United Airlines Holdings, Inc. earnings

Management highlights

### Strategic Positioning & Business Model Resilience - Management emphasizes that United's brand loyalty strategy drives durable, resilient earnings that outperform during both strong markets and industry shocks. United has gained 7 percentage points of passenger local share across its 7 hubs since 2019, the largest gain of any major U.S. carrier. - Two permanent structural industry changes underpin management's long-term confidence: 1) broad cost harmonization across all carriers due to post-COVID inflation in labor, maintenance, and airport fees that has forced industry-wide fare resetting, and 2) the growth of brand loyal-focused airlines that are less exposed to irrational competitor capacity moves. ### Operational Performance - United recorded 10 of its highest-ever daily passenger volumes in Q2, including a single-day record of 640,000 passengers on June 18, 2026. - On-time departure rates ranked second among large U.S. competitors, marking the sixth consecutive quarter of top-tier on-time performance and the best Q2 on-time rate since the pandemic. Q2 also saw the lowest seat cancellation rate in company history, with significant improvements at the Newark hub, which ranked first in on-time arrivals in June 2026 with its best ever on-time departure rate and lowest cancellation rate since 2018. - Q2 net promoter score (NPS) was the highest since the pandemic, reflecting customer approval of operational reliability and product investments. ### Labor & Fleet Updates - Flight attendants ratified a new collective bargaining agreement in May 2026, with costs reflected in current full-year guidance. Management remains committed to reaching new agreements for all remaining work groups. - United plans to retire at least 80 older, less fuel-efficient aircraft in 2027, stepping up the pace of fleet renewal and upgauging. First delivery of the MAX-10 is expected mid-to-late 2027; the aircraft offers more premium seats and best-in-class CASM, supporting long-term margin improvement. United expects to have 100 premium-configured A321s in its fleet by the end of 2026, and plans to rapidly ramp up deployment of A321XLR and Coastliner aircraft through 2027. The United Next strategic fleet and product upgrade plan will be largely complete by the end of 2027. ### Product & Customer Experience Investments - Rollout of free Starlink Wi-Fi is accelerated, with management targeting nearly 1,000 aircraft equipped by the end of 2026. Early customer satisfaction scores for Starlink-equipped aircraft are more than double scores for older Wi-Fi systems, and management expects the upgrade to drive meaningful additional share gains. Most key modification programs (Starlink, upgraded entertainment, larger overhead bins, cabin branding refreshes) will be completed by the end of 2027. - New merchandising (nested fare) strategies rolled out earlier this year are performing better than expected, with higher-than-expected buy-up rates to premium products, and early implementation has been technically flawless.

Guidance

- Third quarter 2026 EPS is guided to $2.50 to $3.50, based on an all-in fuel price of approximately $3.69 per gallon, reflecting recent sharp increases in fuel prices. If fuel prices return to early-July 2026 levels, management expects to exceed the high end of this range. - Full year 2026 EPS guidance is tightened to $9 to $11, focused at the high end of United's prior guidance range, with adjustment to account for the 15-20% increase in fuel prices since early July 2026. If fuel prices fall back to prior levels, United expects to outperform the high end of this range. - Management expects year-over-year RASM growth in Q3 and Q4 2026 to exceed Q2 2026's 12% growth rate, with current consolidated Q4 2026 yield tracking 19% higher year-over-year. Q4 2026 domestic schedules are not yet final and will be adjusted downward to reflect current fuel and demand trends. - For 2027, management reaffirms expectation of double-digit pre-tax margins, with mid-teen pre-tax margins expected long-term. Core CASM ex-fuel is expected to increase 2% to 3% year-over-year in 2027, including continued product investment. Free cash flow conversion is targeted at 50% through the mid-2020s, rising to 75% by the end of the decade. - Management expects to reach net debt leverage below 2x by 2027 and is on the precipice of achieving an investment-grade credit rating, a target expected by the end of 2026.

