Jet fuel prices are rising to levels not seen since before the Covid pandemic and it’s set to drive up airfares, United Airlines CEO Scott Kirby said Wednesday.
“Higher jet-fuel prices lead to higher ticket prices,” Kirby told CNBC’s “Squawk on the Street.” “Ultimately, we’ll pass that through.”
United forecast average fuel costs of $2.39 a gallon in the fourth quarter, when it expects a surge in bookings from the end-of-year holidays and recently loosened international travel restrictions. That’s up from $2.14 a gallon in the third quarter and the $2.02 on average it paid in the fourth quarter of 2019.
Kirby said higher demand usually drives fuel prices up. The increase in demand is a welcome trend for an industry that continues to struggle to return to profitability.
United posted a $473 million profit for the third quarter, thanks to $1.1 billion in federal aid, though a surge in delta-variant cases of Covid-19 weighed on its bottom line. The Chicago-based airline reiterated that it expects its 2022 costs, excluding fuel to be lower than 2019.
The company’s shares were up about 1.7% in premarket trading Wednesday.