Rising Fuel Costs Force United Airlines to Cut 2026 Forecast

• Jet fuel prices spiked from $2.39 per gallon on Feb. 27 to a high of $4.78 on April 2 following attacks on Iran, forcing United to trim capacity growth in the second half of 2026 to flat-to-2% from 3.4% in Q1
• United expects to recover 40-50% of fuel cost increases through higher fares in Q2, rising to 85-100% recovery by year-end, with unit revenue up across all segments including 7.9% growth in domestic flights
• CEO Scott Kirby reportedly floated a potential merger with Alaska Airlines to the Trump administration, though President Trump publicly opposed the idea and American Airlines also rejected merger discussions

United Airlines Cuts 2026 Forecast Amid Surging Fuel Costs

Key Developments:

United Airlines slashed its 2026 full-year earnings forecast to $7-$11 per share, down from its January guidance of $11.50-$13.50 per share. The revision comes as jet fuel prices surged due to Middle East conflicts. Wall Street analysts had previously expected $9.58 per share.

Financial Performance:

Despite the reduced outlook, United's Q1 results exceeded expectations:

• Revenue: $14.61 billion (vs. $14.37 billion expected), up 10% year-over-year
• Net income: $699 million, up 80% from prior year
• Earnings per share: Beat analyst estimates
• Unit revenue: Increased across all segments, with domestic revenue rising 7.9% to $7.9 billion

Fuel Crisis Impact:

Jet fuel prices spiked from $2.39 per gallon on February 27 (before Iran attacks) to a peak of $4.78 on April 2, settling at $3.51 by Monday. United expects to recover only 40-50% of fuel cost increases through pricing in Q2, rising to 85-100% by year-end.

Operational Adjustments:

The airline is trimming capacity growth to manage costs. Second-half 2026 capacity is projected flat to up 2% year-over-year, down from 3.4% growth in Q1. Second-quarter earnings are forecast at $1-$2 per share.

Industry Context:

Alaska Airlines also withdrew its 2026 guidance due to fuel costs, implementing approximately $25 fare increases. Demand remains strong despite higher prices, with airlines benefiting from travelers willing to pay premiums for better seats and services.

Merger Speculation:

CEO Scott Kirby reportedly floated a potential Southwest Airlines merger, though President Trump opposed the idea, complicating consolidation ambitions.