United Airlines raises FY26 EPS guidance despite fuel costs
United Airlines Holdings Inc reported Q2 revenue of $17.67 billion, up 16% year-over-year, with adjusted EPS of $1.99. Despite an $84.1% surge in fuel costs, the company raised its FY26 adjusted EPS guidance to $9.00–$11.00. United anticipates recovering 100% of fuel cost increases by Q4 and maintains strong liquidity of $19.6 billion.
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United Airlines Holdings Inc reported second-quarter revenue of $17.67 billion, surpassing the consensus estimate of $17.62 billion, while adjusted earnings per share of $1.99 exceeded analyst expectations of $1.87. Despite rising fuel costs, the airline raised its full-year 2026 adjusted EPS guidance to a range of $9.00 to $11.00, up from the previous outlook of $7.00 to $11.00. The company's operational performance and revenue recovery across multiple cabin categories underpinned the increased forecast, though shares slipped in premarket trading following the announcement.
Second-Quarter Financial Performance
Total operating revenue increased 16% year-over-year to $17.67 billion, driven by broad-based growth in passenger segments. Premium Cabin revenue rose 16%, Basic Economy revenue increased 11%, and Loyalty revenue grew 11% compared to the prior year. Cargo revenue surged 23% during the quarter. Capacity grew 3.5% year-over-year, while Total Revenue per Available Seat Mile (TRASM) improved 12.1% to 20.25 cents. Cost per Available Seat Mile (CASM) increased 15.2% to 18.99 cents, with CASM-ex rising 6.1% to 13.12 cents.
| Metric | Q2 2026 | Q2 2025 | Change (%) |
|---|---|---|---|
| Total Operating Revenue | $17,672 million | $15,236 million | +16.0% |
| Passenger Revenue | $16,100 million | $13,836 million | +16.4% |
| Cargo Revenue | $527 million | $430 million | +22.6% |
| Net Income (GAAP) | $805 million | $973 million | -17.3% |
| Diluted EPS (GAAP) | $2.46 | $2.97 | -17.2% |
| Adjusted Diluted EPS | $1.99 | $3.87 | -48.6% |
Fuel Costs and Earnings Impact
Aircraft fuel expense rose 84.1% year-over-year to $5.11 billion, with the average fuel price per gallon increasing to $4.19 from $2.34 in the prior-year period. Based on oil prices as of July 14, United anticipates nearly $6 billion in added fuel expense for full-year 2026 compared to expectations at the start of the year. The company recovered approximately half of the fuel cost increase in the second quarter. Since the beginning of July, fuel costs have risen by an additional $575 million, which is expected to reduce third-quarter adjusted diluted earnings per share by $1.12.
Liquidity and Operational Highlights
United exited the quarter with $19.6 billion in total available liquidity and total debt, finance lease obligations, and other financial liabilities of $26.5 billion. The company generated $1.6 billion of operating cash flow and $322 million of free cash flow during the quarter. Additionally, United raised $3.7 billion in new liquidity through private bank transactions and prepaid approximately $1 billion of higher-cost debt since the start of the second quarter. The trailing twelve months net leverage stood at 2.2x.
Operationally, United achieved its best second-quarter on-time departure rate since 2021 and its lowest second-quarter seat cancellation rate in company history, excluding 2020 and 2021. The airline flew the 10 highest-volume passenger days in company history during June. On the technology front, Starlink Wi-Fi is now installed on 450 aircraft, with nearly 1,000 expected by year-end.
Outlook and Guidance
For the third quarter, United guided for adjusted earnings of $2.50 to $3.50 per share. The company expects TRASM growth in both the third and fourth quarters to exceed the growth recorded in the second quarter. United anticipates recovering approximately 80% to 90% of the fuel cost increase in the third quarter and 100% by the fourth quarter. Adjusted capital expenditures are expected to be $7.5 billion for the full year. The carrier introduced a new guidance framework tied to current fuel prices, using an assumed third-quarter average fuel price of $3.69 per gallon based on the July 14 Gulf Coast Jet forward curve. United also expects fourth-quarter capacity to decline from current schedules, partly because of the extension of Federal Aviation Administration restrictions at Chicago O'Hare International Airport, and plans to accrue $135 million to $220 million in profit-sharing expenses during the third quarter.
| Guidance Metric | Details |
|---|---|
| FY26 Adjusted EPS Guidance | $9.00 – $11.00 |
| Q3 2026 Adjusted EPS Guidance | $2.50 – $3.50 |
| FY26 Adjusted Capital Expenditures | $7.5 billion |
| Estimated Year-End 2026 B737 Max Fleet | 323 aircraft |
Can United sustain 100% fuel cost recovery in the fourth quarter if oil prices remain volatile?
How will the FAA restrictions at Chicago O'Hare impact capacity and revenue during the peak holiday season?
Will the rapid expansion of Starlink Wi-Fi provide a sufficient competitive advantage to justify the capital expenditure?
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