# United Airlines Holdings, Inc. (UAL) — Company Narrative, FY26Q2 Period covered: the second quarter of 2026 (quarter ended June 30, 2026), set against the fiscal year ended December 31, 2025. Sources: the FY2025 Form 10-K (accession 0000100517-26-000023, filed February 12, 2026); the Q2 2026 Form 10-Q (accession 0000100517-26-000139, filed July 16, 2026); the Q2 2026 earnings release and Investor Update furnished on Form 8-K (accession 0000100517-26-000135, July 15, 2026); and the Q1 2026 earnings release on Form 8-K (accession 0000100517-26-000089, April 21, 2026). --- ## Business *From the FY2025 10-K, accession 0000100517-26-000023, unless noted.* United Airlines sells scheduled air travel to leisure and business passengers, and the tickets are almost the whole business. Of $59.07 billion of 2025 operating revenue, passenger fares and ancillary fees were $53.44 billion (about 90%), cargo was $1.78 billion (about 3%), and other operating revenue was $3.85 billion (about 7%). Other revenue is largely the MileagePlus loyalty program's sale of miles and marketing rights to partners, chiefly JPMorgan Chase under the co-branded credit card agreement, plus United Club memberships and third-party services such as maintenance, flight academy training and ground handling. United describes itself as the largest airline in the world measured by available seat miles, carrying about 181 million passengers in 2025 to more than 380 destinations on six continents. The company manages and reports its operations as a single segment (10-Q, accession 0000100517-26-000139). United Airlines Holdings, Inc. is a holding company whose operating subsidiary, United Airlines, Inc., accounts for nearly all of its revenue, expenses, assets and liabilities. The network runs through hubs at Chicago O'Hare, Denver, Houston Intercontinental, Los Angeles, Newark, San Francisco, Washington Dulles and Guam. All of the U.S. hubs sit in large business and population centers, which generate heavy "origin and destination" traffic and let the hub-and-spoke system connect many city pairs with frequent service. The main parts of the business: - **Mainline and regional flying.** At December 31, 2025 United operated 1,066 mainline aircraft (958 owned, 108 leased, average age 15.3 years), built around Boeing 737s, 757s, 767s, 777s and 787s and Airbus A319s, A320s and A321neos. Another 424 regional aircraft fly as United Express under capacity purchase agreements with CommuteAir, GoJet, Mesa, Republic and SkyWest. United pays these carriers contracted fees and bears fuel and airport costs, but it sets their schedules and pricing and keeps the ticket revenue. Regional flying was about 6.1% of 2025 capacity. - **United Next growth plan.** The plan grows gauge, network and premium product. United expects to take delivery of more than 630 new narrowbody and widebody aircraft by the end of 2034. At year-end 2025 firm orders were 150 Boeing 787s, 103 737 MAX 9s, 167 737 MAX 10s, 119 A321neos, 50 A321XLRs and 45 A350s. More than 530 new and retrofitted aircraft carry the signature interior (larger bins, seatback screens, Bluetooth). Starlink Wi-Fi is on the regional fleet and is being installed on mainline aircraft. Headcount has risen by more than 38,000 since 2020. - **Alliances.** United belongs to Star Alliance. It runs four antitrust-immunized passenger joint business arrangements: transatlantic with Air Canada and the Lufthansa Group, transpacific with ANA, U.S.–New Zealand with Air New Zealand, and U.S.–Canada transborder with Air Canada. It also has a transatlantic cargo joint business with Lufthansa. - **MileagePlus.** Members earn miles on flights and through non-airline partners, above all Chase co-branded cards. In 2025 about 10.9 million flight awards were used on United and United Express, equal to about 10.3% of revenue passenger miles. - **Air cargo.** Freight and mail fly in the bellies of scheduled passenger flights and on interline and charter flights, serving freight forwarders, logistics firms and postal services. Fuel is the second-largest cost. In 2025 United burned 4,663 million gallons at an average $2.44 per gallon, a $11.40 billion bill equal to 21% of operating expense. The company does not hedge fuel prices. Labor is the largest cost: at December 31, 2025 United had about 113,200 employees, about 83% of them represented by unions under the Railway Labor Act. The pilots' agreement with ALPA (17,126 pilots) becomes amendable in October 2027. At year-end 2025, contracts were open for amendment for flight attendants (AFA, 28,220; since ratified, see below), technicians (Teamsters, 10,599) and the IAM fleet service and passenger service groups (about 28,300 combined). Demand is seasonal. The second and third quarters are historically the strongest, although in 2025 fourth-quarter revenue exceeded both. --- ## Risk factors *Condensed from Item 1A and related disclosures of the FY2025 10-K, accession 0000100517-26-000023. The Q2 2026 10-Q reports no changes to these risk factors.