prices it had to record at the end of the quarter.

Revenue edged up 0.7 percent to $5.57 billion, helped by a nearly 11 percent rise in cargo revenue and a 1.3 percent rise in United Airlines passenger revenue.

The results beat estimates of analysts surveyed by Thomson Reuters, who had expected a larger adjusted loss of $2.48 per share on revenue of $5.54 billion. Shares rose 74 cents, or 5.9 percent, to $13.40 in midday trading after rising as high as $14 earlier in the session.

The July-September period saw crude oil prices peak at $147.27 on July 11, but then decline steeply to the $80-range by the end of the quarter. Jet fuel prices fell, too, but not as fast as oil.

UAL said that meant that its fuel expenses surged $946 million year-over-year, while it was still stuck with the accounting loss on the hedges. It recorded a cash gain of $17 million on fuel hedges that settled during the quarter; the non-cash losses are for contracts that haven't settled yet.

Glenn Tilton, United's chairman, chief executive and president, said United is aiming to return to profitability, although the company didn't predict when.

"It is in this environment of falling oil prices that we at United see opportunity," he said on a conference call.

United said that it expects costs for each seat it flies to rise 2.5 percent to 3.5 percent in the fourth quarter. JPMorgan analyst Jamie Baker wrote in a note that that should be viewed encouragingly; he had been skeptical that United could contain costs that much as it cut capacity.

"While falling slightly short of our 1.5 percent estimate, we are nonetheless impressed (assuming they deliver), considering a mixed track record for expense control," he wrote.

He said United's fourth-quarter guidance suggests it might nearly break even. Analysts on average are expecting a loss of $1.43 per share.

United ended the quarter with about $2.9 billion in cash. It brought in $300 million by borrowing against its planes in the third quarter, and the company said it is working to borrow against more of the $3 billion worth of planes that it currently owns debt-free.

United said it now expects overall capacity to shrink eight percent to nine percent during 2009. That includes a projection of shrinking domestic capacity by 12.5 percent to 13.5 percent and international capacity 7 percent to 8 percent.

On Tuesday the airline said it has switched its U.S.-to-China flights from 747s to smaller 777s, and that over the winter it would stop flying daily from Washington to Beijing. It is also dropping its service from Los Angeles to Hong Kong and from Denver to Heathrow airport in London.

Some of that capacity will come back on new flights such as Washington-to-Dubai, which begins next week. And it said it would add a flight from Washington to Moscow in March.

For the first nine months of 2008, United said it has lost $4.05 billion, or $32.34 per share, versus a profit of $456 million, or $3.10 per share, during the first three quarters of 2007. Revenue rose 3.5 percent to $15.65 billion.