Episode summary
United Airlines CEO Scott Kirby: Stress from higher oil prices is increasing
Summary
United Airlines is absorbing a sharp jump in fuel costs, with Scott Kirby saying fuel is up $8 billion year over year and that the carrier expects to pass through about 72% of the increase for now. He argued that even with softer-than-planned fourth-quarter earnings, the airline remains solidly profitable because the industry has become more rational on pricing and United has differentiated itself from peers. He also said higher oil and jet fuel prices are likely to remain a problem into 2027, increasing the pressure on weaker airlines to stop flying unprofitable routes or exit altogether.
Kirby pointed to Starlink and a faster rollout of new premium infrastructure as a major tailwind for United next year. He said the airline will cross 50% of flights with Starlink this week and expects to finish the rollout by the end of next year. He also cited a surge in status-match applications and credit card sign-ups as signs that customers are switching to United, especially in competitive hubs like Chicago, New York, and Los Angeles.
He also defended his comments on wealth taxes, saying he sees them as a fairness issue rather than a policy campaign. Kirby argued that passive wealth can grow tax-free for years while wages are heavily taxed, and said he would favor lower income taxes and some form of tax on wealth gains. Finally, he said airport projects are improving, but the bigger constraint on air travel is the airspace and FAA capacity.
Key takeaways
- Kirby said United faces an $8 billion year-over-year fuel headwind, but still expects to stay profitable because it can pass through about 72% of the increase.
- He believes higher oil prices will stay elevated into 2027, increasing the odds that weaker airlines will have to cut loss-making flying.
- United expects Starlink to reach 50% of flights this week and finish the rollout by the end of next year, which Kirby sees as a demand driver.
- Kirby said United is seeing unusually strong status-match demand and credit card applications, especially in competitive hubs like Chicago, New York and Los Angeles.
- On taxes, Kirby said he favors some form of tax on passive wealth gains because he views the current system as unfair to wage earners.
Notable quotes
“I'M EXCITED TO BE HERE TALKING TO YOU TODAY ON A YEAR WHEN FUEL IS UP $8 BILLION YEAR OVER YEAR”
“I THINK WE'LL STAY HIGH INTO 2027. YOU KNOW, I DON'T KNOW WHEN OR I DON'T KNOW WHAT THEY DO”
“RUNNING AN AIRLINE AND BEING SUCCESSFUL IS SIMPLE. DON'T FLY PLACES THAT LOSE MONEY”
“BY THE END OF NEXT YEAR, WE'LL FINISH STARLINK. WE ALREADY SEE CUSTOMERS MOVING FROM OTHER AIRLINES”
“I THINK A WEALTH TAX IN PARTICULAR IS A MORE FAIR. IT'S JUST ABOUT FAIRNESS”
How the episode opens
Welcome back to squawk box. Let's get to Phil LeBeau with United Airlines ceo Scott Kirby. Hey, phil.
Thank you very much, joe scott. It's good to be here. We're going to talk about this a little bit because we're in a new terminal here in houston for united, one of your hubs.
Let's start first off with the results that you posted yesterday afternoon. And I think the thing that stands out with everyone is your expectation of q4 earnings of $0.50 to a buck 50. The street's at a buck 75.
It's jet fuel at the heart of this, correct?
Yeah. Well, thanks for being down here with us in houston. We are excited to open the new terminal.
It's pretty remarkable. I'm excited to be here talking to you today on a year when fuel is up $8 billion year over year. And while we're not going to make as much in three and four q as we were planning to or hoping to.
It's a testament to the changes in the industry, the structural changes, but also to de commoditizing air travel here at united, getting brand loyal customers that we're still solidly profitable even in this environment. We're going to pass on about 72% of the increase in fuel. We'd like to get that to 100%.
I think with time it does, but it's pretty amazing the resilience of where we are today.
But you look at what's happened with the airline stocks, and you look at the fact that if we have higher jet fuel for longer, I'm not going to say it's dead money, but why does an investor want to even be interested in an airline stock in this environment?
You know, to me, actually, this is a year, particularly with an airline like united, that it demonstrates strong earnings even in bad times.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- oil prices
- jet fuel costs
- air travel demand
- quarterly earnings
- wealth tax
Companies and tickers mentioned
- UAL
- United Airlines
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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