United Airlines Holdings, Inc. (UAL): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to map out the competitive terrain for United Airlines Holdings, Inc. (UAL) as we close out 2025, and honestly, it's a battleground where input costs are high and rivals are fierce. We see suppliers wielding serious power-think aircraft manufacturers' duopoly and labor leverage after the Teamsters' March 2025 contract rejection-but UAL is fighting back by prioritizing pricing, evidenced by premium revenue climbing 9.2% in Q1 and loyalty income growing over 9% by Q3. The airline is betting its hub defense beats market noise. We need to look closely at the five forces to see if their $9 to $11 EPS guidance is achievable against these headwinds. Find the full breakdown below.

United Airlines Holdings, Inc. (UAL) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing United Airlines Holdings, Inc. (UAL)'s supplier power, and honestly, it's a classic oligopoly situation where a few massive players dictate terms, especially for the big-ticket items. This force is significant because United cannot easily switch its primary suppliers for aircraft or fuel, giving those entities substantial leverage over pricing and delivery schedules.

The aircraft manufacturing segment is the clearest example of high supplier power. United Airlines is essentially locked into a duopoly with two primary global suppliers, Boeing and Airbus. This limited choice means United has little negotiating leverage when it comes to securing new planes or spare parts. The manufacturers hold this power due to their massive order books, which translate directly into long lead times for new deliveries, forcing United to operate with older or less optimal fleet configurations for longer than desired.

To illustrate the scale of this commitment and the manufacturers' leverage, consider the industry-wide backlogs as of late 2025. The market is characterized by record commitments, with the combined backlog representing years of production capacity. Specifically, the industry holds record backlogs of 8,617 aircraft. As of July 31, 2025, Airbus reported a backlog of 8,678 jets, while Boeing's total unfilled orders stood at 6,563 aircraft. This scarcity of immediate supply gives the OEMs significant pricing power over United Airlines Holdings, Inc. (UAL).

Jet fuel represents another critical, high-cost input where supplier power is high due to market volatility. Fuel is the single largest operational expense for any major carrier. While United Airlines Holdings, Inc. (UAL) employed hedging strategies, such as covering 60% of its 2025 needs at an average of $2.70 per gallon, the underlying market price dictates the unhedged portion and future costs. For the second quarter of 2025, United Airlines Holdings, Inc. (UAL)'s fuel expense was reported as $2.775 billion, though other reports show a fuel expense of $2.676 billion for the same period. The average fuel price per gallon in Q2 2025 was $2.34, with another report citing $2.40 per gallon. This volatility, driven by geopolitical factors and global oil market dynamics, keeps United exposed to supplier price shocks.

Labor is perhaps the most immediate and potent source of supplier power for United Airlines Holdings, Inc. (UAL), channeled through powerful unions representing highly skilled employees. The leverage is clear when contract negotiations stall. For instance, the Teamsters union, representing United Airlines maintenance technicians, overwhelmingly rejected the carrier's latest contract proposal in March 2025. The vote was a 99.5 percent rejection, sending a strong signal that the union demands better terms, especially after United reported $4 billion in profits the prior year.

This union power is amplified by a sector-wide shortage of skilled aviation professionals. The demand for pilots, maintenance crews, and ground staff outstrips the available workforce, pushing up costs across the board in 2025.

• Industry-wide total labor costs are projected to reach $253 billion in 2025.
• This represents a 7.6 percent increase in total labor costs from 2024.
• Labor unit costs are expected to rise between 4-6% year-over-year for major carriers.
• Wages for pilots and flight attendants have increased by 8 to 15 percent between 2023 and 2025.
• The deficit of aviation mechanics in the U.S. alone stands at 24,000.

United Airlines Holdings, Inc. (UAL) faced $447 million in special charges in Q2 2025 related to labor contracts, which directly impacted profit margins. The need to attract and retain talent amid this shortage forces United to offer higher wages and better terms, solidifying the high bargaining power of its labor suppliers.

Here is a summary of the key supplier cost inputs and pressures:

Finance: draft 13-week cash view by Friday.

United Airlines Holdings, Inc. (UAL) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for United Airlines Holdings, Inc. (UAL) remains high, primarily driven by the structural reality of low switching costs for many travelers and the transparent pricing environment facilitated by online travel agencies (OTAs). When you are booking a standard economy ticket, comparing prices across carriers is simple, meaning customers have significant leverage to shop for the lowest fare. This pressure is evident in the unit revenue metrics for the core domestic market.

However, United Airlines management is actively working to segment this power by cultivating loyalty and focusing on higher-value segments. The strategy is clear: reduce exposure where customers are most price-sensitive. In response to the current demand environment, United Airlines management announced it is removing 4 percentage points of scheduled domestic capacity starting in the third quarter of 2025 to prioritize pricing power. This move directly addresses the weakness seen earlier in the year; for instance, domestic Passenger Revenue per Available Seat Mile (PRASM) fell 3.3% in Q3 2025.

