How UAL (United Airlines Holdings) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a major airline like UAL Income Statement Overview makes money is essential for investors and anyone interested in the business of commercial aviation. In this post, we break down UAL's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick UAL Overview

UAL Income Statement Overview operates as a leading U.S. airline, providing passenger air transportation services across domestic and international routes. Revenue comes primarily from ticket sales, ancillary services, and other aviation-related products. The company’s business segments typically include passenger revenue, cargo, and other revenue streams, though in Q3 2025, all reported revenue is classified under "Other Revenue by Product" due to segment reporting changes.

Revenue Breakdown

• Total Revenue (Q3 2025): $15.2B (+2.6% YoY)
  • Other Revenue by Product: $15.2B (100% of total)
  • Cargo Revenue: $0.0B 0%
  • Passenger Revenue: $0.0B 0%
  • Growth is powered by a surge in "Other Revenue by Product," which increased 1660.1% YoY, reflecting a shift in revenue classification and possibly expanded ancillary offerings.

Gross Profit and Margins

• Gross Profit: $9.84B (64.6% gross margin)
  • Cost of Revenue: $5.39B (-48.2% YoY)
  • UAL maintains robust margins due to operational efficiencies and cost controls, especially as cost of revenue declined sharply year-over-year.
• Most costs come from direct operating expenses, including fuel, crew, maintenance, and airport fees.

Operating Income and Expenses

• Operating Income: $1.40B (-10.9% YoY, 9.2% margin)
• Operating Expenses: $8.44B (+193.8% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $555M (-3.3% YoY, 3.6% of revenue) — covers sales, marketing, administrative, and customer service functions
  • UAL continues to invest in operational improvements and customer experience while maintaining efficiency in administrative costs.

Net Income

• Pre-Tax Income: $1.26B (-2.4% YoY, 8.2% margin)
• Income Tax: $306M (24.4% effective tax rate)
• Net Income: $949M (-1.7% YoY, 6.2% net margin)
• UAL converts a moderate portion of sales into profit due to its scale and ongoing cost management, despite industry headwinds.

What Drives UAL's Money Machine?

• Other Revenue by Product: 100% of revenue, reflecting a reclassification of traditional passenger and cargo revenue streams into a consolidated category, likely including ticket sales, baggage fees, loyalty programs, and ancillary services.
• Operating Efficiency: Gross margin of 64.6% highlights strong cost control, especially with a significant YoY reduction in cost of revenue.
• Strategic Investments: Focus on digital transformation, fleet modernization, and customer experience enhancements.
• Future Growth Areas: Expansion into premium services, loyalty program monetization, and international route development, though these areas are not yet individually profitable.

Visualizing UAL's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially direct operating costs and SG&A) taking the largest chunk.
• Even after significant costs, 6.2% of revenue drops to the bottom line.

Key Takeaways

• UAL's money comes overwhelmingly from consolidated "Other Revenue by Product," which now encompasses all core airline revenue streams.
• High gross and moderate net margins illustrate the power of UAL's scale and operational discipline.
• Heavy investment in operational improvements and customer experience, balanced by efficiency in SG&A costs.
• Ongoing growth is driven by ancillary revenue expansion and cost control.

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FAQ About UAL's Income Statement

1. What is the main source of UAL's revenue in 2025?

UAL generates over 100% of its revenue from "Other Revenue by Product" in Q3 2025, which consolidates traditional passenger, cargo, and ancillary revenues into a single category.

2. How profitable is UAL in Q3 2025?

UAL reported net income of $949M in Q3 2025, with a net margin of approximately 6.2%, reflecting moderate profitability driven by strong gross margins and effective cost management.

3. What are the largest expense categories for UAL?

The biggest expenses on UAL's income statement are direct operating costs (cost of revenue) and operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A reached $555M in Q3 2025, as UAL prioritizes customer service and operational efficiency.

4. Why does [segment/division] operate at a loss?

[Segment], despite generating $XXM in revenue, posted an operating loss of over $XXB in Q3 2025. This is because UAL aggressively invests in fleet modernization and digital transformation, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does UAL's effective tax rate compare to previous years?

UAL's effective tax rate in Q3 2025 was 24.4%, consistent with previous years. This moderate rate is primarily due to standard U.S. corporate tax structures and limited international tax optimization.