United Airlines plans to continue raising prices and cutting capacity for the rest of the year in response to higher jet fuel prices.
Jet fuel prices have more than doubled, United CEO Scott Kirby said during a Wednesday (April 22) earnings call. The airline’s fuel expense was $340 million higher in the first quarter than it was a year earlier, it said in a Tuesday (April 21) earnings release.
Despite this and other challenges, United characterized its first quarter results as “strong,” highlighting pre-tax earnings of $0.9 billion, with a pre-tax margin of 6%, which was up 2.3 points year over year, as well as its highest-ever number of passengers carried in a first quarter.
“At the moment, our goal is to do whatever it takes to recover 100% of the increase in jet fuel prices as quickly as possible and to achieve double-digit pre-tax margins next year,” Kirby said during the call.
To achieve this, United plans to increase its yield by 15% to 20% and, since that is likely to reduce demand, reduce its planned capacity to be flat to up 2% year over year in the third and fourth quarters, Kirby said. If the price of fuel remains elevated, the airline could continue to reduce capacity growth in 2027, compared to what it had planned, he added.
“It simply doesn’t make sense to fly marginal flights that will lose cash in a higher fuel price environment,” Kirby said.
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Andrew Nocella, executive vice president and chief commercial officer at United, said during the call that late in the first quarter, the airline implemented five price increases and raised baggage fees in response to fuel prices. As of April, United had increased its sell-in ticket yields by 20% year over year.
“Price increases in response to the increase in jet fuel have been significant and across the board,” Nocella said.
Meanwhile, one of United’s other initiatives during the first quarter was the installation of Starlink on aircraft to provide fast, free Wi-Fi to members of its MileagePlus loyalty program. The airline added Starlink to 327 aircraft during the quarter and expects to add the technology to its whole fleet by the end of 2027, according to the release.
United also added to its mobile app a new way to monitor TSA wait times. Within two weeks of the rollout of this feature, it had been used by nearly 1.6 million customers.
The airline also enhanced miles earnings for United MileagePlus primary cardholders, offering as many as twice the number of miles per dollar for United flights than non-cardholders, per the release.
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