* - **Executing United Next and the aircraft order book.** The plan rests on assumptions about demand, fuel, certification timelines, supply chains and labor costs, and United has already adjusted those assumptions for higher infrastructure, labor and maintenance costs and late deliveries. The order commitments are large and made years ahead. Changing or cancelling them could create material liabilities, and late deliveries force older aircraft to fly longer at higher maintenance cost. Tariffs on imported aircraft, engines or parts could raise acquisition costs. - **Dependence on Boeing and Airbus.** Substantially all aircraft and many parts come from two manufacturers, and engines come from a small group of suppliers. Production delays at both manufacturers have already forced United to rework its fleet plan. Management names 737 MAX 10 certification delays among the legal and regulatory factors most likely to affect results. United is also in a contract dispute with Rolls-Royce over widebody engine and maintenance agreements; each side claims the other owes it damages (see Litigation below). - **Fuel price and supply.** Fuel cost about $11.4 billion in 2025. United buys at market prices with no hedges, has historically been unable to pass sharp, sustained price increases fully into fares, and estimates that each one-dollar change in the price of a barrel of jet fuel moves 2026 fuel expense by about $116 million. - **Competition and capacity.** United competes with network, low-cost and ultra-low-cost carriers at home, and abroad with foreign airlines including government-subsidized Middle East carriers with large widebody orders. Fare discounting by low-cost carriers has lowered yields in many domestic markets. Airline consolidation and alliance realignments could produce stronger competitors. - **Economic conditions.** Air travel is discretionary and cyclical. A downturn that hits business and premium-cabin demand, or one that pushes the industry into fare promotions, would cut revenue. Tariffs and trade barriers could also weigh on international demand. - **Airport, air traffic control and government disruptions.** In spring 2025, ATC staffing shortages, technology outages and runway construction caused concentrated delays and cancellations at the Newark hub, and the FAA issued an order capping Newark operations through October 2026. During the late-2025 federal government shutdown, the FAA ordered temporary schedule cuts across about 40 domestic airports. Rising airport rents and landing fees at hubs add cost. - **Geopolitical conflict and security.** The loss of Russian overflight rights and interruptions from military conflicts have already hurt results. Insurance and financial resources may not absorb a major terrorist or security event. - **Labor costs and relations.** New collective bargaining agreements have materially raised labor costs, and unresolved negotiations could bring job actions. Pension and retiree health obligations, participation in the IAM multi-employer pension plan, and litigation over state and local labor laws add exposure. - **Leverage and covenants.** At year-end 2025 United had about $31.0 billion of debt, finance lease, operating lease and other financial liabilities, $5.1 billion of it due within 12 months, plus large non-cancellable aircraft commitments. Its ratings are below investment grade (BB+ at S&P and Fitch, Ba1 at Moody's). Some debt requires at least $2.0 billion of unrestricted liquidity at all times and a collateral coverage ratio of at least 1.6 to 1.0. Cross-default provisions mean a breach of one agreement could accelerate others. - **MileagePlus and co-brand cards.** The loyalty program competes with bank and other airline programs. Legislation that reshaped the benefits United can offer through co-branded credit cards could materially hurt profitability. - **Regulation.** United operates under DOT and FAA certificates. Slot rules, FAA groundings and airworthiness directives, consumer protection rulemaking, interference from 5G networks, and changes to international air service agreements can all restrict operations or raise costs. - **Technology, cybersecurity and AI.