10-K: United Airlines Reports Strong 2025 Revenue Amidst Rising Costs

United Airlines Holdings, Inc. reported increased operating revenue and net income for 2025, driven by capacity growth and strategic initiatives, despite a decline in operating income and ongoing labor negotiations.

Summary

• Operating revenue for 2025 increased by 3.5% to $59.07 billion, up from $57.06 billion in 2024.
• Net income for 2025 rose by 6.5% to $3.35 billion, compared to $3.15 billion in 2024.
• Diluted earnings per share (EPS) increased to $10.20 in 2025 from $9.45 in 2024.
• Operating income decreased by 7.5% to $4.71 billion in 2025 from $5.10 billion in 2024, primarily due to increased operating expenses.
• Capacity (Available Seat Miles ASMs) grew by 6.1% in 2025, and passenger count increased by 4.3% to 181.05 million.
• Fuel expense decreased by 3.1% in 2025 due to a lower average price per gallon ($2.44 in 2025 vs. $2.65 in 2024), despite increased consumption.
• Salaries and related costs increased by 5.8% to $17.65 billion, driven by a 5.5% increase in headcount, higher pay rates, and benefits.
• The company made significant progress on its 'United Next' plan, including expecting over 630 new aircraft by the end of 2034 and expanding its global network to new destinations.
• A Tentative Agreement with the Association of Flight Attendants (AFA) was rejected on July 29, 2025, and negotiations are ongoing.
• The company redeemed $1.52 billion of MileagePlus 6.5% senior secured notes due 2027 in July 2025, fully repaying all indebtedness secured by MileagePlus assets.
• A share repurchase program authorized for up to $1.5 billion saw $640 million in repurchases in 2025, with approximately $0.8 billion remaining as of February 5, 2026.
• The company is involved in an antitrust class action lawsuit alleging collusion on capacity and a dispute with Rolls-Royce regarding engine agreements and damages.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive report. While revenue and net income growth are strong, the decline in operating income due to rising costs and ongoing labor challenges present headwinds. Strategic initiatives and debt reduction are positive, but liquidity has decreased, and aircraft delivery delays persist.

Positives

• Operating revenue increased by 3.5% to $59.07 billion in 2025, demonstrating strong top-line growth.
• Net income grew by 6.5% to $3.35 billion in 2025, indicating improved profitability.
• Diluted EPS increased to $10.20 in 2025, reflecting enhanced shareholder value.
• Passenger revenue increased by 3.1% and other operating revenue (including MileagePlus and co-branded credit card spending) increased by 10.4%, diversifying revenue streams.
• Capacity (ASMs) increased by 6.1% and passenger numbers rose by 4.3%, indicating strong demand for air travel.
• Average fuel price per gallon decreased to $2.44 in 2025 from $2.65 in 2024, contributing to lower fuel expense.
• Significant progress was made on the 'United Next' strategic plan, including fleet modernization with over 530 new and retrofit aircraft featuring enhanced interiors and expanding the global network to new destinations.
• Launched 'Kinective Media SM', a new media network leveraging travel behaviors for personalized advertising, creating new revenue opportunities.
• Bringing Starlink's Wi-Fi service to regional and mainline aircraft, enhancing customer experience.
• Successfully redeemed $1.52 billion of MileagePlus senior secured notes, reducing debt and improving the capital structure.
• Active share repurchase program, with $640 million in repurchases in 2025, signaling confidence in company valuation and returning capital to shareholders.

Negatives

• Operating income decreased by 7.5% to $4.71 billion in 2025, primarily due to a larger increase in operating expenses compared to revenue growth.
• Total operating expenses increased by 4.6% to $54.36 billion in 2025.
• Salaries and related costs increased by 5.8% due to higher flight activity, a 5.5% increase in headcount, and higher pay rates/benefits.
• Landing fees and other rent increased by 12.0% due to rate increases at airports, terminal expansions, and higher landed weight volume.
• Aircraft maintenance materials and outside repairs costs increased by 7.5% due to higher volumes of engine overhauls and component part repairs, and increased material costs.
• Regional capacity purchase costs increased by 7.0% due to a 9% increase in regional flight activity and higher contractual rates.
• Cash and cash equivalents decreased from $8.77 billion in 2024 to $5.94 billion in 2025, and total unrestricted liquidity decreased from $14.5 billion to $12.2 billion.
• The Tentative Agreement with the Association of Flight Attendants (AFA) was rejected, indicating ongoing labor challenges and potential for further negotiation costs or disruptions.
• Aircraft delivery delays from Boeing and Airbus have caused the company to rework its fleet plan and may impact financial position and operations.
• The company has a significant amount of financial leverage from fixed obligations, with $31.0 billion in total debt and other financial liabilities as of December 31, 2025.
• Geopolitical conflicts and government shutdowns have negatively impacted demand, network availability, and operations, leading to schedule reductions and additional costs.

