The ongoing U.S.-Israel war on Iran is having a significant impact on the airline industry, the worst disruption since the COVID-19 pandemic. United Airlines is preparing for a future where high oil prices will persist through at least 2027, and the carrier is adjusting its operations accordingly.
Surge in Fuel Prices and Financial Impact
United Airlines’ CEO, Scott Kirby, highlighted the alarming rise in jet fuel prices, which have more than doubled in just the past three weeks. This increase is expected to add an additional $11 billion in annual costs for the airline if fuel prices stay at their current levels.
United spent $11.4 billion on fuel in 2025, and with the soaring prices, this could push the airline’s fuel expenditure to over $20 billion in 2026.
Despite the higher fuel costs, United has seen strong demand and reported a record revenue performance in the past 10 weeks. However, Kirby cautioned that maintaining profit margins will be difficult if oil prices remain high for an extended period.
The airline’s projections assume oil could hit $175 per barrel, not returning to $100 until the end of 2027.
The Impact of Oil and Jet Fuel Price Increases
Brent crude oil prices surged by 3.26%, closing at $112.19 per barrel, while U.S. oil prices increased by 2.27%, reaching $98.32 per barrel. The closure of the Strait of Hormuz, a key oil passage through which 20% of the world’s oil flows, has further fueled concerns.
Analysts warn that if the Strait remains closed, prices could spike to as high as $150 or $200 per barrel.
Jet fuel prices have been even more volatile, especially in Northwest Europe, where they have reached record highs near $239 per barrel, while Asian jet fuel prices have hit near $200 per barrel.
United Airlines Adjusts Operations
In response to these challenges, United Airlines is planning to reduce capacity in specific markets to better manage costs. This includes:
- Fewer flights during off-peak times (like redeye flights and Tuesday, Wednesday, and Saturday trips) during the second and third quarters of the year.
- Reduced capacity at the Chicago O’Hare airport hub and a halt in service to Tel Aviv and Dubai, which remain impacted by ongoing conflict in the region.
- These changes will reduce United’s capacity by about 5 percentage points, but the airline plans to restore full service in the fall.
Despite these adjustments, United Airlines remains committed to its longer-term plans, including taking delivery of around 120 new aircraft this year. CEO Kirby emphasized that the airline would avoid drastic cost-cutting measures, such as furloughing employees, deferring aircraft orders, or downgrading to regional jets.
Investments in technology and infrastructure, particularly at Newark Airport and its airport lounges, will continue.
Other Airlines Face Similar Challenges
United is not the only airline grappling with these rising fuel costs. Scandinavian airline SAS announced it would cancel around 1,000 flights due to the high fuel prices.
Air France-KLM is also planning to scale back service to certain parts of Asia if fuel costs for return flights to Europe continue to rise, as these routes are more reliant on Gulf-based fuel supplies.
What Lies Ahead for the Airline Industry
The airline industry, already hit hard by the COVID-19 pandemic, now faces another crisis due to soaring fuel prices linked to geopolitical instability.
While United Airlines remains optimistic about its long-term growth, it is adjusting its near-term operations to navigate the financial pressures of high fuel costs. For now, the airline industry is preparing for a prolonged period of uncertainty.
