'Preparing for oil to hit $175 per barrel': United Airlines CEO to employees as West Asia conflict rages on

United Airlines is bracing for a cataclysmic shift in energy costs. In a memo to employees, the airline's CEO Scott Kirby revealed the airline is prepping for oil to hit $175 per barrel and warned that prices may not drop back below the $100 mark until at least the end of 2027.

"Our plans to assume oil goes to $175/barrel and doesn't get back down to $100/barrel until the end of 2027. Honestly, I think there's a good chance it won't be that bad," Kirby told employees. 

The forecast comes as the aviation industry reels from a massive "fuel shock" triggered by escalating geopolitical conflict in the Middle East.

To protect the company's bottom line, United is immediately slashing approximately 5% of its planned capacity for the second and third quarters of 2026. Kirby described the move as "tactically pruning" flights that have become temporarily unprofitable due to skyrocketing jet fuel costs.

What travellers can expect:

• Cancelled off-peak flights: Red-eyes and flights on Tuesdays, Wednesdays, and Saturdays are being scaled back.
• Suspended routes: Service to Tel Aviv and Dubai remains paused.
• Hub reductions: A 1% capacity cut is planned for Chicago O’Hare (ORD).

The $11 billion risk

The financial stakes are massive. Kirby noted that if oil prices remain at these elevated levels, United’s annual fuel bill could balloon by $11 billion. To put that in perspective, that cost is more than double the total profit United earned in its "best year ever."

Despite the grim forecast, Kirby insisted the airline is "playing offence." Unlike previous downturns, United does not plan to furlough staff or defer its order for 120 new aircraft due this year.

Why are fares climbing?

While United hopes to restore its full schedule by the fall, the immediate result for passengers is fewer seats and higher prices. Fares have already jumped 15% to 20% in the last week as airlines scramble to offset costs.

"There’s no point in burning cash on flying that just can’t absorb these fuel costs," Kirby wrote.

For now, demand for travel remains at record highs, but with $175 oil on the horizon, the era of cheap flights may be grounded for the foreseeable future.