Risks

• Failure to successfully execute the 'United Next' strategic operating plan, including assumptions about customer demand, fuel costs, aircraft deliveries, labor market, and supply chain constraints.
• Changes in network strategy or unfulfilled demand expectations may make ordered aircraft less economical, leading to modification or termination costs.
• Inability to obtain timely deliveries, additional equipment, or support from a limited number of aircraft, engine, and parts suppliers (e.g., Boeing, Airbus), exacerbated by production delays and increased FAA oversight.
• Adverse publicity, increased regulatory scrutiny, harm to brand, reduced travel demand, potential tort liability, and operational restrictions due to accidents, catastrophes, or incidents involving aircraft or operations.
• Highly competitive global airline industry susceptible to price discounting and capacity changes, potentially impacting profitability.
• Unfavorable developments affecting the MileagePlus loyalty program, including intense competition from other loyalty programs.
• Reliance on third-party service providers (e.g., regional operations, IT, maintenance) and the risk of their failure to perform, system disruptions, or interruptions in relationships.
• Extended interruptions or disruptions in service at major airports (e.g., ATC delays, weather, infrastructure constraints) could adversely impact operations and expansion plans.
• Geopolitical conflicts, terrorist attacks, or security events may negatively affect demand, network availability, fuel prices, and incur significant security-related expenditures.
• Damage to reputation or brand image from various factors, including failure to meet Corporate Citizenship goals, negative public perception, or cybersecurity incidents.
• Increasing privacy, data security, and cybersecurity obligations or a significant data breach could lead to legal claims, penalties, operational impacts, and reputational harm.
• Union disputes, employee strikes or slowdowns, and other labor-related disruptions, as well as increased employee and retiree health, pension, labor or regulatory compliance costs on operations or financial performance.
• Inability to recruit, hire, develop, or retain skilled personnel, including senior management, due to intense competition and labor market constraints.
• Extensive government regulation of the airline industry, including potential modifications to DOT certificates, FAA directives, and new or enhanced requirements from FAA reauthorization.
• Current or future litigation and regulatory actions, or failure to comply with settlement terms, could result in material adverse financial impacts and adverse publicity.
• Substantial costs from environmental regulation and liability, including climate change risks, transition costs to a lower-carbon economy, and potential climate litigation.
• High and/or volatile fuel prices or significant disruptions in fuel supply, which the company currently does not hedge against, could materially impact financial results.
• Significant financial leverage from fixed obligations and insufficient liquidity may make it difficult to raise additional capital or comply with debt covenants.
• Limitations on the ability to use net operating loss carryforwards (NOLs) and certain other tax attributes if an 'ownership change' occurs under Section 382 of the Internal Revenue Code.
• Failure to realize the full value of intangible assets or long-lived assets, leading to impairment charges.
• Fluctuations in the price of common stock due to various internal and external factors.
• Increased insurance costs or inadequate insurance coverage.
• The share repurchase program may not enhance long-term stockholder value and can be limited, suspended, or discontinued at any time.

Future Outlook

The company expects to continue making progress with its 'United Next' plan, taking delivery of over 630 new narrowand widebody aircraft by the end of 2034 to increase gauge, scale, connectivity, and fuel efficiency. Absolute greenhouse gas emissions are expected to increase in the immediate future due to growth, but the company aims for a net-zero goal by 2050 without relying on traditional carbon offsets and a 50% carbon emissions intensity reduction by 2035. The company anticipates less than $8.0 billion in adjusted capital expenditures for 2026, in light of certain aircraft delivery delays. Labor negotiations with the AFA are ongoing, and new contracts are expected to include material increases in salaries and benefits. The company will continue to monitor economic and market factors, supply chain constraints, volatile fuel prices, and increasing maintenance expenses. Future payments under capacity purchase agreements are estimated to be $18.9 billion through their terms, and pension contributions are anticipated to be at least $259 million in 2026.

