United Airlines Maps Profitable Path Amid Turbulence

United Airlines Holdings, Inc. ((UAL)) has held its Q4 earnings call. Read on for the main highlights of the call.

United Airlines Strikes Confident Tone Despite Short-Term Turbulence

United Airlines Holdings, Inc. struck an upbeat tone on its latest earnings call, emphasizing record revenue, robust earnings per share (EPS) growth, strong premium and loyalty trends, and rapid balance-sheet improvement. Management acknowledged meaningful near-term headwinds — from a government shutdown to Newark-specific issues and regional softness — but framed them as manageable and temporary. The overarching message was one of resilience and controlled execution, with 2026 guidance described as conservative despite targeting materially higher profits.

Earnings Power Holds Up as 2026 EPS Targets Rise

Management underscored the resilience of the earnings engine. Fourth-quarter EPS came in at $3.10, squarely within the prior $3.00–$3.50 guidance range, despite an estimated $250 million pretax hit from the U.S. government shutdown and a full-year $0.85 EPS drag tied to Newark disruptions. For 2025, United is tracking at $10.62 EPS, up slightly versus the prior year even with these unusual headwinds. Looking ahead, the company guided first-quarter 2026 EPS to $1.00–$1.50, implying roughly 37% year-on-year improvement at the midpoint, and set an ambitious full-year 2026 EPS range of $12–$14, more than 20% growth at the midpoint versus 2025. Management stressed that these targets were set with a conservative bias given recent volatility, suggesting confidence in underlying earnings power.

Record Quarterly Revenue Underscores Demand Strength

Top-line performance was a highlight. United generated consolidated fourth-quarter revenue of $15.4 billion, up 4.8% year over year on a 6.5% increase in capacity — the highest revenue quarter in the company’s history. While unit revenue (TRASM) dipped about 1.6%, the airline still managed to grow its overall revenue base to record levels, signaling resilient demand and the benefits of a scaled network. The combination of higher capacity and rising revenue indicates United is successfully growing its footprint even as it navigates pressure in certain cabins and regions.

Premium Cabins and Loyalty Programs Outpace the Core

United’s premium products and loyalty engine continued to outshine the broader network. In the fourth quarter, premium cabin revenue rose roughly 12% on about 7% more premium capacity, with premium revenue per seat meaningfully outperforming the main cabin by about 10 points. For the full year, premium revenue climbed around 11%, reinforcing the structural shift toward higher-yield customers. Loyalty revenue grew about 9% in 2025, while co-brand credit card remuneration increased 12% for the year and 14% in the fourth quarter. United added more than 1 million new co-brand cards for the third consecutive year, a key driver of high-margin, less-cyclical revenue and an important buffer against volatility in the core flying business.

Operational Reliability Becomes a Competitive Advantage

Operational performance was another major theme, with United positioning reliability as a differentiator. The airline flew a record 189 million passengers in 2025 and delivered the highest seat-completion factor in its history, ranking number one in seat completion among the big three U.S. legacy carriers. Over the crucial holiday period, United led peers in on-time departures and arrivals and kept cancellations below 1%. Its United Express operation achieved 134 days of perfect completion, and nearly 60% of customers affected by cancellations were rebooked within four hours. This reliability pitch is central to United’s brand strategy and supports its push into premium and loyalty segments.

Costs Kept in Check Through Efficiency and Technology

United emphasized disciplined cost control as a core pillar of its strategy. Cost per available seat mile excluding fuel (CASM-ex) rose only about 0.4% year over year in the fourth quarter and for the full year 2025, a strong outcome in a high-inflation environment and amid rising labor and maintenance costs. Management pointed to operational efficiency, procurement savings (with around $150 million of run-rate savings identified), and technology-driven productivity as key levers. The company highlighted ongoing multi-hundred-million-dollar technology opportunities still ahead, suggesting further cost efficiencies could support margins even if revenue pressure persists in certain markets.

Balance Sheet Deleveraging and Steady Free Cash Flow

United has accelerated its balance-sheet repair, a key focus for investors after the pandemic. The airline paid down $1.9 billion of high-cost, COVID-era debt, bringing net leverage to 2.2x at year-end 2025 and targeting below 2.0x in 2026. Its total cost of debt stands at roughly 4.7%. Over the past 13 months, the company received five credit-rating upgrades and now sits just one notch below investment grade across agencies. Free cash flow reached $2.7 billion in 2025 and is expected to be similar in 2026, even as the airline plans more than 100 narrowbody and about 20 widebody aircraft deliveries next year. Capital expenditures are projected to stay below $8 billion, consistent with its stated $7–$9 billion multi-year framework, and the company maintains remaining share repurchase authorization, underscoring growing financial flexibility.

Profitable Hubs Underpin Network Strategy

Network performance across United’s hubs was another positive. Management reported that all of its hubs were profitable in the fourth quarter and for the full year 2025, giving the airline room to selectively add capacity where returns justify it. Notably, United highlighted that its Chicago hub was profitable in 2025, even as some competitors in the market posted losses. This hub profitability dynamic is key to sustaining the carrier’s growth strategy, supporting investments in key cities while maintaining discipline where competitive pressure runs high.

