United Airlines slashes profit forecast as price of jet fuel surges

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United Airlines has lowered its profit forecast for 2026 despite recording healthy first-quarter sales growth as elevated jet fuel prices triggered by the Iran war start to bite in the US aviation industry.

The Chicago-based carrier achieved its highest first-quarter revenue of $14.6bn, buoyed by a 14 per cent rise in demand for premium and business travel. Revenue was 10.6 per cent higher than the same period last year.

But it pared back its full-year earnings per share forecast from $12-$14 to $7-$11, attributing the lower range to the extra billions of dollars it expects to spend on fuel-related costs since the US and Israel attacked Iran at the end of February.

US carriers including United have pushed up ticket prices and increased or imposed new fees on passengers because of the sharp rise in jet fuel prices stemming from the conflict. Despite a fragile ceasefire between the US and Iran, the Strait of Hormuz, through which about a fifth of the world’s oil and natural gas transits, remains largely closed.

United on Tuesday said it expects to cut its capacity by 5 per cent compared with its original plan for 2026. Chief executive Scott Kirby said the airline was making “tactical adjustments to higher fuel prices while maintaining our long-term focus”.

He added that “moments of uncertainty may also create opportunity for United”.

Analysts say the airline, along with fellow leading carrier Delta, is best placed to withstand the impact of higher jet fuel costs because of their modest leverage ratios and popularity among premium and business travellers less sensitive to ticket price rises.

Delta earlier this month said it expected to make cuts to its schedules “across the board” as it tries to recoup about 40 per cent to 50 per cent of its higher fuel costs.

The lower profit forecast from United comes after the White House confirmed last week that the airline had raised with senior US officials the possibility of a merger with rival American Airlines. Such a proposal has been met with scepticism by analysts.

American Airlines responded by arguing a “combination with United would be negative for competition and for consumers, and therefore inconsistent with our understanding of the [Trump] administration’s philosophy toward the industry and principles of antitrust law”.

President Donald Trump on Tuesday expressed his opposition to the potential merger saying American Airlines was “doing fine” and United was “doing very well”.

“I don’t like having them merge,” he told CNBC.

Raymond James analyst Savanthi Syth said that while a United-American merger could generate almost $8bn in synergies, a combined airline would also dominate several key US aviation hubs including in Chicago and Washington, generating antitrust concerns.

“The Trump administration has returned their antitrust lens towards the consumer welfare standard,” she said. “Alternatively, if this merger was viewed through an international lens with competition from global competitors, it could have a better argument for approval.”