Shrink Now, Grow Later

The airline is pulling about 3% of flying from its weakest time slots - think Tuesday flights, Saturday departures, and overnight routes nobody loves - during the second and third quarters.

It's also trimming a point of capacity at O'Hare and keeping Tel Aviv and Dubai flights grounded. 

At the same time, United is still taking delivery of around 120 new planes this year, including 20 widebody 787s. Another 130 are on the way by early 2028.

CEO Scott Kirby told staff the airline isn't furloughing anyone or pulling back on future spending.

So then, what’s going on?

The Math That’s Mathing

Fuel is the second-biggest bill airlines pay - right behind labor. 

And right now, it's a bill that just doubled.

The cost of filling up a commercial jet has essentially doubled in under a month, driven by the Iran war's disruption of global energy flows. 

Kirby's internal planning assumes oil could climb as high as $175 a barrel, though he acknowledged it probably won't get that high.

If it did, United would be staring at $11 billion in extra fuel costs per year. 

For context, the airline made less than $5 billion in what Kirby called its best year on record last year.

Travelers that keep booking and keep paying more are offsetting these costs..

United said fares on tickets sold in the past week alone were 15% to 20% higher than where they were before the spike. 

The industry has already tacked on two rounds of price bumps - roughly $10 per leg each time - and analysts at Melius Research think another 5% to 7% is still on the table.

Airlines Are Flying Together

United isn't alone - Delta raised its first-quarter revenue outlook this week and said it can pull capacity if fuel stays high.

While plenty of airlines in Europe and Asia lock in prices ahead of time, major U.S. airlines take the hit in real time and try to make it up through pricing and discipline. 

It's riskier when demand cracks - but right now, demand is doing the opposite.

Low-fare carriers are in a tighter spot - Their business models already run on thin margins, and rising labor costs were squeezing them before fuel joined the party. 

A doubling in jet fuel is harder to absorb when your average ticket price is $79.