United Airlines CEO Scott Kirby: Not expecting oil prices to be as high as we'd feared

Summary

United Airlines CEO Scott Kirby discusses strong demand and brand loyalty that allow earnings growth despite a $6 billion fuel cost increase. He now sees oil prices as elevated but not as high as previously feared due to market resilience. Industry capacity is expected to tighten as loss-making carriers pull back, benefiting United.

• United beat Q2 estimates but Q3 guidance missed consensus largely because of a $575 million fuel cost increase in the quarter.
• Demand remains robust across the board, with corporate demand up 30% so far in Q3, and no signs of pullback.
• Kirby no longer expects oil to spike as feared; the market found workarounds around the Strait of Hormuz, keeping prices elevated but off worst-case levels.
• Airfares are still 13% below pre-COVID levels in real terms, while all airline costs (airport fees, maintenance, labor) have risen sharply.
• United’s brand-loyalty strategy and investments in Starlink, technology, and clubs give it protection against industry commoditization.
• Four of the eight publicly traded US airlines are likely to lose money this year, and Kirby expects loss-making capacity to exit, with schedules declining in Q4.