Management Comments

• Our shared purpose is 'Connecting People. Uniting the World.'
• We have the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C.
• We are the largest airline measured by available seat miles in the world, helping to connect around 181 million passengers to more than 380 destinations across six continents.
• United Next aims to increase customer choice and win brand-loyal customers by offering a diversity of products ranging from Basic Economy to Polaris and growing our leading global network, which the Company expects will lead to diverse revenue streams for the Company.
• The new aircraft that the Company has taken delivery of to date have increased our gauge, scale, and connectivity, as well as improved the Company's fuel efficiency.
• The most important factor for customer satisfaction is on-time flights. We face some unique challenges in this respect because we operate hubs in the most congested and constrained airports in the country. That backdrop means that United needs to be a leader at using technology to overcome these challenges.
• We believe that best-in-class margin performance will provide the cash flow needed to support our planned investments in growth.
• We believe that excellent customer service is part of de-commoditizing air travel. Our people are our greatest asset and they are by far the most important part of our product. Ultimately our people provide customers with the service they expect.
• At United, safety is first in everything that the Company does and is its first service standard of Core4 (the Company is safe, then caring, dependable and efficient).
• The Company's current strategy is to not enter into financial transactions to hedge the market price exposure of its expected fuel consumption, although the Company regularly reviews its strategy based on market conditions and other factors.
• Management believes, after considering a number of factors, including (but not limited to) the information currently available, the views of legal counsel, the nature of contingencies to which the Company is subject and prior experience, that its defenses and assertions in pending legal proceedings have merit and the ultimate disposition of any pending matter will not materially affect the Company's financial position, results of operations or cash flows.

Industry Context

StockSavvy.ai notes that United Airlines' continued investment in fleet modernization and network expansion, as outlined in its 'United Next' plan, aligns with broader industry trends of carriers seeking to enhance operational efficiency, customer experience, and global reach. The airline's focus on sustainable aviation fuel (SAF) and electrification of ground service equipment positions it within the growing industry push towards decarbonization, although the challenge of SAF supply constraints and price premiums remains a sector-wide issue. The rejection of the AFA Tentative Agreement highlights ongoing labor pressures common across the airline industry, where unions are seeking improved compensation and working conditions. The reliance on a limited number of aircraft suppliers (Boeing and Airbus) and the impact of production delays are systemic risks affecting many major carriers, underscoring supply chain vulnerabilities in the aviation sector. The launch of 'Kinective Media SM' indicates a trend towards diversifying revenue streams beyond traditional ticket sales, leveraging customer data for personalized advertising, a strategy increasingly adopted by consumer-facing industries.

Comparison to Industry Standards

• United's 3.5% operating revenue growth in 2025 is competitive within the airline industry, which has generally seen a post-pandemic recovery in demand, though specific comparisons to peers like Delta Air Lines or American Airlines would require their respective 2025 filings.
• The 6.1% increase in Available Seat Miles (ASMs) reflects an aggressive capacity expansion strategy under 'United Next', potentially outpacing some competitors who might be more cautious due to economic uncertainties or supply chain issues.
• The decrease in average fuel price per gallon to $2.44 in 2025 is a favorable trend for United, aligning with a general easing of fuel costs compared to the peaks of 2023, which benefits all carriers but particularly those with large fleets like United.
• The 5.8% increase in salaries and related costs, driven by headcount growth and higher pay rates, is consistent with industry-wide labor cost inflation as airlines compete for talent and negotiate new collective bargaining agreements.
• United's commitment to a net-zero goal by 2050 and a 50% carbon emissions intensity reduction by 2035, without relying on traditional carbon offsets, sets a high standard for environmental sustainability, potentially positioning it ahead of some global benchmarks that still incorporate offsets.
• The rejection of the AFA Tentative Agreement indicates that United's labor negotiations are facing similar challenges to those experienced by other major airlines, where unions are pushing for significant improvements in compensation and work-life balance, often leading to prolonged discussions.
• The ongoing aircraft delivery delays from Boeing and Airbus are a common challenge for major airlines globally, impacting fleet modernization and capacity growth plans across the industry, including for carriers like Southwest Airlines (Boeing) and Lufthansa (Airbus).

Corporate Governance

Legal Proceedings

• The company is a defendant in multiple class action lawsuits, consolidated in the U.S. District Court for the District of Columbia, asserting claims under the Sherman Antitrust Act. These lawsuits, initiated on July 1, 2015, allege collusion among U.S. airlines on capacity impacting airfares and seek treble damages. The company is vigorously defending against these lawsuits.
• In December 2025, the company issued a demand for payment to Rolls-Royce following a breach of engine purchase and related maintenance services agreements. Rolls-Royce subsequently terminated the agreements and asserted that the company breached them. Both parties contend the other owes damages, and the company is taking steps to recover amounts it believes it is owed. A loss is currently neither probable nor reasonably estimable.

