United Airlines on Tuesday sharply reduced its 2026 earnings forecast as soaring jet fuel prices, driven by the war involving Iran, threaten to erode airline profitability even as travel demand remains resilient. The Chicago-based carrier said it expects adjusted earnings of $7 to $11 per share for the year, down from its prior forecast of $12 to $14, issued in January before the U.S. and Israel launched attacks on Iran.
For the second quarter, United forecast adjusted earnings of $1 to $2 per share, below Wall Street's $2.08 estimate. The airline expects fuel prices to average $4.30 per gallon, sharply higher than earlier assumptions. United said it is trimming planned flying to blunt the impact of higher fuel costs. Capacity in the second half of the year is expected to be flat to up 2%, compared with 3.4% growth in the first quarter.
The airline said it expects revenue to offset 40% to 50% of fuel increases in the second quarter, rising to as much as 100% by year-end through higher fares and fees. U.S. jet fuel prices, while down from early April peaks, remain far above pre-war levels, according to Platts.
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Despite the cost pressures, United posted a strong first quarter. Revenue jumped more than 10% to $14.61 billion, beating expectations. Net income rose 80% year over year to $699 million, while adjusted earnings of $1.19 per share topped forecasts. Domestic unit revenue climbed nearly 8%, signaling solid pricing power.
United's warning echoes pressure across the global airline sector. Europe's Lufthansa has cautioned that fuel volatility linked to Middle East tensions could weigh on margins in 2026, even as premium demand remains strong. Like U.S. carriers, Lufthansa has signaled tighter capacity management and fare increases to cope with higher energy costs.
Alaska Airlines on Monday also withdrew its full-year outlook, citing extreme fuel volatility. CEO Ben Minicucci said the carrier has raised fares by about $25 and is proactively cutting capacity. Alaska reported a first-quarter adjusted loss but said premium and international demand remain strong.
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