Product and Digital Investments Drive Customer Engagement

United said its investments in product and digital experience are paying off in customer satisfaction and loyalty. The company invested $1 billion in customer-facing improvements, including the United Next fleet upgrade program, Polaris business-class enhancements, the United Signature Interior, and the installation of Starlink high-speed connectivity. On the digital side, roughly 85% of customers now use the United app on the day of travel. New features — such as mobile bag tracking, virtual gates, and real-time boarding information — are designed to improve the travel experience and Net Promoter Scores, ultimately supporting pricing power and repeat business. A major redesign of the united.com website is planned for 2026, reinforcing the focus on digital engagement.

Government Shutdown and FAA Constraints Hit Q4

Management detailed the direct hit from macro-related disruptions, particularly the U.S. government shutdown that prompted the Federal Aviation Administration to temporarily reduce departures at 40 major airports. United quantified the impact at roughly $250 million in pretax profit in the fourth quarter, with cancellations running about 4% of departures during peak periods due to mandated reductions. While described as a one-off event, the shutdown showcased the vulnerability of airline operations to regulatory and political shocks, and was a key factor in softening what was otherwise a record revenue quarter.

Newark and Other One-Off Operational Headwinds

The airline also called out Newark-related operational challenges as a significant earnings drag in 2025, estimating an $0.85 per-share headwind for the full year. Management framed Newark and other unusual disruptions as idiosyncratic events that obscured the underlying progress in operations and profitability. The implication for investors is that some of the recent earnings noise may fade as these issues normalize, though the call suggested United is not assuming a full rebound in its conservative 2026 guidance.

Main Cabin and Unit Revenue Under Pressure

Despite strong premium and loyalty trends, the main cabin remains a weak spot. Consolidated TRASM declined about 1.6% in the fourth quarter, and main cabin revenue increased only around 1% even as capacity in that cabin grew roughly 6%. Standard and Basic Economy revenues fell about 5% for the year, which management linked to unprofitable capacity being added by other carriers in the market. This competitive oversupply is weighing on unit revenues and makes the premium and loyalty outperformance even more critical to United’s margin story. The airline signaled that it will remain disciplined about matching uneconomic capacity, but near-term pressure in the main cabin is likely to linger.

Latin America and Caribbean Weakness Prompts Capacity Shifts

Regional performance in Latin America and the Caribbean was another sore spot. United reported another challenging quarter for Latin America and said it is making aggressive capacity cuts in that region for the first quarter of 2026. Meanwhile, geopolitical and airspace issues in parts of the Caribbean are measurably depressing bookings in early 2026, with the timing of recovery uncertain. These pressures highlight the geographic diversification of United’s network but also underscore that parts of the international portfolio may remain a drag until conditions stabilize.

Chicago Competition Heats Up as United Defends Share

United devoted time to competitive dynamics in Chicago, one of its core hubs. Rival expansion there has intensified competition, and management suggested that some competitors are losing money in the market even as they chase share. In response, United plans to add flights to defend its gates and market position in 2026, signaling a willingness to respond aggressively to protect its strategic hub. While this could add near-term cost and contribute to fare pressure, the company appears focused on maintaining network scale and relevance in a key business and connecting market.

Labor Negotiations Introduce Execution Risk

Labor was flagged as an area of ongoing negotiation and potential risk. United is in active discussions with four labor unions, and while no specific financial impact was quantified, management acknowledged the possibility of higher labor costs or operational disruptions. With the industry already facing higher wage structures and tight labor markets, the ultimate outcome of these talks will be important for the company’s medium-term cost base and operational stability.

Conservative Stance Amid Macro Volatility

The company repeatedly described its 2026 outlook as deliberate and conservative in light of recent macro and operational volatility. Management cited the government shutdown, geopolitical tensions, engine and supply-chain constraints, and demand shifts in certain regions as reasons to avoid overpromising. While bookings have improved, United emphasized that upside to guidance depends on sustained momentum. This cautious tone on external risks stands in contrast to the strong internal performance metrics, underscoring a message of disciplined planning rather than exuberant optimism.

Guidance: Strong Earnings Growth, Fleet Investment, and Deleveraging

Looking forward, United’s guidance aims to blend growth with balance-sheet repair. For the first quarter of 2026, EPS is guided to $1.00–$1.50, roughly 37% higher year over year at the midpoint, and full-year 2026 EPS is set at $12–$14, more than 20% growth versus the 2025 level of $10.62. The company plans over 100 new narrowbody and about 20 widebody aircraft deliveries in 2026, with capital expenditures held under $8 billion, consistent with its longer-term $7–$9 billion annual investment framework. Free cash flow is expected to be around $2.7 billion in 2026, similar to 2025, with medium-term free-cash conversion near 50% and an ambition to reach about 75% by the end of the decade. United targets net leverage below 2x next year, building on the recent $1.9 billion debt paydown and benefiting from a roughly 4.7% cost of debt and multiple recent credit-rating upgrades. Collectively, the guidance points to a company investing heavily in its fleet and product while steadily improving its financial profile.

United’s latest earnings call painted the picture of an airline that has emerged from the pandemic with a stronger, more diversified business model but still faces pockets of turbulence. Record revenue, rising EPS, premium and loyalty outperformance, operational excellence, and rapid deleveraging underpin a constructive long-term story. At the same time, main-cabin softness, regional underperformance, competitive flare-ups, and labor negotiations are reminders that the path to higher earnings will not be linear. For investors, the takeaway is a company leaning into growth and product investment, backed by conservative guidance and a strengthening balance sheet, while keeping a close eye on the external headwinds that could shape results in the quarters ahead.