Related Party Transactions

• United has contractual relationships with various regional carriers to provide regional aircraft service branded as United Express. In 2025, United amended several of its Capacity Purchase Agreements (CPAs) with certain regional carriers, including those in which United is a minority shareholder (CommuteAir LLC, Republic Airways Holdings Inc., Mesa Airlines, Inc.), to amend contractually agreed fees, modify terms for certain aircraft, and adjust service entry dates for new aircraft.
• United recorded approximately $1.1 billion in expenses related to its CPAs with regional carriers in which it is a minority shareholder for the years ended December 31, 2025, 2024, and 2023.
• As of December 31, 2025, United had prepaid assets and accounts and notes receivables with combined carrying values of $82 million with these related companies, and $165 million of liabilities due to these companies.
• On November 25, 2025, Mesa Airlines, Inc. merged with Republic Airways Holdings Inc., with Mesa continuing as the surviving corporation and renamed 'Republic Airways Holdings Inc.'. United committed to certain financial contributions to Mesa to facilitate asset disposition and liability extinguishment, in exchange for additional shares of up to 6% of Republic's total equity interests. As of December 31, 2025, United held approximately 16.5% minority interest in Republic, which increased to approximately 22.3% on February 3, 2026, after receiving an additional allocation of 2,744,348 shares.
• United owns a 40% minority ownership stake in CommuteAir LLC.
• United holds a 33% ownership interest in the United Airlines Ventures Sustainable Flight Fund (the 'Fund'), through its corporate venture capital arm, United Airlines Ventures, Ltd.

Stakeholder Impact

• **Shareholders**: The increase in net income and diluted EPS, along with the ongoing share repurchase program, could positively impact shareholder value. However, the decrease in operating income and liquidity, coupled with significant financial leverage and ongoing labor disputes, presents risks to future returns.
• **Employees**: Increased headcount and higher pay rates/benefits reflect positive investment in human capital. However, the rejection of the AFA Tentative Agreement indicates dissatisfaction among flight attendants, potentially leading to prolonged negotiations, strikes, or other disruptions that could affect employee morale and compensation.
• **Customers**: Expansion of the global network, fleet modernization with enhanced interiors, and the introduction of Starlink Wi-Fi aim to improve customer choice and experience. Operational challenges at congested hubs and potential flight delays due to aircraft delivery issues or ATC staffing could negatively impact customer satisfaction.
• **Suppliers**: Ongoing aircraft delivery delays from Boeing and Airbus highlight supply chain risks, impacting the company's fleet plans and potentially leading to renegotiations or penalties. The dispute with Rolls-Royce could affect engine maintenance services.
• **Creditors**: Active debt management, including the redemption of secured notes and new senior note issuances, demonstrates efforts to manage financial obligations. However, the significant amount of financial leverage and potential for increased costs from labor or operational issues could impact the company's ability to meet future obligations.
• **Regulatory Bodies**: The company's extensive environmental sustainability goals and efforts to comply with evolving regulations (e.g., CORSIA, SAF mandates) demonstrate proactive engagement. However, increased regulatory scrutiny, particularly regarding safety and cybersecurity, could lead to additional compliance costs or operational restrictions.

Next Steps

• Continue progress with the 'United Next' plan, including taking delivery of over 630 new narrowand widebody aircraft by the end of 2034.
• Continue negotiations with the Association of Flight Attendants (AFA) for a revised Tentative Agreement following its rejection.
• Monitor and adjust operations based on economic and market factors, supply chain constraints, volatile fuel prices, and increasing maintenance expenses.
• Work with policymakers to adopt policies that incentivize the production of Sustainable Aviation Fuel (SAF) to support decarbonization goals.
• Continue to evaluate, expand, and shape the FAA-approved Safety Management System (SMS) to incorporate new areas of the business.
• Regularly review and explore the evolving environmental landscape to further understand potential risks and opportunities to enhance the environmental strategy.
• Continue to recruit, hire, develop, motivate, and retain skilled personnel to support the ambitious growth agenda under the United Next plan.
• Meet regularly with Boeing and Customer to determine in good faith mutually acceptable terms and conditions with respect to certain aircraft matters, commencing in the first quarter of 2026.
• The company expects to make required contributions to its tax-qualified defined benefit pension plans in 2026, totaling at least $259 million for pension and approximately $66 million for other postretirement plans.

Key Dates

Recommendation

United Airlines demonstrates strong revenue and net income growth, driven by strategic expansion and diversified revenue streams. However, the decline in operating income due to rising costs, particularly labor and airport fees, signals operational efficiency challenges. The rejection of the AFA labor agreement introduces uncertainty and potential for increased future expenses. While debt reduction efforts are positive, the company maintains significant leverage. Aircraft delivery delays from key suppliers remain a persistent headwind for capacity growth. Given the mixed financial performance, ongoing labor and supply chain risks, and a decrease in unrestricted liquidity, a 'hold' recommendation is appropriate for a seasoned investor. The stock has potential for long-term growth if strategic initiatives overcome cost pressures and labor issues are resolved favorably, but current uncertainties warrant caution.

Keywords

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