United Airlines Expects Elevated Aviation Fuel Prices to Persist Through 2027

en.Wedoany.com Reported - On October 21, United Airlines CEO Scott Kirby said on the third-quarter earnings call that aviation fuel prices will remain elevated through 2027, and the company faces pressure in achieving its goal of double-digit pre-tax margin next year. United expects fourth-quarter fuel purchase prices to be approximately $4.80 per gallon; in the third quarter, revenue growth offset only 72% of the incremental fuel costs, and the cost recovery ratio in the fourth quarter is expected to be similar to the third quarter.

United had previously planned to fully offset rising fuel costs through higher ticket revenue, but the latest operating expectations show that fare adjustments have not yet kept pace with cost changes. Chief Financial Officer Mike Leskinen said the company will still face a situation in the fourth quarter where fuel costs cannot be fully passed through. United plans to cover all additional fuel expenses through revenue growth in 2027.

Rising fuel costs have affected the company's fourth-quarter earnings outlook. United announced adjusted earnings per share guidance of $0.50 to $1.50 for the fourth quarter of 2026, below the market's previous expectation of approximately $1.64. The company's third-quarter operating revenue was approximately $17.9 billion, up 17.4% year over year, but fuel expenses rose 62% year over year, and adjusted earnings per share were $2.54.

Regarding flight capacity arrangements, Kirby said the aviation industry's capacity growth is trending faster in 2027. United will review seat supply route by route and flight by flight, and flexibly adjust its 2027 flight plan based on market demand and fare levels. The company's achievement of its double-digit pre-tax margin target depends on conditions such as fuel costs declining, industry capacity growth slowing, or airlines continuing to prioritize maintaining higher fares.

United also plans to increase unit revenue through investments in onboard products and technology services, including advancing satellite internet and cabin service upgrades. The company expects that by the end of 2026, approximately 61% of flights will offer Starlink internet service, with fleet-wide deployment completed in 2027.