United Airlines Just Issued A Playbook For Any Business Staggered By Skyrocketing Costs

This article was originally published on Inc.com.

United Airlines CEO Scott Kirby doesn’t sugarcoat the impact that the war in Iran has already taken on the company. Jet fuel prices have more than doubled in the past few weeks, he says, and he expects oil to soar to US$175 a barrel and go no lower than $100 until the end of 2027.

At those prices, United’s jet fuel bill this year will increase by $11 billion, he says—an ominous figure, considering “in United’s best year, we made less than $5 billion.”

But Kirby wants everyone at United to know their jobs are safe, the company is swimming in cash, and he’s prepared to reduce expenses without derailing plans to add new planes and invest in airport infrastructure.

In a letter to the airline’s more than 100,000 employees, Kirby acknowledged that United’s past response to economic crises like 2020’s COVID shutdown was to initiate immediate cost-cutting measures that started with layoffs and the postponement of aircraft orders and plans for future investments.

“We are NOT going to do that,” he wrote, noting that the carrier has three times as much cash now as it did pre-COVID. “We have the financial firepower to continue to stay focused on the long term. We will continue full speed ahead to take delivery of about 120 new aircraft this year, including 20 new 787s, and will take another 130 new aircraft by April 2028.”

To ease the burden of higher fuel costs, however, Kirby announced a short-term plan for “tactically pruning” off-peak flights on Tuesdays, Wednesdays, and Saturdays as well as redeyes. United will also trim capacity at its Chicago hub at O’Hare International Airport and scrub service to Tel Aviv and Dubai until autumn. Both Middle East cities have been the target of recent Iranian attacks.

“There’s no point in burning cash in the near term on flying that just can’t absorb these fuel costs,” Kirby said.

The good news, he added, is that business is booming at United, which reported adjusted net income of $3.5 billion last year. “The 10 biggest booked revenue weeks in our history have been the last 10 weeks,” Kirby claimed.

And United is proceeding with plans to step up its expenditures on technology and facilities. “Think more and better clubs, new infrastructure investments at our hubs,” and expansion at Newark Liberty International Airport that will enable the carrier to accommodate 100 widebody departures a day.

Kirby ended his reassuring letter to employees with what amounted to a group hug. “I want you to sleep well at night knowing United prepared for this,” he said, “and I’m asking you to stay 100 percent focused on what you’ve been doing to take care of each other and our customers.”