Segment performance

Total operating revenue for Q2 2026 was $17.7 billion, up 16% year-over-year, with total RASM up 12.1% year-over-year and slightly higher load factors indicating strong broad-based demand. - Domestic: Passenger revenue up 20.3% year-over-year, PRASM up 12.2% year-over-year, contributing ~60% of total passenger revenue. - International: PRASM up 12% year-over-year overall, with Pacific PRASM up 14%, Atlantic PRASM up 12.1%, and Latin America PRASM up 10.7% year-over-year. - Cargo: Revenue up 22.6% year-over-year, with almost all gains driven by higher yields rather than volume increases. - Loyalty (Mileage Plus): Revenue up 11.3% year-over-year; adjusted for a one-time out-of-period adjustment, revenue would have been up over 13% year-over-year. New co-branded credit card accounts hit a Q2 record up 22% year-over-year, card spend up 14% year-over-year, and membership enrollments up 9% year-over-year, outpacing capacity growth by 5 percentage points. - Premium cabins: Total premium revenue up 16.4% year-over-year, premium PRASM up 11.6% year-over-year, and RASM for Polaris and Premium Plus cabins up 13.6% year-over-year. Main cabin RASM up 11.5% year-over-year, marking the second consecutive quarter of positive growth after years of underperformance industry-wide.

Risks & headwinds

- Geopolitical conflict in Iran and associated risks to oil supply and elevated fuel price volatility have created significant near-term and medium-term cost uncertainty. At current prices, 2026 full-year fuel costs are almost $6 billion higher than management's initial outlook at the start of 2026. - Airport capacity constraints at major hubs (O'Hare Chicago, Newark, San Francisco) are extended through 2027, limiting near-term domestic capacity growth at these high-demand locations. Runway construction in San Francisco is temporarily reducing landing rates through October 2026. - Industry risk persists from potential irrational capacity decisions by less profitable competitors, though management notes broad post-COVID cost inflation has left most carriers with no choice but to increase fares to cover higher costs, reducing the scope for unsustainable discounting. - Corporate business travel still remains 5 percentage points lower as a share of load factor than pre-COVID levels, representing remaining unpriced upside but also near-term revenue risk if growth slows.

Analyst Q&A

• Q: Analysts ask how RASM acceleration into Q3 2026 will break down across regions and what to expect for cargo revenue. /

  A: Management notes broad strength across all regions, with continued strong performance in the Atlantic and Pacific, and particularly strong year-over-year RASM growth in Latin America driven by easier comps. Cargo is expected to remain strong in Q3, with gains continuing to be driven by higher yields. Hawaii is the only region with currently lower-than-expected yields. All other regions are performing well, supporting the outlook for accelerating full-system RASM in the second half.

• Q: How does Starlink add value for United, and what is the strategic benefit of the upcoming MAX-10 fleet introduction? /

  A: Management states Starlink is the most impactful customer experience investment United has made to date, with extremely positive early customer feedback, particularly for premium travelers who value reliable high-speed connectivity. It expects Starlink to drive meaningful additional share gains. The MAX-10, expected for first delivery in mid-late 2027, is larger and has far lower unit costs than the aircraft it replaces, allowing United to add more premium seats on narrowbody routes, creating a structural cost and product advantage over competitors. Upgraded widebody aircraft with new premium cabins are also performing very well on key long-haul routes.

• Q: How should investors think about the risk that carriers will add back capacity once fuel prices fall, pressuring RASM, as happened in 2016? /

  A: Management explains that the current industry environment is structurally different from 2016. 90% of recent fare increases are driven by broad post-COVID cost inflation (labor, maintenance, airport fees) that impacts all carriers equally, not just temporary fuel price changes. Only 10% of fare increases are tied to near-term capacity adjustments. Most major carriers face pressure to cover higher permanent costs, so fares will not revert to previous low levels even if fuel falls. Fares still remain 13% lower in real terms than 2019, so there is still further structural upside for pricing even if energy costs moderate.

• Q: What is the timeline for United's Mileage Plus credit card contract renegotiation, and what early results have come from recent program changes? /

  A: Management confirms the current contract is in its sunset phase, but did not provide a specific renegotiation timeline. Recent program changes implemented in March 2026 are performing exactly as intended: all key metrics (new accounts, spend, membership growth) are moving in the right direction. A one-time out-of-period adjustment made Q2 2026 loyalty revenue look lower than underlying performance; adjusted revenue grew over 13% year-over-year, and management expects continued strong growth in Q3 2026.