(Adds profit margin, cost, company shares, background)
By Alana Wise
Dec 8 (Reuters) - United Continental Holdings Inc forecasts a higher profit margin in the fourth quarter, as bookings strengthened and expenses related to employment benefits were lower than expected, the company said on Thursday.
United, the No. 3 U.S. airline by passenger traffic, said it now expects its pretax margin to be between 7.5 percent and 8.5 percent, a jump from its earlier prediction of 5 percent to 7 percent for the period.
Shares were unchanged in after-hours trading.
The carrier announced a smaller-than-expected passenger unit revenue, which compares sales to how many seats United flies and how far it flies them. It is now projected to decline 3 percent to 4 percent compared with prior expectations of a 4 percent to 6 percent drop.
The improved forecast comes on the heels of a newly ratified contract with the carrier's mechanics. United said it expects the deal to increase fourth-quarter unit costs, excluding fuel and other expenses, by 0.5 percentage points.
However, United said lower benefits expenses would limit unit costs to growing between 4 percent and 4.5 percent in the quarter from a year ago. (Reporting by Alana Wise and Jeffrey Dastin; Editing by Alan Crosby, Bernard Orr)