Investing.com – United Airlines Holdings Inc (NASDAQ:UAL) warned that rising fuel costs linked to the Iran conflict are beginning to pressure the aviation industry, even as travel demand remains strong.

In a message to employees, United CEO Scott Kirby said the airline is preparing for a period of elevated oil prices, which could drive higher operating costs and force adjustments to capacity and pricing.

Kirby said United is planning for a scenario where oil could rise to $175 per barrel and remain elevated through 2027, though he added it may not get that severe.

He said the airline will cut about 5% of planned capacity in the near term, including trimming off-peak flights and suspending select international routes, to manage higher fuel costs.

He added that United will continue long-term investments, including aircraft deliveries and infrastructure expansion, positioning the airline to gain an edge if elevated oil prices persist.

The warning comes as global oil markets remain volatile amid escalating tensions in the Middle East. Analysts say the near-term outlook for airlines will depend on how long supply disruptions persist and whether crude prices stabilize.

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