United Airlines Slashes 2026 Guidance Amid Middle East Fuel Spike

United Airlines has drastically reduced its full-year 2026 adjusted earnings forecast, citing a surge in jet fuel prices triggered by conflict in the Middle East. The carrier now expects adjusted earnings per share to fall between $7 and $11, a sharp decline from the $12 to $14 range projected in January, prior to U.S. and Israeli military actions against Iran. The guidance revision reflects a broader industry trend, with Alaska Airlines also withdrawing its 2026 forecast recently due to fuel pressures. To mitigate costs, United is trimming planned flight schedules, with second-half capacity expected to remain flat or grow by only 2%, compared to 3.4% growth in the first quarter. For the second quarter, United projects adjusted earnings of $1 to $2 per share, trailing analyst expectations of $2.08. The company estimates fuel will average $4.30 per gallon in Q2. United plans to recover these costs through revenue increases, targeting 40% to 50% coverage in Q2, rising to 85% to 100% by the end of the year. Despite the cautious outlook, Q1 results remained robust. Revenue rose over 10% to $14.61 billion, and net income surged 80% to $699 million. Unit revenue grew across all segments, including a 7.9% increase in domestic U.S. flights, signaling strong pricing power among premium travelers who are less sensitive to fare hikes. Beyond operational challenges, the carrier faces hurdles in its growth strategy. Reports indicate that both American Airlines and the Trump administration have rejected United's interest in a potential merger, limiting the airline's options for inorganic expansion.