United Airlines Sharply Cuts Guidance: Why Its Stock Rose After-Hours Instead of Falling?
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United Airlines reported Q1 2026 net income of $699 million, up 80.4% YoY, and revenue of $14.6 billion, up 10.6% YoY, exceeding market expectations. Despite a $340 million increase in fuel expenditures due to geopolitical conflict, growth in premium cabin revenue, loyalty programs, and business travel mitigated rising costs. The company plans a 5% capacity cut for 2026 and is enhancing customer experience with innovations like the "United Relax Row." Though Q2 and full-year guidance was lowered, analysts remain optimistic, citing proactive guidance updates and conservative fuel cost assumptions.
TradingKey - United Airlines released its first-quarter financial results for the period ended March 31, 2026, after the market close on April 22. During the period, the company's net income was $699 million, up 80.4% year-over-year; adjusted diluted earnings per share was $1.19, significantly higher than the $0.91 recorded in the same period last year and market expectations of $1.09.
During the period, the group's total revenue was $14.608 billion, up 10.6% year-over-year, surpassing market expectations of $14.46 billion. Passenger revenue reached $13.166 billion, up 11% year-over-year, which also beat the market estimate of $12.96 billion.
Regarding expenses, United Airlines stated that, impacted by the war, fuel expenditures increased by $340 million year-over-year to $3.041 billion.
Following the earnings announcement, United Airlines shares initially fell by over 3% in after-hours trading before rebounding sharply to gain more than 1%. As of press time, the stock was up 1.31% in overnight trading, quoted at $98.4.
Q1 Earnings Dispel Growth Concerns; Stock Reverses Losses to Gain
Following the earnings release, United Airlines shares once fell over 3% after-hours but subsequently surged to gain over 1%; as of press time, the stock rose 1.31% in overnight trading to $98.4.
In the past, the aviation industry was typically considered the primary sector affected by war, mainly due to a collapse in passenger demand and skyrocketing fuel costs.
However, reviewing the current results, the company still achieved growth in both revenue and net profit despite the environment of significantly rising fuel costs.
The strong performance was primarily driven by growth in premium cabin revenue, which mitigated some of the impact from rising oil prices. Specifically, premium cabin revenue grew 14% year-over-year, loyalty program revenue increased by 13%, and basic economy revenue rose 7%. Business travel revenue also showed strong performance, with a 14% increase in the first quarter. This indicates that the company's pricing power remained robust during the quarter.
Furthermore, in response to rising fuel prices, United Airlines expects to cut its full-year 2026 capacity by 5 percentage points. Additionally, United has made adjustments to enhance its product competitiveness. This quarter, the airline announced several measures to improve customer experience, including accelerating the installation of Starlink and introducing the "United Relax Row." United Relax Row is a pioneering economy class concept in North America. The design converts a three-seat economy row on long-haul wide-body aircraft into a sofa bed, providing passengers with a more comfortable resting space. Pricing will be positioned between standard economy and premium economy, aiming to attract price-sensitive consumers.
Taken together, it is evident that the company is adjusting its long-term strategic direction: controlling costs through capacity contraction while enhancing yields through structural and product upgrades, highlighting the company's resilience during extraordinary times.
United Airlines CEO Scott Kirby stated: "Uncertain periods in the aviation industry can also create opportunities for United. We have demonstrated for several consecutive quarters that we have the capability to weather various shocks, and now is no exception. In the short term, we will remain flexible while continuing to grow and invest in our customers, products, and employees."
Guidance Downgrades Are Not Necessarily Bearish; Conservative Assumptions Leave Room for Earnings Recovery
Regarding guidance, United Airlines expects second-quarter adjusted diluted net income per share to be $1-$2, with the midpoint significantly lower than the market expectation of $2.08; full-year adjusted diluted net income per share is projected at $7-$11, well below the company’s original forecast of $12-$14.
The company expects average fuel costs for the second quarter to be $4.30 per gallon; currently, U.S. jet fuel prices stand at $3.51 per gallon, significantly higher than pre-conflict averages, further underscoring the operating pressure from rising energy costs.
Despite the lowered guidance, Morgan Stanley maintained its Overweight rating on United Airlines. Analyst Ravi Shanker noted that the company's first-quarter results beat market expectations, and the decision to proactively update guidance—unlike peers who withdrew theirs—will likely be well-received by investors. Furthermore, while fuel costs remain the key driver for performance, the current guidance range encompasses consensus expectations, and the company's fuel assumptions are slightly conservative, providing a buffer for future performance recovery.
We also noted in our earnings preview article, " United Airlines Q1 2026 Earnings Preview: Fuel Costs Remain High, How This Airline Navigates the “Aviation Winter”? ", that the current focus is no longer on whether the company can maintain high growth, but rather whether United Airlines can survive longer and more resiliently than its peers in a broadly pressured environment.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
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