United Airlines will cut more unprofitable flights over the next two quarters as it braces for a prolonged period of elevated jet fuel prices linked to the war involving Iran. However, strong travel demand continues to allow US carriers to raise fares.
In a staff memo on Friday, chief executive Scott Kirby said the airline is preparing for oil prices to rise as high as $175 a barrel and remain above $100 through the end of 2027, as cited by Reuters.
At those levels, United’s annual fuel bill could increase by about $11 billion, more than twice the profit the airline earned in its best year on record, he said.
US airlines have so far managed to push through fare increases, supported by resilient travel demand and tighter capacity, even as the war has triggered a fresh fuel price shock for the industry.
“There’s a good chance it won’t be that bad,” Kirby wrote of the airline’s fuel assumptions. “But… there isn’t much downside for us in preparing for that outcome.”
The airlines had already begun trimming less profitable flights, including some midweek, Saturday and overnight services.
Kirby said the airline would cancel about three percentage points of off-peak flying in the second and third quarters, targeting routes and time periods with weaker demand.
United will also remove about one percentage point of capacity from its Chicago O’Hare hub and keep services to Tel Aviv and Dubai suspended, bringing the total reduction to roughly five percentage points of its planned capacity for the year.
Kirby said the airline currently expects to restore its full schedule in the fall. The latest cuts build on his comments earlier this week that United would rather leave some demand unmet than continue operating routes that lose money if fuel prices remain high.
Jet fuel prices have nearly doubled since late February, driving up costs across the airline industry and disrupting global flight patterns through reroutings and airspace restrictions.
Major US airlines say strong travel demand is giving them room to raise fares, helping offset the impact of higher fuel costs. Capacity cuts such as those announced by United are also expected to support the industry’s pricing power.
Rival Delta Air Lines, which raised its first-quarter revenue forecast this week, has said it also has flexibility to trim capacity if fuel prices remain elevated.
US carriers are particularly exposed to fuel price swings because most do not hedge their fuel costs. In contrast, some European and Asian airlines use hedging strategies to cushion price shocks. Instead, US airlines have been relying on fare increases and tighter capacity to recover part of the additional expense.
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