** Reservation, flight operations and other systems, many run by third parties, can fail or be breached. The company says its use of AI applications has already produced certain immaterial cybersecurity incidents. - **Environmental regulation and climate.** United targets net zero greenhouse gas emissions by 2050 and a 50% cut in carbon intensity by 2035 against 2019, without relying on traditional carbon offsets. Meeting those goals depends on sustainable aviation fuel, which costs more than conventional jet fuel and is in short supply. CORSIA, European and UK SAF mandates, and PFAS remediation liabilities are expected to add cost. - **Tax attributes.** United reported about $10.6 billion of U.S. federal net operating loss carryforwards at year-end 2025. An "ownership change" under Section 382 could limit their use. A tax benefits preservation plan, which penalizes any non-exempt holder that crosses 4.9% ownership, expires December 4, 2026. - **Litigation.** United remains a defendant in consolidated class actions, filed after a 2015 DOJ civil investigative demand, alleging collusion among U.S. airlines on capacity; the company says it is vigorously defending them. It is also a defendant in a certified class action over its COVID-19 employee vaccination requirements. In the Rolls-Royce matter, United paid a $175 million commitment payment in 2017 and demanded repayment plus escalation in December 2025. Rolls-Royce did not pay, terminated the agreements and claimed United was in breach. United has recognized no loss and no gain. --- ## Management's discussion — fiscal 2025 *From Item 7 of the FY2025 10-K, accession 0000100517-26-000023.* **Results.** Higher volume drove growth in 2025 while unit revenue fell. Operating revenue rose 3.5% to $59.07 billion. Passenger revenue rose $1.6 billion (3.1%) because capacity grew 6.1% and passengers 4.3%, but yield fell 1.9% and passenger revenue per available seat mile (PRASM) fell 2.9%. By region, passenger revenue grew 2.0% domestically, 4.9% on the Atlantic, 7.5% on the Pacific and 1.4% in Latin America. The domestic load factor fell 1.9 points as capacity outran traffic. Other operating revenue grew 10.4% ($362 million) on higher mileage sales to non-airline partners, mainly Chase card spending, and more United Club membership purchases. Operating expense rose 4.6% to $54.36 billion, so operating income fell to $4.71 billion from $5.10 billion. The cost growth came mostly from: - salaries and related costs, up $969 million (5.8%) on more flying, about 5.5% more staff and higher pay rates; - landing fees and rent, up 12.0% on airport rate increases and terminal expansions; - maintenance materials and repairs, up 7.5% on more engine overhauls; - regional capacity purchase, up 7.0%; - other operating expenses, up $866 million (9.6%) on catering, ground handling and IT. Fuel expense fell 3.1% because the average price dropped to $2.44 a gallon from $2.65. Cost per available seat mile (CASM) eased to 16.46 cents from 16.70 cents. Special charges of $259 million combined a $561 million accrual for a proposed flight attendant ratification payment with $303 million of net gains, mainly from aircraft sale-leasebacks. Below the operating line, net nonoperating expense fell to $408 million from $928 million. Interest expense dropped $256 million (15.7%) on lower debt and a lower average cost of debt, and 2024 had carried $128 million of debt extinguishment fees. That $520 million improvement below the operating line more than offset the drop in operating income, so pre-tax income rose to $4.31 billion from $4.17 billion, and net income rose to $3.35 billion from $3.15 billion. **Cash flow and capital.** Operating cash flow was $8.43 billion, down $1.0 billion on lower operating income, working-capital changes and about $0.3 billion of pension contributions. Investing outflows grew $3.7 billion, mostly from net purchases of short-term investments. United repaid $4.8 billion of debt and lease obligations and bought back 8.1 million shares for about $640 million (average $78.75), leaving about $0.8 billion of authorization as of February 5, 2026. It ended 2025 with $12.2 billion of unrestricted cash and short-term investments, down from $14.5 billion, plus an undrawn $3.0 billion revolving credit facility. S&P upgraded the company in August 2025, Moody's in November 2025 and Fitch in December 2025 (10-Q, accession 0000100517-26-000139). In the 10-K, management guided to less than $8.0 billion of adjusted capital expenditures for 2026 because of aircraft delivery delays. **Management's stated priorities.