TLDR
- United Airlines reports Q2 earnings Wednesday; market expects 15.6% revenue growth year on year
- UBS reiterates Buy rating with a $153 price target, implying ~28% upside from current price of ~$120
- UBS forecasts Q2 EPS of $1.91, above consensus estimate of $1.86
- Delta reported Q2 revenue up 18.7%, with 20% corporate revenue growth — seen as a positive signal for UAL
- 13 analysts have revised UAL earnings estimates upward ahead of Wednesday’s report
United Airlines (UAL) is set to report its second quarter earnings on Wednesday afternoon, with analysts watching closely to see if the carrier can build on a strong start to the year. The stock is currently trading around $120, against an average analyst price target of $153.97.
United Airlines Holdings, Inc., UAL
UBS reiterated its Buy rating on UAL Monday, keeping its $153 price target in place. The bank forecasts Q2 EPS of $1.91, ahead of the consensus estimate of $1.86 and within the company’s own guidance range of $1.00 to $2.00.
Wall Street is expecting revenue to grow 15.6% year on year this quarter. That would be a meaningful step up from the 1.7% growth posted in the same period last year.
Last quarter, UAL reported revenues of $14.61 billion, up 10.6% year on year. The company beat on EPS but missed on EBITDA, and posted 63.39 billion revenue passenger miles, up 6.5%.
Analysts have largely held steady on their estimates over the past 30 days. However, United has missed Wall Street’s revenue estimates multiple times over the last two years, so the bar is set with some caution.
UBS noted that most market participants expect results to come in near the high end of guidance — but not above it. Buyside expectations on revenue per available seat mile and cost per available seat mile excluding fuel are broadly in line with UBS estimates.
The bank’s Q2 forecast assumes 3% available seat miles growth, 12.8% revenue per available seat mile, 7% cost per available seat mile excluding fuel, and jet fuel at $4.25 per gallon.
Delta Results Offer a Preview
Delta’s Q2 numbers, already out, give investors a useful read on the quarter. Delta reported revenue up 18.7%, topping estimates by 3.9%, with revenue per available seat mile of 12.4%.
Delta posted 20% growth in corporate revenue and a 17% jump in premium revenue. UBS flagged both as positive indicators for United given its similar business mix.
UBS also noted that United could show greater sequential acceleration in its Atlantic operations than Delta, which saw Atlantic unit revenues rise 7% — matching its Q1 pace.
Delta’s stock slipped 2.8% after its report despite the strong numbers, a reminder that a good quarter doesn’t always equal a good day for the stock.
What Else Is in the Mix
Beyond earnings, United recently announced a new seating configuration for its Airbus A321XLR fleet, adding shared table space in Economy Plus for international routes.
The Federal Aviation Administration also awarded Air Space Intelligence an $875 million contract to improve U.S. flight scheduling. The move is aimed at reducing congestion across the industry.
InvestingPro data shows 13 analysts have revised UAL earnings estimates upward ahead of Wednesday’s report, though the platform notes the stock appears overvalued relative to its Fair Value estimate.
United Airlines reports Q2 earnings Wednesday afternoon.
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