By Rajesh Kumar Singh
CHICAGO, Oct 20 (Reuters) - United Airlines on Tuesday forecast fourth-quarter profit well below Wall Street estimates despite expectations for record revenue, as soaring fuel costs eat into gains from strong travel demand and higher ticket prices.
Airline fares are rising sharply, but fuel costs are climbing even faster, squeezing profits industrywide. With the Iran war threatening to keep fuel prices elevated into 2027, analysts say carriers may have to raise fares further and
risk losing customers, or limit flight growth to support ticket prices and protect profits.
Earlier this month, United's rival Delta Air Lines cut its annual earnings forecast by nearly a quarter after projecting a $6 billion increase in its fuel bill from last year.
Delta CEO Ed Bastian warned that airlines may need to further restrain flight growth next year to sustain higher fares and protect profitability.
United expects to pay $4.80 a gallon for jet fuel in the fourth quarter, about 45 cents more than the market consensus assumption. The difference translates into roughly $1 per share in earnings, the company said.
The Chicago-based carrier expects adjusted earnings of 50 cents to $1.50 per share for the December quarter. LSEG data shows an average analyst estimate of $1.76. The $1 midpoint of the carrier's outlook is 43% below expectations.
HIGHER FARES, THINNER MARGINS
United's third-quarter results show how difficult it has become for airlines to turn higher ticket prices into stronger profits.
Revenue jumped 17.4% to a record $17.9 billion, but fuel expenses surged nearly 62% to $4.84 billion, even as flying capacity increased just 1.3%.
The additional fuel spending of $1.85 billion was equivalent to nearly 70% of United's $2.65 billion increase in quarterly revenue.
The squeeze comes despite little evidence of a significant slowdown in travel demand.
United carried a record 49.5 million passengers in the third quarter, up 2.4% from a year earlier. Contracted business revenue jumped 26%, while premium revenue increased 17% and basic economy revenue rose 16%.
The carrier's revenue per unit of capacity surged nearly 16%, reflecting its ability to generate more money from flights without significantly increasing the number of seats available.
Passengers are already paying considerably more to fly. US air fares rose an average of nearly 23% year-on-year in the seven months through September, according to Labor Department data.
The industry's fuel bill, however, has been climbing even faster. US airlines spent $42.9 billion on fuel in the first eight months of 2026, up $13.2 billion from a year earlier despite slightly lower consumption, government data showed.
Analysts at Deutsche Bank have warned that further fare increases could weaken demand, forcing airlines to slow capacity growth to make higher ticket prices stick.
The pressure is spreading beyond the United States. Ryanair CEO Michael O'Leary warned on Tuesday that European airfares could rise as much as 20% next year as higher fuel costs and reduced airline capacity squeeze the industry.
United will discuss its financial results in a call with analysts and investors on Wednesday morning.
(Reporting by Rajesh Kumar Singh; Editing by David Gregorio)
