United doubles down on premium travel, new airplanes
United Airlines is accelerating its sweeping push into premium travel as surging fuel costs driven by the conflict with Iran drive oil prices higher and put downward pressure on profits.
The carrier warned oil could remain above $100 a barrel through 2027 and reach as high as $175, a scenario that would increase its annual fuel bill by roughly $11 billion — more than double its best-ever profit, CEO Scott Kirby said.
United plans to cut about five percentage points of capacity this year while expanding higher-margin premium seating, betting wealthier travelers and corporate customers will continue paying elevated fares.
The airline also expects to take delivery of more than 250 aircraft by April 2028 – the most by any airline over a two-year period – as it builds out premium offerings across its network.
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"We've positioned ourselves to get through these storms that are inevitable, stay focused on the long term and keep investing for the long term," Kirby said.
New Airbus A321neo "Coastliner" and A321XLR aircraft will feature lie-flat Polaris seats and larger premium cabins, significantly increasing high-end capacity. The A321XLR alone will double premium seating compared with the older Boeing 757 jets it is replacing.
United said the expansion will leave it with nearly twice as many lie-flat seats as its closest competitor, reflecting a broader industry shift toward higher-paying customers who are less sensitive to rising prices.
Andrew Nocella, United's chief commercial officer, said demand remains strong.
"I can tell you that the environment is strong," Nocella said. "We've been able to pass through many of the price increases necessary to cover" rising fuel costs.
United has already increased premium seats per North American departure by about 40% since 2021 while hiring more than 60,000 employees and overhauling much of its fleet.
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By cutting less profitable flying and expanding premium capacity, United is aiming to protect margins and offset billions in higher fuel costs without significantly weakening demand.
Reuters contributed to this report.