To counter this, the focus shifts to segments where customers are demonstrably less sensitive to price. UAL's premium cabin revenue grew 9.2% in Q1 2025, showing that the high-end consumer is more insulated from broader economic uncertainty. This trend continued into the third quarter, where premium cabin revenue was up 6% year-over-year, outperforming the main cabin by 5 points in terms of PRASM performance.

The most significant countermeasure to customer power is the MileagePlus loyalty program. Strong loyalty creates high switching barriers, as the value proposition extends beyond the immediate flight price. Loyalty program revenue (MileagePlus) increased over 9% in Q3 2025, which is a powerful indicator of customer stickiness. Furthermore, United Airlines took a major step to strengthen the program's financial foundation by prepaying the last $1.5 billion dollar of its MileagePlus bonds during the third quarter, which helped net leverage drop from 2.44 times down to 2.1 times.

Here's a quick look at how the different customer segments performed in the third quarter of 2025 compared to the prior year:

You can see the dual nature of customer power clearly when you break down the results. The price-sensitive customer base is challenging, but the high-value, loyal customer base is providing resilience and margin support. The key financial indicators from the third quarter of 2025 illustrate this dynamic:

• Domestic capacity was intentionally cut by 4 percentage points for Q3 2025.
• Basic Economy revenue still managed to grow 4% year-over-year in Q3 2025.
• International PRASM saw a steeper unit revenue decline of 7.1% in Q3 2025.
• Net Income in Q3 2025 was $949 million, dipping slightly despite strong EPS of $2.78.
• The airline is projecting adjusted earnings between $3.00 and $3.50 a share for Q4 2025.

Still, United Airlines is betting that its investments in product-like the ongoing rollout of Starlink Wi-Fi-will further decommodify its offering and reduce the customer's willingness to switch based on price alone. Finance: review the Q4 2025 guidance against the Q3 2025 domestic PRASM trend by next Tuesday.

United Airlines Holdings, Inc. (UAL) - Porter's Five Forces: Competitive rivalry

Competitive rivalry within the US airline sector remains fierce, characterized by direct confrontation with legacy carriers and pressure from aggressive Ultra-Low-Cost Carriers (ULCCs). United Airlines Holdings, Inc. (UAL) is navigating this environment by focusing on high-quality revenue streams and operational discipline.

United Airlines Holdings, Inc. has positioned itself with a distinct financial outlook, projecting full-year 2025 earnings per share (EPS) guidance in the range of $9 to $11. This projection is set against a backdrop where the airline is emphasizing 'absolute profitability' over simply matching rivals' margins. The carrier's Q2 2025 pre-tax margin reached 8.2%, which management views as proof that legacy carriers can evolve without sacrificing profitability.

Hub defensibility is a key component of this rivalry strategy. United Airlines is actively diversifying its hub strategy, moving away from overreliance on a single constrained location. For instance, the airline secured the addition of seven daily round-trip slots at John F. Kennedy International Airport (JFK) starting in 2027. Furthermore, all seven of United's hubs generated profits during the third quarter of 2025, underscoring the strength of its network strategy.

A significant structural advantage for United Airlines Holdings, Inc. is its scale, operating the world's largest mainline fleet. As of October 2025, United Airlines Holdings, Inc. operates 1,055 mainline aircraft, creating a scale advantage over its primary competitors.

The competitive positioning relative to other major US carriers can be seen in the mainline fleet sizes as of late 2025:

The strategy to build customer loyalty through product investment is designed to shield revenue from the intense price competition inherent in the market. This involves substantial capital deployment into the customer experience:

• Over half of the narrowbody fleet now features the signature interior and seatback screens.
• The airline received FAA certification for its first mainline Starlink-equipped aircraft in October 2025.
• Starlink internet access will be complimentary for all MileagePlus customers.
• Premium cabin revenue grew 6% year-over-year in Q3 2025.
• Loyalty program revenue surged 9% year-over-year in Q3 2025.

United Airlines Holdings, Inc. (UAL) - Porter\'s Five Forces: Threat of substitutes

The threat of substitutes for United Airlines Holdings, Inc. (UAL) is assessed as moderate, stemming primarily from advancements in virtual meeting technology impacting business travel segments. You see this tension playing out in corporate boardrooms right now.

Virtual communication tools present a clear, though not yet overwhelming, substitution risk. As of mid-2025, 43% of Chief Financial Officers believe more than half of their company's travel could be replaced by virtual meetings, showing a significant portion of the market is considering this trade-off. Some organizations report that using these tools can cut travel costs by 30% and reduce the need for business travel by as much as 47% in specific use cases. Despite this, the overall impact on the total volume of business travel is projected to cause a long-term contraction of up to 10% in overall business travel, which is a manageable headwind given United Airlines Holdings, Inc.'s diversified revenue base.

