FILE PHOTO: Customers of United wait in line to check in at Newark International airport in New Jersey, November 15, 2012.REUTERS/Eduardo Munoz

(Reuters) - United Continental Holdings Inc (UAL.N) on Monday raised its forecast for first-quarter flight capacity, a keenly watched industry metric.

The No. 3 U.S. airline by passenger traffic said it expects capacity growth of 2.6 percent for the quarter ended March 31, compared to a prior forecast of a 1-2 percent increase.

United said the increase in the forecast was driven mainly by an improvement in mainline completion factor — the number of completed flights relative to the number of flights scheduled — in the first quarter, which resulted in higher flight capacity.

The Chicago-based carrier also said it expects first-quarter passenger unit revenue, which measures sales relative to flight capacity, to be about flat, compared to a year earlier.

"Better than expected close-in traffic in March offset higher than anticipated completion factor in the quarter," United said of the unit revenue forecast.

Last week, Delta Air Lines Inc (DAL.N) lowered its first-quarter passenger unit revenue forecast for the second time, citing slower-than-expected improvement in average fare prices for flights booked at the last minute.





(Reporting by John Benny in Bengaluru; Editing by Sai Sachin Ravikumar)