UAL · Q1 2026 Earnings

Q: Could United operate its own hub in Europe similar to Pan Am, and how do Star Alliance partnerships factor into thinking about capturing foreign passenger flows?

Scott Kirby stated it is extremely unlikely United will open a foreign hub. Star Alliance partnerships enable global reach to cities United couldn't serve alone. The company's strategy of building a brand-loyal airline through investments in product (Starlink, Wi-Fi, entertainment) across all customer classes has proven more successful than expected, driving market share gains in all hubs. While there's an aspiration to address the global trade deficit by competing with Middle Eastern and Asian airlines, no specific approach has been determined.

Q: In an elevated fuel environment, how does United manage hub profitability and what demand destruction scenarios are modeled for premium versus leisure customers within 2026 guidance?

United proactively canceled off-peak flights to manage demand weakness risk. Business traffic is accelerating significantly (up 25% in recent weeks, revenue up 25%, compared to 16% in Q1 and 9% in late last year). Leisure traffic is bouncing in mid-single digits. Yields are up 20% year-over-year. The company built an 'act of God' contingency into guidance but has not seen demand destruction; bookings show no demand destruction signals. Five successful price increases have been passed through.

Q: Why does the airline industry need a crisis to implement higher yields, and assuming 10% pre-tax margin in 2026, will United retain pricing power if fuel normalizes?

Scott Kirby attributed pricing reluctance to organizational disconnects between revenue management and marketing/government affairs teams, with marketing typically prevailing against fare increases. He explained that real airfares are down 27% versus pre-pandemic levels, making the current price recovery necessary. He estimates United will retain 20% of price increases if fuel returns to mid-February levels, but that probability increases toward 80% the longer prices remain elevated. Expects double-digit margins next year. Airfares in real terms are down 27% pre-pandemic (2025 vs pre-pandemic).

Q: What visibility does United have on fuel availability in Asia and Europe, and does management expect structural share gains from Middle Eastern carriers' current challenges?

United has 4-5 weeks of fuel visibility. The company does not see availability issues in the US (only price issues), but monitoring Europe and Asia closely where it is primarily a price issue, not availability, with price acting as a rationing function. Regarding Middle Eastern carriers, Scott Kirby views their current challenges as temporary and expects Dubai to recover fully, though not immediately. Management is not banking on permanent competitive advantage from their setbacks.

Q: How will maintenance costs trend as United cuts 5 points of planned capacity, and should investors expect maintenance to grow faster than capacity growth long-term?

CASM ex-fuel trends will move inversely with capacity reductions. Earlier capacity cuts enable greater cost variabilization. However, United will continue investing in the business as this crisis is temporary. United has unique opportunities through global procurement and tech ops to fight the industry trend of maintenance costs expanding as a percentage of overall costs, where Mike notes he is 'very optimistic' about managing this differently than the rest of the industry.

Cautious

United Airlines Holdings

Reported April 21, 2026

30-second summary

United cut FY2026 non-GAAP EPS guidance from $12–$14 to $7–$11 — a 31% midpoint reduction one quarter after setting the $12–$14 range — citing a fuel-price shock that management expects to recover only 40–50% of in Q2, 70–80% in Q3, and 85–100% by Q4. Q1 non-GAAP EPS of $1.19 landed within the prior $1.00–$1.50 guide but below the $1.25 midpoint, on revenue of $14.6B (+10.6% YoY). The under-reported story is the silent withdrawal of three FY2026 commitments management made just 90 days ago: the <$8B capex guide, the "similar to FY2025" (~$2.7B) FCF anchor, and the sub-2.0x net leverage / investment-grade-by-year-end pledge. Net leverage already prints at 2.0x TTM.

Headline numbers

EPS

Q1 FY2026

$1.19

Revenue

Q1 FY2026

$14.61B

+10.6% YoY

Free cash flow

Q1 FY2026

$2.90B

Operating margin

Q1 FY2026

6.8%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$14.61B	+10.6%	$15.40B	-5.1%
EPS	$1.19	—	$3.10	-61.6%
Operating margin	6.8%	—	9.0%	-220bps
Free cash flow	$2.90B	—	—	—

