United Airlines Holdings, Inc. (UAL) Income Statement

The 16.0% year-over-year revenue growth in 2026Q2 marks a significant acceleration from the mid-single-digit growth seen in the prior four quarters. This uptick appears driven by both increased capacity and stronger yields, as revenue per available seat mile likely benefited from disciplined capacity growth across the industry. Investors should monitor whether this growth rate is sustainable given potential macroeconomic headwinds and competitive capacity additions.

The gross margin expansion of over 300 basis points sequentially suggests that fuel prices have moderated and that UAL is effectively managing its non-fuel unit costs. However, the airline industry is highly cyclical, and margins can compress quickly if fuel prices spike or if pricing power weakens. The current margin level is above the peer average, but investors should watch for sustainability given the volatile cost environment.

While revenue grew 16% in 2026Q2, operating income only increased by about 10% sequentially, as SG&A expenses jumped to $644 million from $571 million in 2025Q4. This suggests that UAL is not fully realizing operating leverage, possibly due to investments in technology or network expansion. The elevated SG&A as a percentage of revenue (3.6%) is still low, but the trend warrants monitoring to ensure overhead costs do not outpace revenue growth.

The dramatic shift in COGS reflects the volatile nature of jet fuel prices, which are a major input for airlines. In 2024Q1, COGS was 78% of revenue, compressing gross margin to 21.9%, while in 2026Q2, COGS dropped to 32% of revenue, boosting gross margin to 67.7%. This volatility underscores the importance of fuel hedging and cost management. UAL's ability to maintain cost discipline outside of fuel will be key to sustaining margins.

The 2024Q1 results represented a low point in the income statement history, with negative net income and razor-thin operating margins. This was likely driven by elevated fuel costs and seasonal weakness. Subsequent quarters showed a steady recovery, with operating margins expanding to over 9% by 2025Q3. This inflection suggests that UAL successfully navigated the cost environment and benefited from strong demand, but the cyclicality of the industry means such troughs could recur.