The actual realized impact in 2025 suggests business travel remains resilient for high-value interactions. For instance, United Airlines Holdings, Inc. reported that business travel revenue rose 7.4% year-over-year in the first quarter of 2025. Furthermore, by July 2025, the company noted a 'double-digit acceleration' in business demand compared to the second quarter, driven by reduced geopolitical and macroeconomic uncertainty. Still, 84% of companies now use video conferencing instead of traveling for at least some business needs.

The threat from high-speed rail (HSR) is distinctly limited for United Airlines Holdings, Inc., as it is mostly confined to short-haul US domestic corridors where United's presence is less dominant than its transcontinental or international routes. In established HSR markets outside the US, the rail option captures over 60% of the market share on routes where the door-to-door (D2D) travel time difference is only about 1.5 hours longer than flying. In the US, there is public appetite, with 54% of American respondents supporting the reduction of short-haul flights where HSR alternatives exist. However, the current US infrastructure footprint means this is a localized pressure point, not a systemic one for the entire network.

Long-haul and international travel, which represent a core strength for United Airlines Holdings, Inc., currently has no viable, direct substitute. The airline's international segments are showing significant strength as of early 2025. For example, in the first quarter of 2025, United Airlines Holdings, Inc.'s Atlantic revenue per seat mile increased by 4.7%, and Pacific revenue per seat mile jumped 8.5% year-over-year. International bookings also showed a 5% increase year-over-year in recent weeks leading up to April 2025. These long-distance routes, which are critical for premium revenue, are effectively insulated from both virtual meetings and short-haul rail competition.

Here's a quick look at the substitution dynamics:

The key takeaway for you is where the revenue is concentrated. While the digital threat is real for certain corporate segments, the high-margin, long-haul international business is currently irreplaceable.

• Business travel revenue for UAL rose 7.4% in Q1 2025.
• Business demand saw a 'double-digit acceleration' in early July 2025.
• United Airlines Holdings, Inc.'s Q1 2025 total revenue reached $13.2 billion.
• The airline's Q2 2025 adjusted diluted EPS was $3.87.

Finance: draft 13-week cash view by Friday.

United Airlines Holdings, Inc. (UAL) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for United Airlines Holdings, Inc. (UAL) remains low, primarily because the capital required to start a major airline operation is staggering. Consider the fleet scale alone: United Airlines Holdings, Inc. operates a mainline fleet of 1,055 aircraft as of late 2025. Furthermore, United Airlines Holdings, Inc. has an order backlog of 650 aircraft, signaling a massive, ongoing capital commitment that new entrants cannot easily match. The airline plans to receive over 70 new aircraft in 2025 alone, predominantly Boeing 787 Dreamliners and 737 MAX jets. This level of capital expenditure, even for fleet replacement-United retired 20 Airbus A319s and A320s in 2025, moving from 159 to 139 units-creates an immediate financial moat.

Regulatory barriers are significant, backed by increased government oversight and financial risk. For instance, civil penalties for aviation violations have nearly doubled in 2025, with the maximum fine now set at $75,000 per incident for issues like chronic delays or refund failures. The FAA Reauthorization Act of 2024 authorized $105 billion for the agency, indicating a heavily regulated environment where compliance costs are high for any new operator. Securing prime airport access is another major hurdle. You see this play out in real-time at key United Airlines Holdings, Inc. locations.

United Airlines Holdings, Inc.'s established dominance at its seven major hubs acts as a massive barrier. The sheer scale of their operation, such as flying to 111 cities from San Francisco and operating the world's largest mainline fleet of 1,055 aircraft, means a new entrant would face immediate competitive pressure on frequency and network breadth. For example, American Airlines is only increasing its Chicago (ORD) flights by nearly 20% year-over-year for Summer 2025, showing how incremental growth is for established players, let alone a startup trying to enter the market.

The ongoing consolidation signals a difficult environment for smaller, independent carriers to gain traction. You see this most clearly in the Ultra-Low-Cost Carrier (ULCC) space, where scale is seen as the only path to survival against the major carriers. The potential merger between Frontier Airlines and Spirit Airlines is frequently discussed as the most viable option for 2025.

• Frontier has made multiple overtures to acquire Spirit.
• Avelo Airlines ended West Coast service by early December 2025 due to high costs and competition.
• Some observers suggest the market may only support two major premium carriers (Delta and United).
• The failure of the JetBlue-Spirit deal, blocked by a federal judge, highlights the regulatory scrutiny even large combinations face.