United Airlines' (UAL.US) Q2 performance exceeded expectations and it was hard to hide the impact on oil prices! Fuel costs skyrocketed by $6 billion throughout the year and may drag down profits

The Zhitong Finance App learned that the second-quarter results announced by United Airlines (UAL.US) exceeded Wall Street expectations, but the airline also warned that new fuel costs of billions of dollars continued to drag down profit performance. Financial reports show that United Airlines' second-quarter revenue was US$17.67 billion, up 16% year on year, better than analysts' general expectations of US$17.61 billion; net profit fell more than 17% year over year to US$805 million; adjusted net profit was US$649 million; and adjusted earnings per share were US$1.99, better than analysts' general expectations of US$1.88.

In the second quarter, United Airlines' capacity increased by 3.5% year on year; unit revenue increased by 12.1% year on year, the highest increase since the beginning of 2023. The company said that revenue from premium class, corporate customers, and basic economy class tickets has all increased, and unit revenue for domestic and international routes has also risen at the same time.

Looking ahead, United Airlines expects adjusted earnings per share for the third quarter to be between $2.50 and $3.50, while analysts generally expect $3.60. The company also expects full-year adjusted earnings per share to be between $9 and $11, and the forecast range given in April this year is $7 to $11. At the time, due to the US and Israel's attacks on Iran at the end of February, the company lowered its full-year profit forecast released in January.

According to Argus data released by the aviation industry organization American Airlines Association, as of this Tuesday, in July alone, aviation fuel prices at major US airports had risen 34%. Against the backdrop of repeated escalation and easing of the situation between the US and Iran, aviation fuel prices fluctuated sharply.

Aviation fuel is the second most expensive item for airlines after labor costs. United Airlines said that based on current fuel prices, this year's fuel costs will increase by nearly 6 billion US dollars compared to expectations in early 2026. The company's second-quarter fuel spending increased 84% year over year to $2.3 billion. The above estimates are based on Tuesday's fuel prices.

United Airlines said it will be able to absorb up to 90% of the new fuel costs this quarter, and plans to fully cover the new costs in the fourth quarter. Competitor Delta Air Lines (DAL.US) also said earlier that the company is passing on more rising fuel costs to travelers. Both airlines indicated that despite rising ticket prices, market demand remained strong.

United Airlines said that due to sharp fluctuations in fuel prices, the company updated its performance guidelines to include the latest fuel prices in the scope of predictions. The company said that since early July, rising fuel prices have reduced third-quarter adjusted earnings per share by $1.12. United Airlines also said that due to the continued rise in fuel costs this year, the company may further reduce its capacity expansion plan this year.

As of press release, United Airlines' US stocks fell more than 2% after the market on Wednesday.