United Airlines (NASDAQ:UAL) said third-quarter revenue rose 17.4% year over year to a record $17.9 billion, as the carrier raised fares amid higher fuel costs and continued to gain share in its hub markets.
The airline posted third-quarter adjusted earnings per share of $2.54 and a 6.2% pre-tax margin, within its prior guidance range. Fuel prices accelerated during the quarter, increasing expenses by $1.8 billion from a year earlier, according to Executive Vice President and Chief Financial Officer Mike Leskinen.
United said it recovered 72% of the year-over-year fuel-expense increase during the period, though Leskinen said the company expects it can recover 100% of higher fuel costs over time. The partial recovery reflected the late-quarter rise in jet fuel prices, when much of the carrier’s revenue had already been booked.
Revenue Gains Fueled by Higher Yields
Chief Commercial Officer Andrew Nocella said total revenue per available seat mile, or TRASM, increased 15.9% in the quarter, while yields rose 17%. Passenger load factor declined modestly as United accepted lower occupancy in exchange for higher fares.
- Premium revenue, including Economy Plus, rose 17% on a 2.5% increase in capacity.
- Non-premium revenue increased 18.4% on a 0.5% increase in capacity.
- Business revenue rose 22%, while contracted-business revenue increased 26%.
- Leisure revenue grew 16%, with stronger yield gains than business travel.
- Cargo revenue climbed 23%, primarily because of higher yields.
- Loyalty revenue increased 17%, with remuneration from Chase up 15% and co-brand card portfolio spending up 13%.
Nocella said United expects economy-class RASM to again outpace premium RASM in the fourth quarter. He also said sell-in yields have recently been up in the “very high teens,” including some weeks above 20%, though the company still needs further pricing gains to fully capture current fuel costs.
Latin America, including Central America, the Caribbean and Florida, along with Newark and London, were among the strongest RASM contributors in the third quarter. Florida RASM rose 26%, Nocella said. Hawaii, the South Pacific and Chicago were relative laggards, although United expects Hawaii to improve in the fourth quarter.
For the fourth quarter, United forecast adjusted earnings per share of $0.50 to $1.50, based on an assumed all-in fuel price of about $4.80 per gallon using the forward curve as of the prior Friday. Leskinen said the company expects TRASM to accelerate from the third quarter while non-fuel unit-cost growth decelerates.
Starlink and Product Investments Central to 2027 Plan
Chief Executive Officer Scott Kirby said United is preparing for elevated fuel costs and faster industry capacity growth in 2027, while continuing to target double-digit pre-tax margins. He said the company is not assuming lower fuel prices, lower industry capacity or a continued industrywide willingness to sacrifice load factor for yield.
Instead, Kirby highlighted the airline’s investments in service, technology and onboard products, particularly the rollout of Starlink connectivity. About half of United departures currently use Starlink-equipped aircraft, and the company expects that share to reach 61% by the end of 2026, 87% by June 1, and fleetwide availability by the end of 2027.
Kirby said United is seeing anecdotal evidence that passengers loyal to other airlines are selecting United flights because of Starlink, then remaining with the carrier after experiencing its app, service, seatback screens, larger overhead bins and other improvements. He said the connectivity rollout should provide a meaningful RASM tailwind in 2027 and 2028, but likely would not be enough on its own to produce double-digit margins next year.
United also plans to complete installation of its signature interiors and Starlink across mainline and express jets by the end of 2027. Nocella said the airline will introduce Relax Row, an Economy Plus open-middle-seat product, expand tiered fares and continue adding premium capacity through A321neo Coastliner and A321XLR aircraft.
The company expects to add 1 million new co-brand card accounts in 2026 and pursue another 1 million in 2027. Nocella said United hopes loyalty revenue can grow at least 14% to 15% annually for the next several years as new accounts mature and customers move to higher-tier cards.
Fleet, Costs and Balance Sheet
United congratulated Boeing on certification of the MAX 10 and said it expects to receive its first aircraft next year. Nocella said United plans to take roughly two widebody aircraft per month and more than 100 narrowbody aircraft in 2027, supporting replacement of older, less fuel-efficient aircraft and continued fleet upgauging.
Third-quarter CASM-ex, or unit costs excluding fuel and certain items, rose 7.8%, reflecting the full run-rate impact of the flight attendant agreement and capacity reductions. Leskinen said the third quarter should represent the high point for CASM-ex growth, with expense growth expected to moderate in the fourth quarter and step down materially in 2027.
For 2027, United is targeting 2% to 3% CASM-ex growth, though Leskinen cited higher distribution and airport costs as ongoing pressures. The company said airport costs have risen 60% since the pandemic. Management emphasized that it will manage for margin rather than a fixed unit-cost objective and could cut unprofitable flying if fuel prices remain elevated.
United ended the quarter with $17.7 billion in liquidity, including its undrawn revolving credit facility, after repaying about $1 billion of debt. The company raised $900 million in fixed-rate debt at an equivalent rate in the low-5% range and increased its revolving credit facility to $5 billion from $3 billion while extending its maturity to 2031.
Leskinen said United plans to reduce liquidity to $18 billion by year-end and expects the revised credit structure to save about $70 million annually in interest and fees. The company’s net leverage stood at 2.4 times, and United continues to target leverage below two times and investment-grade credit metrics.
Hub Investments and Chicago Capacity Constraints
President Brett Hart said United ranked second in on-time departures during the third quarter and first among the three largest U.S. carriers in seat cancellation rate. The airline recorded its highest quarterly net promoter score since 2022 despite record passenger growth, he said.
United is advancing terminal projects in Houston, Washington Dulles and Dallas. Hart said a new 14-gate concourse at Dulles is expected to open next month, while United also opened what Nocella described as the largest United Club and largest airport club in the Americas in Houston.
At Chicago O’Hare, United expects minimal domestic industry capacity growth beginning in the second quarter of 2027 because of FAA-imposed flight constraints. Nocella said United is capped at 600 daily flights and believes the limitation could remain in place into 2028 as airport construction continues. United captured 50% of Chicago-based passenger revenue for the first time in the second quarter of 2026 and expects the capacity limits to become a tailwind after April, he said.
About United Airlines (NASDAQ:UAL)
United Airlines Holdings, Inc is the parent company of United Airlines, a major U.S. commercial airline headquartered in Chicago, Illinois. The company provides scheduled passenger air transportation and air cargo services, connecting customers across the United States and to international destinations.
United operates a broad network serving North America, Latin America, Europe, Asia, Africa and Oceania. Its operations are supported by hubs in major U.S. cities, including Chicago, Denver, Houston, Los Angeles, Newark, San Francisco and Washington, DC, as well as an extensive network of regional carriers operating under the United Express brand.
The company offers several travel classes and related services, including premium-cabin seating, onboard amenities, airport lounges and the MileagePlus customer loyalty program.
