Morningstar

United Airlines Earnings: Premium Segment Should Help Weather Fuel Price Shock

We’ve slightly decreased our fair value estimate of United Airlines stock.

A United Airlines plane at Denver International Airport.
Robert Alexander via Getty
Securities in This Article
United Airlines Holdings Inc
(UAL)

Key Morningstar Metrics for United Airlines Holdings

  • Fair Value Estimate
    : $95.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : Very High

What We Thought of United Airlines Holdings’ Earnings

United Airlines Holdings UAL earned 11.0% more revenue and (excluding gains on sales of aircraft) 22.0% more operating profit on 3.4% more capacity, 2.4 points of higher load factor, and 4.2% higher yields in the first quarter, while fuel costs rose 12.6% and structural costs increased 5.9% compared with 2025.

Why it matters: Most of the past quarter unfolded before fuel prices spiked at the end of February, so the most relevant data on whether United’s premium customer segments may shield it from the unexpected jump in fuel prices comes from March and management’s comments about recent trends in April.

  • At the end of February, before it adjusted prices to compensate, United had already sold 23% of its tickets through the second quarter and 8% through the third quarter. Similarly to Delta, its stable of less price-sensitive customers booking premium seats, refundable business bookings, and the like are less likely to balk at an increased fare than more casual and leisure travelers.
  • Travel demand so far in 2026 closely resembles the overall volume of early 2025, with about 2% more travelers passing through security by the end of March. United announced it would pare its prior capacity growth to preserve what pricing power it may have, which we think is prudent and commensurate with our lower overall US air-mileage forecast for 2026.

The bottom line: We have decreased our fair value estimate for no-moat United’s shares to $95 per share from $98, reflecting the short-term squeeze on profits from pre-sold seats, but also reflecting its industry-leading revenue yield, which we believe may persist in the medium term as unprofitable competing flight capacity exits the US domestic network.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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