United Airlines Earnings: A Robust Quarter With the Economy Returning to Cruising Altitude

Key Morningstar Metrics for United Airlines

• Fair Value Estimate: $43
• Morningstar Rating: ★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of United Airlines’ Earnings

United UAL reported a robust second quarter, delivering $1.3 billion operating profit on $15.2 billion revenue as the summer travel season warmed up and economic uncertainty waned. Management forecasts a similar 2025 to 2024 in terms of capacity, but with slightly weaker demand so far in the year.

Why it matters: United is doing well, having established similar premium segmentation and loyalty offerings as Delta’s, and as long as their premium customers remain loyal and not too frugal, we think these airlines can continue to prosper, sharing the bulk of industry profits.

• While constraints on the supply of jets and traffic to the busiest airports may persist for more than the coming year, aided by low-cost carriers exiting unprofitable routes, we maintain the view that decreasing demand will deflate industry profits.

The bottom line: We haven’t altered our full-year forecast, but raised our fair value estimate for the no-moat airline’s shares to $43 from $42, due to the time value of money.

• Our valuation represents a 4.45 multiple of our 2025 enterprise value/2026 EBITDAR estimates, which is higher than the industry multiple, but not as heady as recent market valuations of United’s stock.
• Investors’ enthusiasm for United’s shares have led them to trade meaningfully higher than our fair value estimate for most of the past 12 months. We caution that small changes to the company’s operating performance can have a material effect on profits and potentially stock performance.