Guidance

United dramatically cut FY2026 EPS guidance from $12–$14 to $7–$11 (−27% at midpoint), citing fuel cost pressures only partially offset by RASM expansion and capacity constraints; multiple forward-looking targets (capex, FCF, net leverage) withdrawn.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
EPS (non-GAAP)	Q1 FY2026	$1.00 to $1.50	$1.19	-$0.06 to $0.19 above the low end of guide; within upper portion of range	Beat

New guidance

Metric	Period	Guide	YoY
Fuel cost pass-through recovery	Q2 FY2026	40% to 50%	—
Fuel cost pass-through recovery	Q3 FY2026	70% to 80%	—
Fuel cost pass-through recovery	Q4 FY2026	85% to 100%	—
Capacity growth (Q3 and Q4)	FY2026	flat to up approximately 2%	—
RASM growth	Q2 FY2026	double-digit increase	—
Pre-tax margin target	FY2027	at least 10%	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (non-GAAP)	FY2026	$12.00 to $14.00 (midpoint $13.00)	$7.00 to $11.00 (midpoint $9.00)	-$4.00 at midpoint; -27% reduction	Lowered
Capital expenditures	FY2026	less than $8 billion	Withdrawn — no replacement	—	Withdrawn
Free cash flow	FY2026	similar level to 2025	Withdrawn — no replacement	—	Withdrawn
Net leverage target	FY2026	below 2.0x	Withdrawn — no replacement	—	Withdrawn

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Domestic	$7.915B	+10.2%
International	$5.251B	+12.2%
Cargo Revenue	$0.422B	-1.6%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Atlantic	$2.064B	+18.9%
Pacific	$1.73B	+14.5%
Europe	$1.742B	+18.0%
Latin America	$1.456B	+1.8%
Middle East/India/Africa	$0.322B	+23.9%
Total Revenue per Available Seat Mile (TRASM)	18.80 cents	—
Passenger Revenue per Available Seat Mile (PRASM)	16.95 cents	—
Cost per Available Seat Mile (CASM)	17.52 cents	—
CASM-ex (ex-fuel, profit sharing, special charges, third-party)	13.95 cents	—
Passenger Load Factor	81.6%	—
Adjusted EBITDA Margin	9.5%	—
Adjusted Pre-Tax Margin	3.4%	—
Net Leverage (TTM)	2.0x	—

Management tone

One quarter ago the FY2026 EPS guide was set at $12–$14 with a YE2026 investment-grade leverage commitment and an explicit "continued margin expansion towards double-digit margins" framing. This quarter Scott reframed the double-digit margin pledge to 2027 — verbatim: "our view for 2027 is that we're targeting a pre-tax margin of at least 10%." The structural-advantage story has not been retracted but the date stamp slipped a full year, and the FY2026 EPS guide ($7–$11 midpoint $9) now sits below the FY2025 actual of $10.62. The bull thesis has been pushed out a year while the year that was supposed to validate it has been written down 31%.

The "we will absorb the shock" posture from prior quarters has been replaced with explicit timing uncertainty. Mike's pass-through framework — 40–50% in Q2, 70–80% in Q3, 85–100% in Q4 — is the most quantitative admission of phased recovery in any recent United print, and Scott's hedge that "realistically, there probably isn't enough time to make up 100% of the fuel price increase this year" directly contradicts the Q4 25 commitment to continued margin expansion. The FY EPS range is the widest United has issued in years — $7 to $11, with Mike attributing the width to encompassing "multiple scenarios."

Capacity discipline has hardened from rhetorical to operational. Scott said "it simply doesn't make sense to fly marginal flights that will lose cash in a higher fuel price environment" and guided Q3/Q4 capacity to flat-to-up-2%. He explicitly extended it: "if jet fuel remains elevated…we'd once again expect to require less capacity growth in 2027 than we were planning just two months ago." That is a forward 2027 capacity walk-down disclosed before 2026 has played out — a hedge against repeating the Q4-to-Q1 guide collapse.

The most telling silence is on capex, FCF, and net leverage. Three commitments made unambiguously 90 days ago — capex <$8B, FCF similar to $2.7B FY25, leverage <2.0x with investment-grade metrics by YE26 — were not reiterated in this quarter's guidance block. Management did not characterize these as withdrawn; they simply stopped appearing. Combined with TTM net leverage already printing at the 2.0x threshold, the silent withdrawal is the cleanest read on how much fuel has eroded the FY26 cash bridge.

