United Airlines Warns Q1 Earnings Will Take Hit From Surging Fuel Costs

United Airlines Warns Q1 Earnings Will Take Hit From Surging Fuel Costs

United Airlines Chief Executive Scott Kirby warned Thursday that surging jet fuel prices will deliver a meaningful hit to the carrier's first-quarter earnings, with potential spillover into the second quarter. Jet fuel costs have spiked 58% in one week to reach $3.95 per gallon, driven by escalating Middle East tensions and supply disruptions. United shares reflected investor concern, plunging approximately 10% following news of the Iran conflict escalation, with stock trading near $91.27 in Friday premarket trading.

Analysts have begun revising their forecasts to account for the higher cost environment. Fuel typically represents about one-third of airline expenses, but can exceed 40% during disruptions. TD Cowen cut its first-quarter adjusted earnings per share forecast to between 5 and 22 cents, down from previous guidance. Most U.S. carriers remain unhedged against fuel price volatility, exposing them directly to crack spreads that remain elevated in Singapore and New York markets.

The broader aviation industry faces similar pressures, with more than 20,000 global flight cancellations attributed to Middle East crisis disruptions. While demand remains resilient with booked revenue growing 20% year-over-year, carriers must quickly adjust fares to recapture costs. United expects higher pricing to help mitigate the impact, though analysts caution that material forecast cuts are likely if conflict-induced inflation persists into 2026.