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United Airlines Holdings, Inc. (UAL)·Q2 2025 Earnings Summary

Executive Summary

  • United delivered Q2 adjusted EPS of $3.87, beating S&P Global consensus ($3.81)* despite a Newark-driven headwind; GAAP diluted EPS was $2.97 and revenue was $15.24B, up 1.7% YoY but slightly below consensus ($15.34B)*. Management highlighted a six-point sequential demand inflection beginning in early July and double‑digit acceleration in business demand.
  • Guidance: Q3 adjusted EPS guided to $2.25–$2.75 and FY25 adjusted EPS to $9.00–$11.00; FY25 adjusted capex expected to be < $6.5B. Newark’s estimated adjusted pre‑tax margin impact is ~1.2 pts in Q2, ~0.9 pts in Q3, and ~0.0 pts in Q4, indicating normalization into year‑end.
  • Commercial mix resilient: premium cabin revenue rose 5.6% YoY; loyalty revenue +8.7%; cargo +3.8%. TRASM fell 4.0% on 5.9% capacity growth, but management sees industry capacity cuts in late summer aiding pricing into Q4.
  • Balance sheet: repaid remaining 2020 MileagePlus debt ($1.52B) with cash on hand, leaving the loyalty program unencumbered; ending liquidity $18.6B; TTM net leverage 2.0x; FCF $1.13B in Q2.
  • Potential stock catalysts: evidence of durable demand inflection, visible industry capacity reductions into the shoulder season, and reaffirmed path to double‑digit pre‑tax margins longer‑term.

What Went Well and What Went Wrong

  • What Went Well

    • Premium and loyalty strength offset yield pressure: premium cabin revenue +5.6% YoY; loyalty revenue +8.7%; cargo +3.8%.
    • Cost control and execution: CASM‑ex +2.2% YoY on higher capacity; operations delivered best post‑pandemic Q2 on-time departures and lowest seat cancellation rates since 2021.
    • Demand/supply setup improved: “six point positive swing in sales” to start July and double‑digit business revenue uptick; published industry schedules show capacity cuts in Aug/Sep. “We believe this will be uniquely beneficial to brand‑loyal airlines.”
    • CEO quote: “United saw a positive shift in demand beginning in early July… anticipates another inflection in industry supply in mid‑August.”

  • What Went Wrong

    • Revenue per seat pressure: TRASM down 4.0% YoY; PRASM down 4.5%; consolidated load factor down 110 bps YoY.
    • Newark disruption: FAA tech outages/runway works/ATC constraints caused book‑away; estimated ~1.2 pt hit to Q2 adjusted pre‑tax margin and ~0.9 pt expected in Q3.
    • GAAP results impacted by special charges: $447M operating special charges including $561M flight attendant agreement ratification bonus; GAAP EPS $2.97 vs adjusted $3.87.

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenues ($B)$14.99 $13.21 $15.24
Diluted EPS (GAAP)$3.96 $1.16 $2.97
Adjusted Diluted EPS (Non‑GAAP)$4.14 $0.91 $3.87
Operating Margin (GAAP)12.9% 4.6% 8.7%
Adjusted Operating Margin13.1% 3.8% 11.6%
Pre‑tax Margin (GAAP)11.6% 3.6% 8.2%
Adjusted Pre‑tax Margin12.1% 3.0% 11.0%
TRASM (cents)18.81 17.58 18.06
CASM‑ex (cents)12.10 13.17 12.36
Avg Fuel Price/gal$2.76 $2.53 $2.34
Load Factor (Consolidated)84.2% 79.2% 83.1%
ASMs (mm)79,678 75,155 84,347

Q2 2025 actuals vs S&P Global consensus:

  • EPS (adjusted): $3.87 vs $3.81* — beat (EPS estimate from S&P Global)*
  • Revenue: $15.24B vs $15.34B* — slight miss (Revenue estimate from S&P Global)*
Q2 2025 Actual vs ConsensusEPS ($)Revenue ($B)
Actual$3.87 $15.24
Consensus (S&P Global)*$3.81*$15.34*

Segment revenue and unit metrics (Q2 2025):