Recurring themes management leaned on this quarter:

Fuel price shock absorption and pass-through strategyCapacity discipline and removal of uneconomical flightsBalance sheet strength and path to investment gradeCommercial product differentiation and premium positioningDemand elasticity management in elevated cost environmentOperational resilience despite geopolitical disruptions

Risks management surfaced:

Jet fuel price volatility and potential for further escalationDemand elasticity effects from 15-20% yield increasesGeopolitical disruptions (war/conflict impacts on routes)FAA restrictions on Chicago O'Hare summer scheduleWeather events and operational disruptions affecting CASM

Q&A highlights

Jamie Baker · JP Morgan

Could United operate its own hub in Europe similar to Pan Am, and how do Star Alliance partnerships factor into thinking about capturing foreign passenger flows?

Scott Kirby stated it is extremely unlikely United will open a foreign hub. Star Alliance partnerships enable global reach to cities United couldn't serve alone. The company's strategy of building a brand-loyal airline through investments in product (Starlink, Wi-Fi, entertainment) across all customer classes has proven more successful than expected, driving market share gains in all hubs. While there's an aspiration to address the global trade deficit by competing with Middle Eastern and Asian airlines, no specific approach has been determined.

Extremely unlikely to open foreign hubFirst quarter results delivered with fuel prices doublingConfidence in $7-11 earnings guidance for full yearWon approximately 20 points of market share in hubs with major competitors

Connor Cunningham · Melius Research

In an elevated fuel environment, how does United manage hub profitability and what demand destruction scenarios are modeled for premium versus leisure customers within 2026 guidance?

United proactively canceled off-peak flights to manage demand weakness risk. Business traffic is accelerating significantly (up 25% in recent weeks, revenue up 25%, compared to 16% in Q1 and 9% in late last year). Leisure traffic is bouncing in mid-single digits. Yields are up 20% year-over-year. The company built an 'act of God' contingency into guidance but has not seen demand destruction; bookings show no demand destruction signals. Five successful price increases have been passed through.

Business traffic up 25% in last two weeks, revenue up 25%Business traffic acceleration from +16% in Q1 to +25% recentlyYields up 20% year-over-yearLeisure traffic in mid-single digit range

Scott Group · Wolf Research

Why does the airline industry need a crisis to implement higher yields, and assuming 10% pre-tax margin in 2026, will United retain pricing power if fuel normalizes?

Scott Kirby attributed pricing reluctance to organizational disconnects between revenue management and marketing/government affairs teams, with marketing typically prevailing against fare increases. He explained that real airfares are down 27% versus pre-pandemic levels, making the current price recovery necessary. He estimates United will retain 20% of price increases if fuel returns to mid-February levels, but that probability increases toward 80% the longer prices remain elevated. Expects double-digit margins next year. Airfares in real terms are down 27% pre-pandemic (2025 vs pre-pandemic).

Airfares in real terms down 27% (2025 vs pre-pandemic)Expects to retain 20% of price increases if fuel normalizes to mid-February levelsEstimates probability of retaining pricing increases moves toward 80% with prolonged elevated fuelExpects double-digit margins next year

Ravi Shankar · Morgan Stanley

What visibility does United have on fuel availability in Asia and Europe, and does management expect structural share gains from Middle Eastern carriers' current challenges?

United has 4-5 weeks of fuel visibility. The company does not see availability issues in the US (only price issues), but monitoring Europe and Asia closely where it is primarily a price issue, not availability, with price acting as a rationing function. Regarding Middle Eastern carriers, Scott Kirby views their current challenges as temporary and expects Dubai to recover fully, though not immediately. Management is not banking on permanent competitive advantage from their setbacks.

4-5 weeks fuel visibilityNo US fuel availability concernsEurope and Asia fuel pressure primarily pricing-drivenJet fuel prices rising more than Brent as crack spreads widen

Andrew DeDora · Bank of America

How will maintenance costs trend as United cuts 5 points of planned capacity, and should investors expect maintenance to grow faster than capacity growth long-term?

CASM ex-fuel trends will move inversely with capacity reductions. Earlier capacity cuts enable greater cost variabilization. However, United will continue investing in the business as this crisis is temporary. United has unique opportunities through global procurement and tech ops to fight the industry trend of maintenance costs expanding as a percentage of overall costs, where Mike notes he is 'very optimistic' about managing this differently than the rest of the industry.

