Better-than-expected performance cannot cover up the impact of oil prices! United Airlines expects full-year fuel costs to surge by $6 billion
United Airlines said on Wednesday (July 15) that based on current crude oil prices, it expects to spend an additional $6 billion on jet fuel this year, which means that this expenditure will become the airline's second largest expense after labor costs. The airline said in its second-quarter earnings report that it spent an additional $2.3 billion on fuel in the second quarter alone, an 84% increase from the same period last year. Passing on fuel costs United Airlines on Wednesday reported second-quarter results that beat Wall Street expectations.
United Airlines said on Wednesday (July 15) that based on current crude oil prices, it expects to spend an additional $6 billion on jet fuel this year, which means that this expenditure will become the airline's second largest expense after labor costs. The airline said in its second-quarter earnings report that it spent an additional $2.3 billion on fuel in the second quarter alone, an 84% increase from the same period last year. On Wednesday, United Airlines reported second-quarter results that topped Wall Street expectations. The financial report showed that United Airlines’ second-quarter revenue was US$17.67 billion, a year-on-year increase of 16%, which was better than analysts’ consensus expectations of US$17.61 billion; net profit fell by more than 17% year-on-year to US$805 million; adjusted net profit was US$649 million; adjusted earnings per share was US$1.99, which was better than analysts’ consensus expectations of US$1.88. Specifically, aviation fuel is the second largest cost item for airlines after labor costs. United said that based on fuel prices on Tuesday (July 14), fuel costs this year will increase by nearly $6 billion compared with expectations in early 2026. Jet fuel prices soared to a record high of nearly $5 in April due to the ongoing war between the United States and Iran, according to the Argus U.S. Jet Fuel Index. As of Tuesday, the index showed prices at $3.64 per gallon. Faced with high oil prices, the company is passing on more of the rising fuel costs to passengers. As consumer demand for air travel remains strong, many airlines, including United Airlines, have raised ticket prices to offset some of the impact of higher fuel prices. United Airlines said that revenue from premium cabins, corporate customers and basic economy class tickets all increased, and unit revenue from domestic and international routes also increased simultaneously. United rival Delta Air Lines has also previously said it is passing on more of the rising fuel costs to passengers. Both airlines noted that demand remained strong despite rising fares. Delta Air Lines CEO Ed Bastian said in an interview, "Air ticket prices are determined by supply and demand. Demand is very strong right now, and supply is balanced." United also said that due to volatile fuel prices, the company updated its performance guidance to include the latest fuel prices in its forecast range. Looking ahead, United expects third-quarter adjusted earnings per share to be in a range of $2.50 to $3.50, compared with analysts' consensus estimate of $3.60. The company also expects full-year adjusted earnings per share to be between $9 and $11, compared with a range of $7 to $11 given in April. United also said it expects to be able to absorb up to about 90% of its new fuel costs this quarter, and plans to fully cover the new costs in the fourth quarter. (