As soaring fuel prices tested airline profitability, both United Airlines Holdings Inc. (UAL) and Delta Air Lines Inc. (DAL) beat Wall Street's second-quarter expectations.
But while Delta delivered record revenue and maintained its outlook, United went a step further: raising its full-year earnings guidance despite billions in additional fuel costs, a move that has strengthened the case for the carrier as the stronger airline stock heading into the second half of 2026.
UAL And DAL: Higher Fuel Costs Put Airline Profits To Test
For years, airlines enjoyed strong demand as travelers returned after the pandemic and accepted higher ticket prices. In 2026, rising oil prices pushed up costs and created a tougher challenge for airlines to manage expenses.
The Q2 financial prints highlight a stark industry-wide headwind: a sudden, massive surge in fuel prices that has added billions in unplanned operating costs. Delta reported absorbing the highest quarterly fuel expense in its history, with average fuel prices reaching $3.93 per gallon, while United reported a staggering $2.3 billion year-over-year increase in fuel expense for Q2 alone, pushing its average fuel price to $4.19 per gallon.
Despite rising fuel costs, both airlines beat Wall Street’s expectations by raising fares, expanding premium travel, and strengthening loyalty programs. The key difference emerged in what came next: while Delta maintained a more cautious outlook, United increased its 2026 earnings forecast.
United’s Execution Stands Out
reported adjusted revenue of $17.7 billion with adjusted earnings of $1.56 per share, premium products overtaking main cabin revenue, and a 15% dividend hike.
Delta's adjusted fuel expense skyrocketed 77% year-on-year to $4.4 billion, with the average price per gallon jumping 75% to $3.93. Although Delta remains highly profitable, the sudden jump in fuel costs eroded its operating margins, which fell from double-digit levels to 8.8%.
, reporting days later, posted adjusted EPS of $1.99, 16% revenue growth, 12% RASM (Revenue Per Available Seat Mile) gains driven by higher fares and product investments, and most compellingly raised full-year adjusted EPS guidance to a range of $9.00 to $11.00 despite disclosing a massive $6 billion increase in anticipated fuel costs.
United responded strongly to the fuel cost increase by quickly adjusting its operations. Under CEO Scott Kirby, the airline reduced less profitable flights, focused on higher-value routes and managed to protect earnings. As a result, United’s revenue climbed 16% from a year earlier to $17.67 billion, in line with analyst expectations.
United Airlines (UAL) provided a stronger earnings outlook compared with Delta Air Lines (DAL). For the third quarter of 2026, United expects adjusted EPS between $2.50 and $3.50, while Delta sees an EPS of $2.00 to $2.50. For the full year, United increased its adjusted EPS guidance to $9.00 to $11.00, whereas Delta maintained its existing outlook of $6.50 to $7.50.
Morgan Stanley Says United’s Strategy Is Paying Off
Morgan Stanley analyst Ravi Shanker increased his price target for United Airlines to $190 from $185 while maintaining an ‘Overweight’ rating on the stock, implying a 60% upside to the stock’s last closing price.
The analyst said the airline industry is entering a period in which carriers have greater ability to increase fares as customers continue to accept higher travel costs.
Shanker’s view centers on a major change in the industry’s long-term business model. Airlines have historically struggled with cycles of excess capacity and weak pricing, but tighter industry discipline and stronger consumer demand could help carriers maintain healthier margins.
The analyst said United’s recent Q2 performance supports the argument that airlines are moving away from years of aggressive competition that pressured profits. Instead, companies are focusing more on controlling capacity, attracting premium travelers and improving revenue quality.
Valuation: A Key Factor For Investors
Delta’s shares trade at a higher valuation, with a price-to-earnings (P/E) multiple of 10.3. United, meanwhile, appears more affordable based on its current valuation with a P/E multiple of 9.2.
Delta remains a strong airline, but United may offer a better opportunity for investors in a difficult market. The airline managed higher fuel costs, improved its operations and increased its earnings forecast. Its growth prospects and lower valuation could make it more attractive for investors watching the airline sector.
UAL, DAL Stocks: Retail Continues To Favor United Airlines
On Stocktwits, retail sentiment around UAL remained in ‘bullish’ territory while sentiment for DAL dropped to ‘bearish’ from ‘bullish’ territory the previous day.
So far this year, UAL stock has gained 6%, while DAL stock has jumped 24%.