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UPDATE 2-United Airlines posts smaller loss, sees recovery from pandemic gaining traction

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(Adds share price, background details)

By Rajesh Kumar Singh

CHICAGO, Oct 19 (Reuters) - United Airlines Holdings on Tuesday reported a smaller quarterly loss than a year ago, but a resurgence in coronavirus cases slowed bookings and drove up cancellations, upending the carrier's plan to return to profit.

Chief Executive Scott Kirby, however, said recent headwinds the airline has faced are "turning to tailwinds."

United said it expects revenue in the current quarter to recover to up to 75% of 2019 levels, improving from about 68% in the quarter through September.

The company's shares rose about 2% to $47.22 in extended trading.

Buoyed by a strong summer travel season, United was expecting to be profitable in the third and fourth quarters. It lowered its estimates last month, citing the impact of the fast spreading Delta variant of the coronavirus on travel.

With COVID-19 cases still high but in decline in the United States as more people get vaccinated, airlines said bookings have bottomed out.

Rival Delta Air Lines last week said domestic consumer travel has returned to pre-pandemic levels.

U.S. carriers are eyeing a strong holiday season, with United planning to fly its biggest domestic schedule since the start of the pandemic, offering more than 3,500 daily domestic flights in December - representing 91% of its domestic capacity compared to 2019.

They are also optimistic about the re-opening next month of the transatlantic route - the most lucrative long-haul market - which they expect will spur a recovery in international traffic.

Betting on pent-up travel demand, the Chicago-based carrier last week announced an expansion of its transatlantic service next year, and Kirby has said he expects the route to have the busiest summer ever in 2022.

The company reported an adjusted loss for the third quarter of $1.02 per share, compared with a loss of $8.16 per share last year at the height of the coronavirus pandemic. Analysts were forecasting a loss of $1.67 per share, according to Refinitiv data.

With government pandemic aid, the airline reported a net profit of $1.44 per share for the quarter.

United will discuss the results on a call with analysts and investors on Wednesday morning. (Reporting by Rajesh Kumar Singh Editing by Bill Berkrot)

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