United Airlines due to rising oil prices plans to cut short-term capacity by about five percentage points, according to a Friday letter to employees from CEO Scott Kirby.
Three of those points will come from canceling flying in off-peak periods, including redeyes and Tuesday, Wednesday and Saturday flying during the second and third quarters, according to Kirby.
Another point will come from capacity at Chicago O'Hare "when the [Federal Aviation Administration] process concludes," he added, referencing a proposal from FAA and the Department of Transportation to limit capacity at the airport this summer.
Kirby in the letter, which assured employees the airline would not "furlough employees, defer aircraft orders, downgrade to regional jets, go through cost cutting exercises [or] delay investments in the future," said the carrier now assumes the crude oil price would increase to $175 per barrel and remain higher than $100 per barrel until the end of 2027.
"Honestly, I think there's a good chance it won't be that bad, but ... there isn't much downside for us to preparing for that outcome," according to Kirby.
The U.S. benchmark for crude oil closed Friday at more than $98 per barrel. It has risen sharply in recent weeks following the war in the Middle East between the U.S., Israel and Iran, and Iran's closure of the Strait of Hormuz. Kirby noted that "if prices stayed at this level, it would mean an extra $11B in annual expense just for jet fuel. For perspective, in United's best year ever, we made less than $5B."
Kirby noted 2026 demand remains strong, "the strongest we've ever seen." Reiterating a point he made last week at the J.P. Morgan Industrials Conference, he said that "the 10 biggest booked revenue weeks in our history have been the last 10 weeks."
Of that conference, Kirby wrote that some United competitors there "said some version of 'hope is our strategy.' It's possible they're right and that the war ends quickly. But if it doesn't, this will be our opportunity down the road to buy assets, absorb network changes, etc."