Fuel prices could cause planes to go to ground

In the face of ever increasing fuel prices, United Airlines is considering grounding up to 100 planes. The airline’s chief financial officer said on Wednesday that the airline needed to trim its growth even further.

As crude-oil prices near $100 a barrel, UAL’s chief financial officer, Frederic Brace says the company has two alternatives. “Either the industry passes on higher fuel prices or we’re going to have to lower capacity,” he said.

He said that the company has over 100 planes which could be either sold or grounded if fuel prices continue to climb. In addition, the company is already planning to take 13 narrow-body planes out of service next year.

To offset the price of fuel, the company will have to raise fares. So far, Brace said, the industry “has done a pretty good job of raising fares, it will need to do a better job at raising fares to offset the price,” of fuel.

UAL has followed the same policy as many airlines in America this year. Many airlines have cut the number of their domestic flights in order to limit supply and fill up the planes that fly. Limited supply has enabled many carriers to successfully push up prices.

www.united.com