CASM ex-fuel trends move inversely with capacity reductionsEarlier capacity cuts enable greater variabilization of costsContinued investment in business despite crisisGlobal procurement and tech ops initiatives to control maintenance cost growth

Answers to last quarter's watch list

Whether FY2026 FCF guide of "similar to FY2025" ($2.7B) gets revised lower as labor settlements land. Worse than revised — the FCF guide was silently withdrawn entirely. Q1 FCF printed $2.9B but management did not reiterate any FY anchor. The hidden-cut signal from the prior brief proved correct. Status: Resolved negatively

Q1 FY2026 EPS print vs. $1.00–$1.50 guide. $1.19 — within the range but below the $1.25 midpoint. Met the guide on a technicality; failed to deliver the "strong start" needed to anchor the $12–$14 FY frame, which has now been cut to $7–$11. Status: Resolved negatively

Whether net leverage moves below 2.0x by year-end FY2026. TTM net leverage printed at exactly 2.0x, but the sub-2.0x and investment-grade-by-YE26 commitment was withdrawn from forward guidance. The deleveraging path that was supposed to clear sub-2.0x is no longer being guided to. Status: Resolved negatively

Operating margin trajectory toward "double digit." Q1 operating margin printed 6.8%, up 220bps YoY but below FY2025's 8.0% full-year level. The double-digit pre-tax margin target was explicitly deferred from 2026 to 2027 (Scott: "our view for 2027 is that we're targeting a pre-tax margin of at least 10%"). Status: Resolved negatively

MileagePlus update. Andrew detailed the MileagePlus changes this quarter — enhanced miles earnings for co-branded cardholders, redemption discounts, and acknowledgment that a new Chase contract is being worked toward. Loyalty revenue up 13% in the quarter. Status: Resolved positively

Whether the Chicago competitive posture produces measurable share impact or just unprofitable defensive flying. Scott cited 38 points of business-traveler share won in Chicago in Q&A — directionally validating the competitive thesis. Domestic +10.2% in Q1 is solid in absolute terms, but the unit-economics question is now subsumed by the broader capacity-discipline pivot (Q3/Q4 flat-to-+2%). Status: Continue monitoring

Main-cabin RASM inflection. Premium RASM was up 8.9% YoY, leading main cabin by four points per Andrew. Premium and ancillary continue to lead the mix. The "economic gravity" thesis remains directionally intact but the gap to main cabin persists. Status: Continue monitoring

Business-revenue trajectory through February/March. Andrew confirmed business traffic accelerated from +16% in Q1 to +25% in the last two weeks of the reporting window, with yields +20% YoY. The bull-case demand framework held. Status: Resolved positively

What to watch into next quarter

Q2 FY2026 EPS print vs. the new $1.00–$2.00 guide. A print at the low end ($1.00) implies FY tracking near the $7 floor and risks a second consecutive cut. A print near $2.00 puts FY closer to the $11 ceiling and stabilizes the narrative.

Whether the 40–50% Q2 fuel pass-through actually lands. This is management's most testable near-term claim. A Q2 pass-through below 40% breaks the entire phased-recovery framework and forces another FY cut.

Whether capex, FCF, or net-leverage guidance is reinstated. All three were silently withdrawn this quarter. Reinstatement at materially weaker levels (capex >$8B, FCF <$2B, leverage >2.0x) would formalize the hidden cuts. Continued silence is itself a negative signal.

Whether CASM-ex continues to expand as capacity gets cut. Q1 was +5.9% YoY. The flat-to-+2% Q3/Q4 capacity guide raises the structural CASM-ex floor for the back half — watch whether the RASM benefit offsets it on margin.

Whether the 2027 double-digit pre-tax margin target survives a second quarter of fuel pressure. Scott deferred the target by one year this quarter; another deferral would mark the second consecutive year of margin-timing slippage and structurally damage the bull thesis.

Sources

United Airlines Holdings Q1 FY2026 earnings press release (8-K Exhibit 99.1), SEC EDGAR — https://www.sec.gov/Archives/edgar/data/100517/000010051726000089/ual_erx03312026xex991.htm
United Airlines Q1 FY2026 management commentary and Q&A (Scott Kirby, Mike Leskinen, Andrew Nocella; analysts: Jamie Baker/JPM, Connor Cunningham/Melius, Scott Group/Wolf, Ravi Shankar/Morgan Stanley, Andrew Didora/BofA)

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