SegmentPassenger Revenue ($B)YoY Passenger Rev %PRASM YoYASMs YoYASMs (mm)
Domestic$7.905(0.7%)(7.0%)6.7%45,100
Europe$2.9042.4%(2.2%)4.6%17,311
Middle East/India/Africa$0.2694.3%(3.5%)8.1%1,997
Atlantic (total)$3.1732.5%(2.3%)4.9%19,308
Pacific$1.5078.7%2.9%5.7%11,036
Latin America$1.2511.4%(2.3%)3.8%8,903
International (total)$5.9313.8%(1.0%)4.9%39,247
Consolidated$13.8361.1%(4.5%)5.9%84,347

Selected KPIs and balance sheet (Q2 2025):

KPIQ2 2024Q1 2025Q2 2025
Operating Cash Flow ($B)$2.88 $3.71 $2.22
Free Cash Flow ($B, Non‑GAAP)$1.84 $2.31 $1.13
Ending Liquidity ($B)$17.4 (FY24) $18.3 $18.6
Total Debt + Finance & Other Liabilities ($B)$29.26 $27.66 $27.08
Net Leverage (TTM)2.4x (FY24) 2.0x 2.0x
Share Repurchases ($B)—$0.35 YTD through Q1 $0.24 in Q2; ~$0.6 YTD

Non‑GAAP adjustments in Q2 2025:

  • Operating special charges $447M, driven primarily by $561M flight attendant ratification bonus, partially offset by $151M gains on aircraft sale‑leasebacks; net after‑tax special items $293M.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSQ3 2025—$2.25 – $2.75New range provided
Adjusted Diluted EPSFY 2025— (now “updated”)$9.00 – $11.00Updated range
Adjusted Total CapexFY 2025—< $6.5BProvided; implies lower spend if delays persist
Newark EWR Impact (Adj Pre‑tax margin pts)Q2 2025—~1.2 pts headwindDisclosed
Newark EWR Impact (Adj Pre‑tax margin pts)Q3 2025—~0.9 pts headwindImproving
Newark EWR Impact (Adj Pre‑tax margin pts)Q4 2025—~0.0 ptsNormalized
Profit Sharing AccrualQ3 2025—$175M–$225MNew disclosure

Notes:

  • Management emphasized industry capacity reductions beginning mid‑August and a demand inflection beginning early July underpinning H2 setup.
  • No dividends; company is repurchasing shares and prioritizing deleveraging.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4‑24 and Q1‑25)Current Period (Q2‑25)Trend
Supply/DemandQ4‑24: “robust demand” and path to double‑digit pre‑tax margins . Q1‑25: remove 4 pts of scheduled domestic capacity starting Q3’25 to match demand .Demand inflected upward (6‑pt sales swing in July; double‑digit business demand); industry capacity cuts in Aug/Sep likely support yields into Q4. Improving demand; tightening supply
Newark/EWR Ops—FAA outages/runway works drove Q2 book‑away (~1.2 pt margin hit); FAA caps implemented; operational recovery and share normalization by July; minimal impact by Q4. Normalizing; structural fix (caps) supportive
Premium StrategyQ4‑24: premium revenue +10% YoY; strong premium cadence . Q1‑25: premium +9.2% YoY; plan to up‑gauge .Q2: premium revenue +5.6% YoY; unveiling Polaris Studio suites; expand Premium Plus cabin sizing; premium mix to rise as MAX/A321neo replace A319/320. Continued premium expansion
Loyalty/MileagePlusQ4‑24: loyalty revenues +12% YoY .Prepaid remaining MileagePlus notes; program now unencumbered; plan for segment disclosure next year to highlight resiliency. Balance sheet optionality improving
Technology (Starlink/Media)Q1‑25: Starlink certification; rollout across Express .Starlink launched on some regionals; interference issue resolved; Connected Media targeting revenue growth (doubling 2025 vs 2024), with greater unlock as Starlink + seatback screens scale. Product/ancillary monetization build
Macro/Geopolitics—Less uncertainty (tax, Middle East tensions, tariffs path) cited as driver of demand inflection; resume Tel Aviv from EWR on Jul 21. Easing uncertainty aiding bookings
Fleet/Deliveries—MAX deliveries slightly ahead; 787 deliveries not yet to plan; A321neo delays; engine supply remains constrained; gauge up ~2% in 2026. Narrow‑body tailwind; wide‑body watch

