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    UAL
    Earnings call· Sep 2025(Q3 FY25)

    United Airlines Holdings, Inc. UAL

    Oct 16, 2025 Source

    Executive summary

    United Airlines Holdings, Inc. Q3 FY25 — Strong Earnings Growth and Brand Loyalty

    United Airlines demonstrated resilience in Q3 FY25, exceeding earnings expectations and achieving strong operational performance despite macro volatility and industry-wide supply/demand imbalances. The company's strategy of investing in customer experience and fostering brand loyalty is driving earnings growth and positioning it for long-term double-digit margins. Management is focused on optimizing capacity and leveraging technology for cost efficiencies, while also planning for significant loyalty program expansion.

    Highlights

    5

    • Delivered Q3 EPS of $2.78, above guidance range of $2.25-$2.75 and street expectations of $2.68.

    • Achieved industry-leading CASM-ex performance, down 0.9% in Q3.

    • Loyalty revenues up over 9% YoY, with Amex remuneration up 15% YoY.

    • Achieved the lowest rate of cancellations for any Q3 in company history.

    • S&P upgraded credit rating to BB+ from BB, the highest in over 2 decades.

    Concerns

    4

    • Consolidated TRASM was down 4.3% in Q3, with domestic down 3.3% and international down 7.1%.

    • Supply/demand imbalance impacted Q3 profits, particularly in domestic flying.

    • Latin America results were disappointing, with RASM performance not warranting capacity growth.

    • Q3 RASM trailed Q2 and Q4 in 2024 and is expected to widen in 2025, indicating an industry-wide issue.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full Year 2025 Earnings Growth
    Grow earnings
    high materiality
    High
    Annual Margin Expansion
    at least 1 point or more of margin each year
    high materiality
    High
    Long-term Pretax Margins
    mid-teens margins
    high materiality
    High
    2026 Pilot Hiring
    over 2,000 pilots
    medium materiality
    High
    2026 Flight Attendant Hiring
    over 3,200 new flight attendants
    medium materiality
    High
    Newark Operations Cap
    capped through October 2026 at 72 operations per hour
    medium materiality
    High
    Starlink Fleet-wide Rollout
    expand across the remainder of our fleet by 2027
    high materiality
    High
    Q4 Consolidated RASM
    meaningfully improve in Q4 year-over-year
    high materiality
    High
    Q4 International RASM vs Domestic
    International RASMs in Q4 will outperform domestic
    medium materiality
    High
    Q4 Revenue and Absolute RASM
    Q4 will have United's best revenue quarter ever, but also have the highest absolute RASM of any quarter of 2025
    high materiality
    High
    Q3 2026 Atlantic Capacity
    flat to negative in Q3 2026
    medium materiality
    High
    2026 Customer Product Investments
    another $1 billion
    medium materiality
    High
    2026 Management Headcount Reduction
    shrink another 4%
    medium materiality
    High
    Annual CASM-ex Run Rate
    run up around 2% to 3% annually
    high materiality
    High
    Q4 FY25 EPS
    $3 to $3.50
    high materiality
    High
    Full Year 2025 EPS
    towards the better half of full year 2025 guidance range of $9 to $11
    high materiality
    High
    Long-term Pretax Margins
    double-digit pretax margins
    high materiality
    High
    Full Year 2025 Free Cash Flow
    over $3 billion
    high materiality
    High
    FCF Conversion Rate (mid-term)
    remain in the 50% range
    medium materiality
    High
    FCF Conversion Rate (long-term)
    accelerate closer to around 75%
    high materiality
    High
    Net Leverage Target
    below 2x
    high materiality
    High
    Flight Attendant Contract Ratification
    ratified deal
    high materiality
    High
    Multi-year CASM-ex Growth
    2% to 3%
    high materiality
    High

    Operational metrics

    26
    Total revenues
    $15.2 billionup 2.6%
    Q3

    On a 7.2% increase in capacity.

    Capacity (ASMs)
    7.2%increase
    Q3

    System capacity growth YoY.

    Consolidated TRASM
    down 4.3%YoY
    Q3

    Total Revenue per Available Seat Mile.

    Domestic TRASM
    down 3.3%YoY
    Q3

    On 6.6% more capacity.

