A Quarterly Win Clouded by a Costly Fuel Spike
United Airlines posted second-quarter earnings that exceeded Wall Street's expectations, but billions in extra fuel expenses are still pressuring profits, the carrier said Wednesday. Adjusted earnings per share reached $1.99, surpassing the $1.88 consensus forecast. Revenue also edged past estimates, landing at $17.67 billion, helped by a 16% jump from a year ago and a 12.1% rise in unit revenue, the highest since early 2023, according to FactSet.
Fuel costs in the second quarter hit $2.3 billion, up 84% from the same period last year. At key U.S. airports, jet fuel costs rose 34% in July up to Tuesday, based on Argus data from Airlines for America, amid a volatile pattern of rising and falling tensions in the U.S.-Iran conflict. After labor, jet fuel represents airlines' biggest expense.
United stated that the elevated fuel costs might increase its annual expenditures by almost $6 billion relative to its projections from early 2026. These estimates rely on Tuesday's fuel prices. The airline said it would absorb at most 90% of the extra expenses in the current quarter, and the entire amount in the fourth quarter.
Delta Air Lines, a competitor, has announced it is transferring a greater share of those increased costs to passengers. United reported that travelers are still making reservations even with elevated ticket prices.
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The Numbers Behind the Warning
United revised its earnings guidance to align with the changed fuel landscape. The company projects third-quarter adjusted earnings between $2.50 and $3.50 per share, below the $3.60 analyst consensus. From July onward, rising fuel costs have reduced third-quarter adjusted earnings by $1.12 per share, according to the airline.
United projected full-year adjusted earnings in the range of $9 to $11 per share, which is at the top of the $7 to $11 range it had predicted in April after the U.S. and Israel struck Iran in late February, prompting the airline to lower its earlier January outlook. United stated it is revising its projections to reflect the latest fuel costs due to extreme volatility. The airline may reduce its capacity plans further due to elevated fuel expenses this year, it noted in a filing.
In the second quarter, United expanded flying 3.5%. Revenue gains were seen across premium, corporate, and basic economy tickets, and unit revenue improved for trips within the U.S. and abroad. Net income declined over 17% to $805 million, or $2.46 per share.
Excluding one-time adjustments, the airline posted $649 million in adjusted earnings, or $1.99 per share.
What It Means for Your Portfolio
This story is a window into how geopolitical conflict flows straight into your wallet. When the U.S. and Iran conflict escalates, jet fuel prices jump.
For investors, demand remains strong. But if fuel stays high, United has signaled it could further cut its capacity plans.
United's leadership team is scheduled to host an earnings conference call on Thursday at 10:30 a.m. ET.
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