United Airlines’ parent UAL Corp. reported its first quarterly profit since 2007 on Wednesday, earning a net income of $273 million, or $1.29 per diluted share, during the second quarter of 2010. The results showcase a remarkable turnaround at Chicago-based United, which a year ago was the subject of bankruptcy rumors as its cash reserves dwindled.

Excluding special accounting charges, United earned $430 million, or $1.95 per share. Analysts had expected the company to earn $1.75 per share.

Now, United is riding high. It is slated to become the world’s largest carrier as a result of its merger with Continental Airlines. United consistently beats its peers in on-time performance and it is profiting handsomely from a strong rebound in air travel, especially on the international routes where it caters to business travelers.

Consolidated passenger revenues increased 28.3 percent versus second quarter 2009 results, with revenues on international flights soaring 43 percent year over year.

As a result of its strong sales, United was able to bolster its cash reserves during the quarter. The third-largest U.S. carrier generated $801 million of free cash flow in the second quarter, and closed the quarter with a total cash balance of $5.2 billion, including unrestricted cash of $4.9 billion. United held $2.6 billion in cash at the close of the second quarter 2010.