    International TRASM
    down 7.1%YoY
    Q3

    Global long-haul demand spreading earlier and later in the year.

    Premium revenues
    6%year-over-year
    Q3

    Premium cabins outperformed main cabin.

    Premium cabin TRASM vs Main cabin TRASM
    5 pointsoutperformed
    Q3

    Premium cabins outperformed the main cabin.

    MileagePlus loyalty revenues
    over 9%up
    Q3

    Another strong quarter for MileagePlus.

    Amex remuneration
    15%year-over-year
    Q3

    Expected to end the year up over 12%.

    Amex remuneration
    over 12%up
    FY25

    Expected for the full year.

    Customer NPS score
    nearly 7%up versus summer 2024
    summer

    Reflects dedication of United team and improved customer experience.

    CASM-ex
    negative 0.9%
    Q3

    Expected to be industry-leading, benefiting from maintenance and labor contract timing.

    CASM-ex benefit from maintenance shift
    approximately 1 point
    Q3

    Expense moving to the fourth quarter.

    CASM-ex benefit from labor contract timing
    approximately 1 point
    Q3

    From the timing of certain labor contracts.

    Earnings per share
    $2.78above guidance range of $2.25-$2.75
    Q3

    Above top end of guidance range and Wall Street expectations of $2.68.

    Pretax margin
    8%
    Q3

    Would have been 1 point higher absent disruptions earlier this year at Newark.

    Management headcount
    4%lower than last year
    current

    Efficiency work continues.

    Aircraft buyback
    377 aircraft
    Q3 and early Oct

    Bought back off expensive COVID air leases, accelerating deleveraging.

    Average cost of debt
    less than 5%
    current

    After eliminating all expensive financing.

    Fixed coupons
    no fixed coupons over 6%
    current

    All expensive financing eliminated from the balance sheet.

    Average floating margin
    1.9%
    current

    Current average floating margin.

    Signature interior conversion
    64%
    current

    Investment of over $1.6 billion.

    Jets with seatback screens
    765 jets with more than 146,000 seatback screens
    current

    Part of signature interior conversion.

    Domestic gauge increase
    almost 20%
    since 2019

    Proven formula for margin growth.

    Food spend increase
    25%
    this year

    Part of customer product investments.

    Club investments
    doubled
    2025

    Expected to more than double in 2026 as demand grows.

    Industry KPIs

    7
    MetricValueDetails
    Casm exnegative 0.9%%
    Capacity7.2%%
    Fleet mro64%%
    Unit revenuedown 4.3%%
    Loyalty co brandover 9%%
    Demand indicatorsnearly 7%%
    Premium diverse revenue mix6%%

    Product announcements

    2
    ProductTypeDetails
    Starlink Wi-Fi on Boeing 737-800launch
    Starlink Wi-Fi Fleet-wide Rolloutroadmap

    Capital programs

    3
    Customer product enhancementsunderwayover $1 billion
    Period spend: another $1 billion
    Start: Last few years

    Benefit: Improved aircraft, clubs, food, Wi-Fi, enhanced customer experience

    Annual investment to win brand loyal customers and differentiate United Airlines. Expected to spend another $1 billion next year.

    Signature interior conversionunderwayover $1.6 billion

    Benefit: 765 jets with more than 146,000 seatback screens, premium airline definition

    Conversion is now at 64% completion, defining a premium airline in the U.S.

    Starlink Wi-Fi rolloutunderway$1 billion

    Benefit: Best-in-class connectivity for customers, game-changing in-flight experience

    Investment to provide fastest, most reliable Wi-Fi across the fleet by 2027.

    Risks & headwinds

    5
    Macro volatilityFirst 9 months of FY25

    Economic downturn for airlines in the first 9 months of the year

    Mitigation: United's brand loyal strategy proved resilient, growing earnings despite issues.

    Newark disruptionsQ3 FY25

    1 point impact on pretax margin

    Mitigation: FAA cap on flights through October 2026 at 72 operations per hour; investments in technology and ATC staffing.

    Supply/demand imbalanceQ3 FY25

    Impacted United's profits

    Mitigation: Industry flying expected to be scaled back; United making refinements to network and commercial strategies for Q3 2026.

