US carrier United Airlines has reported a 26% fall in profits as the airline industry continues to suffer the post-11 September slump.

The carrier lost $510m in the first quarter of 2002, or more than $5m a day.

The airline's fortunes have improved since the last quarter of 2001, when it was losing money twice as fast. However, an ongoing labour dispute has not helped the company.

United Airlines' earnings report caps a poor week for the industry. Just one company, budget carrier Southwest Airlines. managed to stay in the black, despite an 82% fall in profits.

Rival US Airways, in contrast, saw losses over the same period widen to $269m - up from $171m one year earlier.

Difficult talks with unions

United narrowly avoided a strike by mechanics last month, but is still in negotiations with unions over contracts for other workers.

Chief Executive Jack Creighton said: "We are certainly seeing signs that our industry's situation is beginning to improve, but there is still a long way to go."

He said complications with negotiating contracts had hit the company's plans to reduce salary and operating costs.

Its labour costs are among the highest in the business, and strike action was averted in December only after a presidential intervention.

Record loss

United is planning to ask workers to make concessions as it attempts to turn around the steep losses it has made since the World Trade Centre attacks.

In March, it closed down its Avolar business jet unit after failing to find an investor to take a majority stake in the venture.

In February, United announced a full year net loss of $2.1bn (�1.49bn) for 2001, the worst in airline history.