** The plan rests on four strategic pillars: United Next growth, operational excellence at congested hub airports, best-in-class pre-tax margin to fund growth, and customer service. Management named the trends it expects to matter most: execution of United Next, supply-chain constraints, volatile fuel, rising maintenance costs, and a possible economic downturn or adverse currency moves. --- ## Current quarter — Q2 2026 *From the Q2 2026 10-Q (accession 0000100517-26-000139) and the earnings release and Investor Update of July 15, 2026 (accession 0000100517-26-000135).* **Fuel shock defined the half.** The 10-Q says geopolitical conflicts in the Middle East during the first half of 2026 disrupted flying in the region and contributed to materially higher global fuel prices. United cut capacity and adjusted fares and fees in response. When it reported the first quarter on April 21, United said it would take about 5 points of planned capacity out of the rest of 2026 and expected third- and fourth-quarter capacity to be flat to up about 2% year over year (accession 0000100517-26-000089). In the second quarter the average fuel price was $4.19 a gallon, against $2.34 a year earlier, and fuel expense rose $2.3 billion (84.1%) to $5.11 billion. The company says it recovered about half of that increase through revenue. **Revenue.** Revenue rose 16.0% to $17.67 billion on 3.5% more capacity, so unit revenue did most of the work: - passenger revenue rose 16.4% to $16.10 billion, on 12.1% higher yield and 5.4% more passengers; - cargo revenue rose 22.6% to $527 million on higher freight yields; - other operating revenue rose 7.7% to $1.05 billion on Chase card spending and United Club visits. Total revenue per available seat mile rose 12.1%, to 20.25 cents. Domestic passenger revenue grew 20.3% on 7.2% more capacity, and the Pacific grew 18.7%. Atlantic passenger revenue grew 7.9% even though capacity fell 3.8%. Within the Atlantic region, Middle East/India/Africa capacity fell 34.4% and passenger revenue fell 16.4%. The release adds that premium revenue rose 16%, Basic Economy 11%, loyalty 11% and contracted business revenue 27%. **Costs and earnings.** Operating expense rose 19.2% to $16.58 billion, and CASM rose 15.2% to 18.99 cents. Excluding fuel, profit sharing, special items and third-party business expense (the company's CASM-ex measure), unit cost rose 6.1%. Salaries rose 6.2% on 5.6% more staff and higher pay for flight attendants under their new contract. Distribution expense rose 32.3% because higher revenue lifted credit card fees and commissions. Special items were a net credit of $145 million: $329 million of net gains on asset sales and other special items, primarily $351 million of gains on aircraft sale-leaseback transactions, outweighed $184 million of ratification bonuses for the flight attendants and several IAM-represented groups. Operating income fell 17.3% to $1.10 billion, and pre-tax income was $1.03 billion (a 5.8% margin). Net income was $805 million, against $973 million, and diluted EPS was $2.46, against $2.97. On the company's adjusted basis, which strips out special items and unrealized investment gains, pre-tax income was $843 million (a 4.8% margin) against $1.67 billion, and adjusted EPS was $1.99 against $3.87. The adjusted figures sit below GAAP this quarter because the excluded items were net gains. Adjusted EPS came in near the top of the $1.00–$2.00 range the company gave in April. For the first half, revenue rose 13.5% to $32.28 billion, net income rose to $1.50 billion from $1.36 billion, and diluted EPS was $4.60, against $4.12. **Operations and product.** United says the second quarter had its best on-time departure rate for a second quarter since 2021, and Newark posted its best-ever second-quarter on-time departure performance. On June 18 United flew a record 640,717 customers. Starlink is installed on about 450 aircraft and nearly 1,000 are expected by year-end, with the whole fleet by the end of 2027. United took delivery of its first A321XLR and expects it to enter domestic service this fall and international service by early next year. The fleet totaled 1,552 aircraft at June 30, 2026. **Labor.** In May 2026 the flight attendants represented by the AFA ratified a five-year agreement effective May 31, 2026, replacing a contract that had been open for amendment since August 2021. The agreement includes pay increases and a one-time ratification payment due by September 15, 2026, for which United carried a $742 million liability at June 30. Headcount was about 117,500, 83% represented by unions. **Balance sheet and liquidity.