United Airlines Earnings: Air Travel Continues to Cruise Along Nicely

Key Morningstar Metrics for United Airlines Holdings

• Fair Value Estimate: $62.00
• Morningstar Rating: ★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of United Airlines Holdings’ Earnings

United Airline Holdings UAL earned 11% less operating profit on 2.6% more revenue and 7.2% more capacity in the third quarter compared with 2024. Salaries increased 5.4% since last year, while United’s fuel expense was flat. Premium cabin sales rose 6% versus 2024, while basic economy revenue rose 4%.

Why it matters: United is doing well, having established similar premium segmentation and loyalty offerings as Delta’s, and as long as its premium customers remain loyal and not too frugal, we think these airlines can continue to prosper, sharing the bulk of industry profits.

• Travel demand so far in 2025 closely resembles overall volume in the same period of 2024, and market worries about a recession resulting from April’s announcements of new tariff policies have all but disappeared as the summer travel season shaped up to closely match last year’s record travel pace.
• While constraints on the supply of jets and traffic to the busiest airports may persist for more than the coming year, aided by low-cost carriers exiting unprofitable routes, we maintain the view that decreasing demand will deflate industry profits.

The bottom line: We have increased our fair value estimate for no-moat United’s shares to $62 from $43, reflecting a few offsetting adjustments to our forecast, including a higher forecast for fuel cost offset by higher revenue yields since airlines generally pass the cost of fuel on to customers.

• We also updated our cost of capital assumptions to reflect United’s evolving leverage and borrowing costs, lowering our overall WACC to 7.5% from 9.3%.
• Our valuation represents a 5.7 multiple of our 2025 enterprise value/2026 EBITDAR estimates, which is higher than the industry multiple but not as heady as recent market valuations of United’s stock, which we still see as overvalued.