Management Commentary

  • CEO Scott Kirby (prepared remarks): “United saw a positive shift in demand beginning in early July, and, like 2024, anticipates another inflection in industry supply in mid‑August.”
  • CCO Andrew Nocella: “This step up is a six point positive swing in sales to date in July versus the second quarter, but even more importantly a double digit swing in higher yielding business revenues… Domestic ticket sales are now… showing positive year over year yields for the first time since February.”
  • COO Toby Enqvist: “We have already seen a dramatic turnaround in Newark. Bookings have largely recovered and we don’t expect any impact in Q4… [FAA] implemented… hourly flight caps to prevent the airport schedule from exceeding its capacity.”
  • CFO Mike Leskinen: “We delivered earnings per share of $3.87… ahead of Wall Street expectations of $3.81… On July 7, we paid down the remaining $1.5 billion balance of our MileagePlus bonds two years early… [We] target net leverage below two times and continue to work towards investment grade.”

Q&A Highlights

  • Costs/Distribution: CASM‑ex trend expected similar in Q3/Q4; distribution expense declining structurally as direct channel grows.
  • Guidance philosophy: Full‑year $9–$11 EPS embeds conservative “one act of God”; recent bookings suggest the range could prove conservative if trends persist.
  • Premium segmentation: Larger Premium Plus cabins seen as a high‑return opportunity; Polaris Studio suites to roll out on 787‑9.
  • Fleet cadence: MAX deliveries tracking; 787 schedules lag; engine constraints linger; gauge up ~2% in 2026 with acceleration in 2027; contingency to take MAX‑9s if MAX‑10 slips to 2027.
  • Newark capacity controls: FAA caps through October likely move higher over time but remain capacity‑aligned, enabling sustainable operations.
  • Connected Media: Building tech stack and client roster; targeting to double media revenue in 2025 vs 2024, with bigger unlock in late‑2026/2027 as platform matures.

Estimates Context

  • Q2 2025 vs consensus (S&P Global): Adjusted EPS beat ($3.87 vs $3.81*), revenue slight miss ($15.24B vs $15.34B*). Management stated results were ahead of Wall Street expectations and would have been above the high end of guidance excluding Newark impact. (Estimates from S&P Global)*
  • Implications: Street models may raise H2 revenue/yield assumptions on early‑July demand acceleration and scheduled capacity reductions; EPS ranges suggest modest Q3 but stronger Q4 seasonality if demand holds.

Key Takeaways for Investors

  • Adjusted EPS beat despite Newark headwind underscores revenue diversity and cost control; special charges masked GAAP profitability, but non‑GAAP trends remain solid.
  • Early‑July bookings inflection and visible industry capacity cuts are constructive into the shoulder season; management explicitly connects setup to last year’s favorable Q4 pattern.
  • Premium strategy remains a core differentiator (Premium Plus expansion, Polaris Studio) as United leans into higher‑yielding mix with fleet up‑gauging.
  • Balance sheet improving: MileagePlus unencumbered, net leverage 2.0x, strong liquidity, positive FCF provide optionality for buybacks while pursuing investment grade.
  • Watch near‑term risks: TRASM/PRASM still under pressure, CASM‑ex modestly higher YoY, and residual Q3 Newark impact (~0.9 pt) before clean exit in Q4.
  • Tactical: The narrative pivot (demand inflection + capacity cuts) is a potential catalyst; confirmation in monthly bookings and Q3 print/guidance should drive estimate revisions.
  • Structural: Management reiterates path to stable double‑digit pre‑tax margins long‑term, supported by brand loyalty, diversified revenues, and improved network discipline.

Values marked with * are from S&P Global consensus via GetEstimates and may differ from other sources. (Values retrieved from S&P Global) [GetEstimates Q2 2025 EPS/Revenue]*