United Airlines (UAL) shares jumped over 5% Thursday morning as investors responded positively to improving demand trends, despite the carrier trimming its full-year profit forecast.
While the airline’s second-quarter results were a mixed bag, the narrative around United is shifting toward optimism—driven by recovering business travel, easing macro uncertainties, and stabilizing operations at key hubs.
Mixed Q2 Results Reflect Resilience Amid Disruption
In the second quarter of 2025, United Airlines reported adjusted earnings of $3.87 per share, beating analyst expectations of $3.81. However, revenue came in slightly below forecasts at $15.24 billion, representing modest year-over-year growth of 1.7%. Margins also took a hit, with operating margin falling to 8.7%, down sharply from 12.9% a year ago.
The results were weighed down by severe disruptions at Newark Liberty International Airport—a major hub for United—which cost the airline an estimated $218 million and trimmed Q2 margins by more than a full percentage point. Equipment failures, staffing shortages, and runway construction all contributed to the chaos. Despite these challenges, CEO Scott Kirby emphasized that operational performance improved meaningfully by June and credited United’s staff for navigating a volatile quarter with strong execution.
United’s total capacity rose nearly 6% year over year, but that expansion came at a cost: revenue per seat-mile fell 4%, underscoring a mismatch between supply and pricing power, especially in domestic markets. Still, passenger metrics were encouraging. The airline flew 70.09 billion revenue passenger miles—up 3 billion from last year—and saw solid growth in premium cabin and loyalty revenue, up 5.6% and 8.7%, respectively.
In the second quarter of 2025, United Airlines reported adjusted earnings of $3.87 per share, beating analyst expectations of $3.81. However, revenue came in slightly below forecasts at $15.24 billion, representing modest year-over-year growth of 1.7%. Margins also took a hit, with operating margin falling to 8.7%, down sharply from 12.9% a year ago.
The results were weighed down by severe disruptions at Newark Liberty International Airport—a major hub for United—which cost the airline an estimated $218 million and trimmed Q2 margins by more than a full percentage point. Equipment failures, staffing shortages, and runway construction all contributed to the chaos. Despite these challenges, CEO Scott Kirby emphasized that operational performance improved meaningfully by June and credited United’s staff for navigating a volatile quarter with strong execution.
United’s total capacity rose nearly 6% year over year, but that expansion came at a cost: revenue per seat-mile fell 4%, underscoring a mismatch between supply and pricing power, especially in domestic markets. Still, passenger metrics were encouraging. The airline flew 70.09 billion revenue passenger miles—up 3 billion from last year—and saw solid growth in premium cabin and loyalty revenue, up 5.6% and 8.7%, respectively.
Guidance Scaled Back, But Sentiment Improves
While United beat expectations for Q2 earnings, the company revised its full-year adjusted EPS forecast to a range of $9 to $11 per share—down from its prior outlook of $11.50 to $13.50 under a “stable” scenario issued in April. Investors initially balked at the downgrade, but the guidance also eliminated its earlier “recessionary” case, signaling increased confidence in economic stability.
Wall Street analysts were largely supportive of the update. TD Cowen’s Tom Fitzgerald called the report “further evidence of the ongoing divergence between full-service carriers and low-cost carriers,” and reiterated a Buy rating with a $101 price target. With the stock trading around $93 after the earnings release, that implies roughly 9% upside.
Despite the guidance cut, United’s stock has surged more than 130% since early April and is now riding a sector-wide rebound, sparked by Delta’s (DAL) upbeat earnings report and reinstated guidance. Much of the selloff earlier this year was driven by tariff fears and macro uncertainty, which United now says are dissipating.
Accelerating Demand Points to a Strong Second Half
Perhaps the most encouraging signal came from United’s demand commentary. The company reported a six-point improvement in overall demand since the start of July and a double-digit increase in business travel demand compared to Q2. Kirby noted that the “world is less uncertain today than it was during the first six months of 2025,” and that United expects a key inflection point in industry capacity by mid-August.
United plans to moderate its capacity growth for the second half of the year, aiming for low-to-mid single-digit increases. The strategy is designed to tighten supply, support pricing, and drive stronger per-seat revenue—especially in lucrative international and business segments.
The Pacific region was a standout performer, with unit revenue rising nearly 3%, while Europe and Latin America showed weakness due to uneven demand and currency headwinds. Domestically, pricing pressures weighed heavily, with revenue per seat-mile dropping 7%. The airline hopes that the pullback in new seat additions will restore balance between supply and demand.
Conclusion
United’s second-quarter results underline a company in transition—facing operational headwinds but benefiting from improving fundamentals. The trimmed guidance may appear cautious, but the underlying momentum in travel demand, especially from business and premium passengers, paints a more promising picture for the second half of 2025. As the company refines its capacity strategy and stabilizes operations at Newark, the outlook appears to be climbing—just like its stock.
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