    Latin America overcapacityApproximately another 2 quarters

    Elevated year-over-year capacity in the region

    Mitigation: Removing non-core, non-Houston flying that underperformed; maintaining core Houston-Latin America capacity.

    Government shutdownOngoing

    Risk to the U.S. economy grows

    Mitigation: Q4 EPS guidance calibrated with shutdown in mind; hope for political resolution.

    What to watch in Q4 FY25

    5

    Q4 FY25 EPS

    Q4 FY25
    CurrentQ3 EPS $2.78
    Target$3.00-$3.50

    Why it matters

    Verifies short-term earnings momentum and resilience against macro headwinds🌐.

    Looking to the fourth quarter. The momentum in the revenue environment, Andrew described continues, and we expect fourth quarter EPS to be $3 to $3.50

    Q&A highlights

    7

    What is the view on main cabin margins if there's a step function change in main cabin supply? Will it narrow the gap with premium cabin margins, or will a gap always exist?

    Scott Kirby explained that the industry is transforming from a commodity to a brand-loyal model. Brand-loyal customers (the majority) prioritize schedule, then product/tech/service. Commodity flying (e.g., ULCCs) currently loses money but will become profitable (low margin) as supply adjusts. United's revenue from brand-loyal customers is resilient and higher margin, while commodity seats will remain lower margin.

    “I think that portion of the business currently loses money for everyone. For the ultra-low-cost carriers, they're 100% commoditized, and you can see how much it loses, but it really loses money across the board.”

    asked by Catherine O'Brien · answered by Scott Kirby

    2 min read6 chapters

    Detailed Narrative

    01

    Brand Loyal Strategy and Decommoditization

    Scott Kirby emphasized that air travel is not a commodity, highlighting United's strategy of winning brand-loyal customers through over $1 billion in annual customer product enhancements. This investment spans all cabins, offering superior value through features like the best app, on-time performance, seatback screens, and a rewarding loyalty program. This approach is seen as a structural, permanent, and irreversible change, giving United a generational lead.

    02

    Operational Resilience and Customer Experience

    Despite record volumes (over 1 billion ASMs, 48 million customers) and significant weather/ATC disruptions in Q3, United achieved its lowest Q3 cancellation rate ever. Investments in technology like ConnectionSaver preserved travel plans for over 290,000 customers, contributing to a nearly 7% increase in customer NPS score year-over-year. The Starlink Wi-Fi rollout, with the first 737-800 certified, is expected to be a "game-changer" for in-flight connectivity by 2027.

    03

    Cost Management and Efficiency

    United is focusing on driving real cost efficiencies through technology, such as modernizing maintenance with iPads and using the ORCA tool for IROPs recovery, which helps offset higher costs from customer investments. Management headcount is 4% lower than last year and is planned to shrink another 4% in 2026, reflecting a new culture of efficiency. The company expects its core CASM-ex to grow 1-2% annually, with an additional 1% pressure from customer investments, leading to an overall 2-3% annual CASM-ex run rate.

    04

    Loyalty Program and Premiumization

    The MileagePlus program had a strong quarter with loyalty revenues up over 9% and Amex remuneration up 15% YoY. Management believes there is potential to double the loyalty program's EBITDA by the end of the decade. United's premium cabins continue to outperform the main cabin, with premium revenues up 6% YoY. The company is actively adjusting its network and commercial strategies, including for Q3 2026, to optimize margins by reducing peaked summer capacity and redeye flights.

    05

    Fleet Modernization and Gauge Growth

    United's signature interior conversion is now at 64%, representing an investment of over $1.6 billion, with 765 jets equipped with more than 146,000 seatback screens. The company has increased domestic gauge by almost 20% since 2019 and expects further acceleration in 2027 with the A321 fleet, which will drive cost convergence and margin growth as smaller, lower-margin aircraft are retired by 2030.

    06

    Balance Sheet and Capital Allocation

    United is progressing towards an investment-grade balance sheet, having bought back 377 aircraft off expensive COVID air leases and eliminated all fixed coupons over 6%. S&P upgraded its rating to BB+ from BB. The company expects to generate over $3 billion in free cash flow this year, with conversion rates trending well above 50% and accelerating to around 75% by the end of the decade. Net leverage target is below 2x.

    AI-generated summary of the company’s earnings call. Not investment advice.