Chief Executive Officer & Director, United Airlines Holdings Inc
United Airlines CEO Scott Kirby: Not expecting oil prices to be as high as we'd feared
CNBC's Phil LeBeau and United Airlines CEO Scott Kirby join 'Squawk Box' to discuss the company's quarterly earnings results, ...
About J. Kirby
United Airlines CEO Scott Kirby said in July 2026 that the company had navigated a $6 billion increase in fuel costs compared to its expectations at the start of the year, and that the airline was raising its guidance and had "a shot at growing earnings on a year over year basis." He described travel demand as "incredibly strong" and said the company had implemented multiple fare increases, with another occurring that week. Kirby stated that airfares in real terms remained about 13% below pre-COVID levels, and that the airline's overall cost base—including airport fees, maintenance, and labor—had risen more than fuel prices. He attributed the company's performance to the "United Next" strategy and the work of United's employees. Kirby also discussed industry challenges, including engine supply constraints that he said would hold back aircraft deliveries for at least five years. He said United had ordered excess aircraft in anticipation of such problems. On the topic of a potential merger with American Airlines, Kirby said he believed it would be "great for customers" and would help build "the best airline in history," but acknowledged that the idea had generated a strong reaction and that such a deal would require a willing partner. He also expressed interest in expanding United's international network, noting that international routes had performed well for the airline.
Transcript (12 segments)
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Narrator0:03
That's what they told me. Let's get to fill the boat. With United. Airlines CEO Scott Kirby.
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Scott Kirby0:08
Hey, Phil.
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Phil0:09
Hey, Joe Scott, thank you for joining us today from United's headquarters in Chicago. I want to ask you about your earnings from the second quarter and your guidance. You beat the street both top and bottom line in the second quarter, but your guidance for the third quarter is a little below what the analysts were expecting. What did the analysts miss or not appreciate when it comes to looking at the third quarter and what you expect?
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Scott Kirby0:31
Yeah. Well, good to see you, Phil. Hope you're enjoying Farnborough over there. You know, demand is really strong at United. You can see that in the second quarter. You can see it in our guidance. I think it's pretty remarkable that we went through this year. Fuel is up $6 billion compared to where we thought it would be at the start of the year. And that compares to our best year in history. We made a little under $5 billion, and yet we have a chance to grow earnings on a year over year basis. And that's really a testament to what the team at United has done. We had a great strategy of the United Next brand loyalty strategy, and just the best team of aviation professionals in the world to execute that strategy and really take care of customers and be able to make it up by getting brand loyal customers to want to fly United. And as far as guidance goes, it's really a function of when we set the fuel price. You know, the estimates were stale. They were set earlier in the month, and fuel's gone up for us $575 million just in this quarter alone. That's a $1.12 of EPS. And so it's entirely about when the analysts set fuel versus the price of fuel yesterday.
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Phil1:33
You said earlier this year that you expect oil and jet fuel to stay higher for longer. In other words, this was not going to be a short term up and down and back to where we were at the end of 2025. Do you still believe that?
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Scott Kirby1:48
You know, I was worried or at least concerned that the conflict backed all the way to mid-March, that the conflict in Iran was had a reasonable probability that it would last longer and that we'd continue this, that the Straits of Hormuz would not be sustainably and reliably opened. And that's turned out to be the case. And it still looks like it's going to be the case. But on the flip side, I didn't appreciate how resilient the oil market has been at finding workarounds around the Strait of Hormuz, whether it's tankers slipping through without their transponders or pipelines or drawing down inventories. And so the impact of the war in Iraq, we got that pretty we got the impact of the war pretty correct. But the impact on fuel prices has been less. And so while we continue to think that this will be a muddle through in Iran, you know, the oil prices, I don't think are going to be as high as we suspected they were. It's still going to be elevated, but probably, at least for now, it looks like not as high as we feared they might be, you know, three or four months ago.
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Phil2:49
Speaking of resilience, demand has not dropped off at all. When we look at the revenue numbers, basically in every category that you posted for the second quarter, airfares are still up, what, 15 to 20% compared to this time last year. Are you seeing any areas where perhaps whether it's companies, whether it's individuals, are just pulling back just a little bit? Or is it you're saying, nope, it's all systems go here?
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Scott Kirby3:16
No. Demand is really strong. In fact, corporate demand so far this quarter is up 30%. Business demand is strong. Leisure demand is really strong across the board. I think the economy is doing well. We have a strong economy, probably better than people appreciate, but because we're a pretty good real time indicator of demand, the economy is strong, demand is strong. And, you know, we don't see any change. I looked at the bookings from yesterday as early as this morning and just really no change. Strength really across the board.
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Becky3:49
Becky. I'm just trying to get a feel on that customer demand being strong, oil prices going up. Customers, your existing customers, don't want to see ticket prices go any higher than they already are, but your investors don't want to see their margins get hurt by higher oil prices. Which one of those groups, your customers or your investors, are you more aligned with in terms of your thinking and what's going to happen in the coming months?
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Scott Kirby4:16
Yeah, the reason airfares are going up in the airline industry is really because all of our costs have gone up and it's really a recovery from the deep trough that we hit in COVID. And, you know, while people talk about oil prices, the reality is that airport fees and maintenance expenses and labor, all of those have gone up much more even than the price of oil. And in fact, even with prices today, airfares are still down about 13% in real terms compared to where they were pre-COVID. So this has just been sort of an inevitable recovery from COVID. It's driven by the cost pressures. But at United, what we think we have to do for our customers is invest in better products and services and value to make it worth it to those customers. And that's why we've got Starlink coming on, you know, 100% of the United Airlines fleet and the relaxed row and investing in technology and investing in clubs. And really, our people are doing a great job of delivering a great experience for customers. It's about value and giving value to customers. But the underlying driver of fare increases has been the cost inflation that's applied to every airline. And the fact that it's harmonized costs across the industry is really what has driven the fare increases.
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Phil5:30
Scott, you're keeping your capacity in check as you go into the second half of this year. And some of your competitors are doing that as well. But you and I both know this is an industry that has a bad track record, that when somebody looks at strong demand and potential for greater revenue growth, they want to do a jailbreak. They want to go out there and add capacity. Are you concerned about that in a broader sense for the industry?
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Scott Kirby5:54
Well, first, I put it into the United perspective because we've built a, you know, brand loyal airline. It makes us less commoditized than much of the industry, which gives us at least some protection against, you know, competitive activity. We have a group of customers who are loyal, who are flying us not just because of the schedule, not just because of the price, but because they love the app, because they love the seatback entertainment. They love having Starlink on airplanes. And so that gives us some protection against it. At a bigger picture level, you know, look, you still have, I think, four of the eight publicly traded US airlines that are likely to lose money this year. That's not a sustainable long term position for them to be in. And they may do it in the short term. But in the long term, it's just economic gravity. That kind of loss making capacity comes out. You know, earlier this year, airlines shut down as a result of that. And I don't think any of the others are going to have to shut down. But loss making capacity does come out of the industry. I think schedules are going to come down in the fourth quarter. I know investors are worried about fourth quarter capacity. It always does. That's the history. I expect the same thing is going to happen again this time. But the bigger point at United too, is we just have some protection against that by building a brand loyal airline that.