United Airlines Cuts Profit Outlook Amid Rising Fuel Prices

UNITED AIRLINES HOLDINGS INC has issued a financial forecast for the second quarter and full year that falls short of Wall Street expectations. The Chicago-based carrier pointed to a significant surge in jet fuel prices as a primary factor squeezing profit margins, even as the airline continues to see robust demand for premium travel services.

For the second quarter, the airline anticipates adjusted earnings between $1 and $2 per share. The midpoint of this range, $1.50, is notably lower than the average analyst estimate of $2.08. For the full year, the company projects earnings of $7 to $11 per share, compared to the market expectation of approximately $9.58. Following the announcement, shares of the company experienced a decline of about 2% in after-hours trading.

The cautious outlook reflects a broader trend within the United States aviation industry, where a fuel shock driven by geopolitical tensions involving Iran is altering economic projections. This environment has impacted global energy benchmarks, including Brent Crude Oil, leading to higher operational costs for carriers. Other major players have also signaled distress or strategic shifts due to rising costs. DELTA AIR LINES INC has already scaled back its planned growth, while ALASKA AIR GROUP INC recently withdrew its full-year forecast, noting that recent fare increases have only covered a fraction of its rising fuel expenses.

Despite the pressure from energy costs, United reported a strong performance in its high-margin segments during the first quarter. Total revenue increased by 10.6% year-on-year to $14.6 billion, with premium revenue rising 14% and loyalty revenue climbing 13%. The airline reported first-quarter adjusted earnings of $1.19 per share, surpassing the $1.07 expected by analysts. GE Aerospace and other suppliers have also warned that elevated oil prices are creating a tougher backdrop for their customers.

Looking ahead, the carrier expects to pay approximately $4.30 per gallon for fuel in the current quarter. While the airline anticipates recovering a larger portion of these costs through fare adjustments later in the year—aiming for 85% to 100% recovery by the fourth quarter—the immediate impact remains a challenge. In response, United plans to maintain a restrained approach to capacity, with growth expected to be flat to up 2% in the second half of the year.