United Airlines Lifts EPS Outlook

United Airlines (UAL 1.11%), a leading global airline with one of the broadest route networks in North America, reported its second quarter 2025 financial results on July 16, 2025. The standout news was adjusted diluted earnings per share (non-GAAP) of $3.87. Adjusted earnings per share of $3.87 beat analyst estimates by 1.57% (non-GAAP), while total revenue (GAAP) of $15.2 billion edged slightly below forecasts. Domestic passenger revenue softened during the quarter, reflecting higher expenses and pressure on main cabin fares. Continued loyalty revenue growth, and increased demand in premium cabins contributed to performance. Overall, the results point to a mix of challenges and strengths, with management raising their full-year adjusted diluted earnings per share guidance, signaling optimism for the remainder of fiscal 2025.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About United Airlines—Business Model and Focus Areas

United Airlines operates an expansive route network connecting major business centers and high-population areas across the globe. Its hub-and-spoke system enables frequent flights to destinations on six continents, supporting large numbers of both business and leisure travelers. United's business model centers on maximizing connectivity, operational efficiency, and customer loyalty through strategic hub placement in cities like Chicago, Denver, Houston, and San Francisco.

In recent years, the company’s focus has shifted toward growing its international presence, expanding its loyalty and premium product offerings, and investing in sustainability initiatives. Key success factors now include network reach, cost management, successful labor relations, and delivering enhanced passenger experiences—especially in premium and high-value services.

Main Highlights from the Quarter

United recorded GAAP revenue growth of 1.7%, but this increase lagged a 6.5% jump in operating expenses (GAAP). Domestic passenger revenue (GAAP) declined by 0.7%, with demand softening in the main cabin and lower yields putting pressure on profitability. In contrast, international passenger revenue grew by 3.8%—led by an 8.7% increase in Pacific routes and solid gains in Europe and the Atlantic. Management attributed the international outperformance to strong US-origin demand and expanded long-haul service, supported by newly launched international routes.

Premium products continued to gain traction, with revenue from premium cabin tickets increasing 5.6% year-over-year. The airline also reported that loyalty revenue climbed 8.7% year-over-year. Cargo revenue contributed positively as well, up 3.8% year over year, despite a slight drop in cargo revenue ton miles. Operational reliability improved, with United achieving its best post-pandemic scores for on-time departures and its lowest second-quarter seat cancellation rate since 2021. New customer upgrades—such as Polaris Studio suites for business class and the Blue Sky partnership with JetBlue—added value to the passenger experience.

Unit revenue metrics showed areas that will need attention. Revenue per available seat mile, a key measure of efficiency capturing fare and demand levels per seat offered, fell 4.0% as domestic markets showed softness. The overall passenger load factor, or the percentage of available seats filled, slipped to 83.1% from 84.2%. In the domestic market, the load factor dropped by 2.3 points, reflecting weaker demand and the company’s decision to accept more lower-fare travelers to fill seats.

United’s costs rose ahead of revenue. Labor expenses increased by 7.7%—driven in part by a $561 million ratification bonus for flight attendants. Maintenance costs (GAAP) rose 20.8%. Other notable expense growth came from landing fees (up 11.0%). However, the airline benefited from a 15.3% year-over-year decrease in average fuel prices per gallon. Special items of $447 million, primarily related to labor agreements, also weighed on GAAP net income.

There were also signs of improving financial health. The company ended the quarter with $18.6 billion in available liquidity and reduced its net leverage (non-GAAP) to 2.0 times trailing twelve-month earnings from 2.4 times a year ago as of June 30, 2025. It also repurchased $0.2 billion of shares during the quarter, bringing year-to-date buybacks to $0.6 billion. Free cash flow (non-GAAP), while down from last year, remained positive at $1.13 billion.

On the strategic front, network expansion and alliances were key themes. United operated its largest-ever schedule by available seat miles, increasing capacity by 5.9% and adding new routes worldwide. The company highlighted the rollout of new customer amenities, progress on sustainable aviation fuel, and expanded digital check-in and touchless ID initiatives. However, the proportion of sustainable aviation fuel remained less than 0.3% of total usage, highlighting the ongoing challenge of scaling environmental initiatives.

Looking Ahead—Management’s Outlook and What to Watch

Management slightly raised its full-year adjusted diluted earnings per share guidance to a range of $9.00 to $11.00, reflecting a recent pickup in bookings and stronger business travel demand observed since early July. This updated outlook is a shift from the company's previous "recession scenario" expectations of $7.00 to $9.00 per share in earnings, though lower than the high case previously discussed.

Investors should monitor domestic revenue trends, as yield and load factors remain under pressure in the main cabin. Additional risks include ongoing labor cost increases and uncertain trajectory for fuel and maintenance expenses. Key areas of possible upside include further loyalty revenue growth, continued international strength—especially in the Pacific region—and operational improvements that boost customer satisfaction scores.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.