Introduction
United Airlines (Nasdaq:UAL) faces a critical test of its recovery narrative as it prepares to report fiscal third-quarter 2025 results after today’s market close. With the stock rallying toward $100 amid optimism about corporate travel and domestic yields, tonight’s earnings will determine whether management’s ambitious full-year EPS target of $9-$11 remains intact. Investors will scrutinize whether recent improvements in bookings and business demand have translated into sustainable revenue momentum against a backdrop of normalized capacity and fuel trends.
Key Points
- Q3 consensus expects 19.6% EPS decline year-over-year but 3% revenue growth, with management targeting $9-$11 full-year EPS
- Key investor focus areas include business travel recovery, Newark hub margin normalization, and premium cabin expansion initiatives
- United maintains strong liquidity position with $18.6 billion and net leverage of approximately 2x, supporting strategic initiatives
Earnings Context and Market Expectations
United Airlines enters tonight’s earnings report with Wall Street consensus expecting $2.68 in normalized EPS on $15.29 billion in revenue for Q3 FY2025. This represents a significant 19.6% year-over-year EPS decline compared to the $3.33 reported in Q3 FY2024, though revenue is projected to grow approximately 3%. The divergence between top-line growth and bottom-line pressure reflects the challenging operating environment airlines have faced throughout 2025, particularly in the first half.
The company’s recent earnings history reveals a pattern of consistent outperformance against consensus estimates. In Q1 FY2025, United delivered a remarkable 22.97% EPS surprise with actual EPS of $0.91 against expectations of $0.74. Q2 FY2025 saw a more modest but still positive 1.57% surprise with $3.87 actual EPS versus $3.81 consensus. This trend of beating expectations has fueled investor optimism, contributing to the stock’s recent rally toward the psychologically important $100 level.
Looking beyond the immediate quarter, Street forecasts for FY2026 project substantial growth with 7.4% revenue expansion to $63.31 billion and 23% EPS growth to $12.71. These projections align with management’s guidance for double-digit pre-tax margins over the longer term, making tonight’s results crucial for validating this optimistic outlook.
Critical Performance Metrics Under Scrutiny
The demand inflection in business travel represents perhaps the most closely watched metric for United Airlines. During the Q2 earnings call, CFO Mike Leskinen and CCO Andrew Nocella highlighted a 6-point improvement in bookings and double-digit growth in business demand entering Q3. Investors will be looking for confirmation that these positive trends translated into RASM stabilization and positive yield momentum, particularly in domestic markets where yields showed signs of turning a corner after a soft first half.
Newark hub margin recovery presents another critical test. Disruptions at the Newark hub cut Q2 margins by approximately 1 percentage point, but management has since declared the hub is “running better than ever.” Analysts will be gauging whether Q3 operations showed full normalization and improved throughput, which would provide confidence in the company’s ability to maintain margin durability amid ongoing operational challenges.
Cost discipline remains central to United’s financial strategy. The company delivered CASM-ex (cost per available seat mile excluding fuel) of +2.2% in Q2 and expects similar performance through year-end. With free cash flow guidance maintained above $2 billion, supported by strong liquidity of $18.6 billion and net leverage of approximately 2x, any deviation from these cost targets could significantly impact sentiment regarding the company’s 2026 margin objectives.
Strategic Initiatives and Future Growth Drivers
Premium mix expansion represents a key growth vector for United Airlines. Management plans to expand Premium Plus cabins and launch the Polaris Studio Suite later this year, initiatives designed to capture higher-margin revenue. Investors will be looking for evidence of premium RASM uplift and updates on gauge increases from MAX 9 and A321neo deliveries, which could enhance the company’s ability to capitalize on recovering premium travel demand.
Strategic initiatives including the Starlink rollout, Blue Sky JetBlue collaboration, and Connected Media advertising revenue will provide early indicators of ancillary revenue growth potential heading into 2026. These initiatives represent important diversification beyond core ticket revenue and could contribute meaningfully to the company’s overall revenue mix as they scale. The success of these programs will be critical for achieving the projected 23% EPS expansion in FY2026.
United’s emphasis on supply-side discipline across the industry, highlighted during the Q2 call, continues to be a foundational element of its strategy. As capacity and fuel trends normalize into 2026, maintaining this discipline while capitalizing on demand recovery will be essential for hitting management’s targeted $9-$11 full-year EPS range and sustaining the positive momentum that has driven the stock’s recent performance.
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