** Unrestricted cash and short-term investments reached $16.6 billion at June 30, 2026, up from $12.2 billion at year-end. Available liquidity, including undrawn facilities, was $19.6 billion. The company describes the cash build as low-cost insurance against geopolitical uncertainty and a possible extreme spike in oil prices. It came mainly from $3.9 billion of aircraft-secured bank borrowing in the first half and strong operating cash flow, partly offset by $4.5 billion of debt and lease repayments that included $0.5 billion of aircraft debt prepayments. The July 15 release adds that United had prepaid about $1 billion of higher-cost debt since the beginning of the second quarter. United had also signed about $375 million of further financing commitments that had not funded by quarter-end. For the half, operating cash flow was $6.41 billion and free cash flow $3.23 billion. Total debt and lease obligations including operating leases were $33.7 billion at June 30, with $3.0 billion due within 12 months, down from $5.1 billion at year-end. **Fleet commitments.** At June 30, 2026 firm orders stood at 146 Boeing 787s, 63 737 MAX 9s, 167 737 MAX 10s, 111 A321neos, 49 A321XLRs and 45 A350s. For the second half of 2026 United expects 12 787s, 40 MAX 9s, 6 A321neos and 5 A321XLRs, and it does not expect the first MAX 10s before 2027. During the quarter it signed Supplemental Agreement No. 16 to its Boeing purchase agreement (April 30, 2026) and Amendment No. 8 to its Airbus A320 family purchase agreement (May 27, 2026); their commercial terms are redacted. **Strategic investments.** Under an amended and restated agreement of February 17, 2026, United subscribed for $100 million of Azul American Depositary Shares. When Azul completed its reorganization on February 20, 2026, United received about 8.7% of Azul's common shares, and it held 8.6% at June 30. On February 3, 2026, United received 2,744,348 additional shares of Republic Airways Holdings (about 5.8%), bringing its stake to about 22%, in consideration for helping facilitate the Republic–Mesa merger. **American Airlines approach.** On April 27, 2026, CEO Scott Kirby said in a published statement that he had approached American Airlines about exploring a combination, but that American declined to engage and publicly closed the door, and that United's pursuit of talks had ended (accession 0001104659-26-048992). No agreement was signed. **Outlook (Investor Update, July 15, 2026).** United raised its full-year 2026 adjusted diluted EPS guidance to $9.00–$11.00, from $7.00–$11.00 in April (accession 0000100517-26-000089) and $12.00–$14.00 in January (accession 0000100517-26-000014), and expects third-quarter adjusted diluted EPS of $2.50–$3.50. United now bases its guidance on current fuel prices: the third-quarter range assumes an all-in average fuel price of about $3.69 a gallon, based on the Gulf Coast jet forward curve as of July 14, 2026. It expects full-year 2026 adjusted total capital expenditures of about $7.5 billion. Management expects unit revenue gains in the third and fourth quarters to outpace the second quarter's, enough to recover most of the fuel increase in the third quarter and all of it by the fourth. It also expects to keep capacity tight. Fourth-quarter flying is expected to come in below currently published schedules, partly because of the recent extension of the FAA order at Chicago O'Hare, and the company says it is prepared to trim further if fuel stays elevated. Other planning figures: a third-quarter profit-sharing accrual of $135–$220 million, and a year-end 2026 fleet of 1,173 mainline and 442 regional aircraft. --- ## Subsequent events *From the Q2 2026 10-Q (accession 0000100517-26-000139) and the Form 8-K of July 15, 2026 (accession 0000100517-26-000135).* The 10-Q contains no separate subsequent-events note, and it discloses no acquisition, divestiture or new borrowing after June 30, 2026. No further Form 8-K had been filed as of October 2, 2026. Developments after the quarter end disclosed in these filings: - **Share repurchase capacity.** As of July 9, 2026, $755 million remained available under the $1.5 billion repurchase program authorized in October 2024. - **Fuel.** Fuel price moves from the start of July to July 14 raised expected third-quarter fuel cost by $575 million, or $1.12 of adjusted EPS. - **Flight attendant ratification payment.** The one-time payment under the new AFA agreement, a $742 million liability at June 30, is due by September 15, 2026.