United Airlines is slashing unprofitable routes and bracing for jet fuel costs that could stay elevated for years.
Chief Executive Scott Kirby told staff in a memo on Friday that the airline is planning for crude oil to surge as high as $175 per barrel and stay above $100 through the end of 2027, prompting the carrier to cancel roughly five percentage points of its planned capacity this year while continuing to invest in its long-term fleet expansion.
Kirby said the airline would eliminate approximately three percentage points of off-peak flying during the second and third quarters. United will also remove about one percentage point of capacity from Chicago O'Hare, bringing total reductions to around five percentage points of this year's scheduled flights. Service to Tel Aviv and Dubai will remain suspended.
The numbers behind the scenario are sobering. If oil reaches the levels outlined, United's annual fuel expenditure would climb by roughly $11 billion — more than twice the profit the airline earned during what it called its "best year ever", according to CNBC News reports. Jet fuel prices have nearly doubled since late February, a spike that the article links to the conflict with Iran.
"There's a good chance it won't be that bad," Kirby wrote in the memo. He added context for employees worried about the aggressive planning posture.
"But...there isn't much downside for us to preparing for that outcome," he continued. The message was clear: plan for the worst, hope the market cooperates.
The tension in this story is worth noting. Airlines face a classic squeeze — costs are surging, but so far demand has held up remarkably well. United reported that the first 10 weeks of the year were the strongest booking period in the carrier's history.
Delta Air Lines raised its first-quarter revenue forecast this week, underscoring industry-wide momentum. Meanwhile, two fare increases of approximately $10 each way have already been implemented, and Melius Research estimates the market could absorb an additional 5% to 7% rise. Kirby said fares booked over the past week had climbed 15% to 20%.
Earlier this week, Kirby commented that United would rather leave some demand unmet than continue flying routes that lose money if fuel stays elevated. He also said the airline aims to fully offset higher fuel costs this year — an ambitious target given the magnitude of the increase.
Perhaps the most notable element of Kirby's memo is what United is not doing. The CEO told employees that United will not respond the way it did during past downturns by furloughing staff or delaying future investments. That's a meaningful departure from the airline industry's traditional playbook of slashing headcount at the first sign of trouble.
United plans to continue taking delivery of approximately 120 new aircraft this year, including 20 Boeing 787 widebodies. Another 130 aircraft are scheduled for delivery by April 2028. Kirby framed the cuts as tactical, not strategic — the airline expects to restore its full schedule in the fall.
This is the kind of disciplined capital allocation that free-market advocates should appreciate. Rather than panic-selling the future, United is trimming around the edges while keeping its growth engine intact. The question is whether fuel costs will cooperate long enough to validate the bet.
The broader airline sector faces a difficult environment. U.S. carriers are reportedly particularly exposed because most do not hedge fuel costs, though specific data supporting that claim is limited. Low-cost carriers, which operate on thinner margins, could face even steeper headwinds from soaring energy prices.
For investors watching the airline space, a few key variables deserve attention:
United's approach reflects a carrier that learned hard lessons from previous downturns. By protecting its workforce and fleet pipeline, the airline is betting that this fuel spike, however painful, is a cyclical challenge rather than a structural one. Kirby's memo essentially tells Wall Street: we see the storm, and we're choosing precision over panic.
The coming quarters will test whether United's calculated gamble pays off. Restoring the full schedule by fall assumes either a moderation in fuel prices or sufficient fare increases to make those routes profitable again. Neither outcome is guaranteed, and the geopolitical situation driving energy costs remains unpredictable.
What is clear is that United is operating from a position of relative strength — record bookings, pricing power, and a committed fleet expansion. In a market where uncertainty is the only certainty, that combination of caution and conviction is exactly what separates airlines that survive disruptions from those that get consumed by them.