Airlines Prepare For Winter Capacity Cuts As Fuel Costs Rise

(MENAFN- Bangladesh Monitor) Dhaka: Airlines in the United States, Canada and Europe are preparing for a difficult winter as rising jet fuel prices and continued geopolitical uncertainty push carriers to reconsider flight schedules and capacity plans.

Several major airlines have signaled that they could reduce seats or suspend less-profitable routes if fuel prices remain elevated, reversing expectations earlier this year that operating costs would ease after the sharp increase triggered by the conflict involving the United States, Israel and Iran.

The situation has become more difficult in recent weeks as the fragile ceasefire has deteriorated and fuel prices have moved higher. Airlines are now planning for the possibility that elevated costs could persist well into the coming quarters.

In the United States, executives from major carriers warned during a Morgan Stanley investor conference that capacity could be adjusted if fuel remains expensive.

American Airlines, which increased capacity by more than 5 percent year over year in the second quarter as it sought to regain market share, said it would moderate future growth. Chief Financial Officer Devon May indicated that the airline could make additional adjustments to its December schedule in response to higher fuel expenses.

United Airlines is also preparing to remove flights that no longer generate sufficient returns. Chief Financial Officer Mike Leskinen said the carrier's focus is on profitability and cash generation rather than maintaining market share at any cost.

Southwest Airlines has already lowered its 2026 capacity growth forecast to between 1 percent and 1.5 percent, compared with its earlier projection of 2 percent to 3 percent. Chief Financial Officer Tom Doxey said further reductions could follow if fuel prices remain high.

Air Canada is also reviewing parts of its network. Chief Financial Officer John De Bert said the carrier could reconsider some leisure and transpacific services, particularly where higher fuel costs are difficult to recover through fares.

The pressure is similarly evident in Europe.

Greek carrier Aegean Airlines is taking a more conservative approach to capacity after concluding that fuel prices could remain significantly above previous levels for several quarters.

Leisure airline group Corendon is making a more substantial adjustment. It plans to reduce its Boeing 737 fleet from 30 aircraft to 21 for the winter season, including the early return of seven aircraft to lessors and the end of a wet-lease arrangement involving two additional jets.

Irish low-cost carrier Ryanair has also announced a one-time winter capacity reduction to limit its exposure to fuel costs that have not been hedged.

The capacity decisions are likely to put pressure on airfares as airlines seek to recover higher operating expenses. Analysts will closely examine upcoming third-quarter earnings reports for indications of whether passengers are accepting higher fares and whether weaker demand could further influence winter schedules.

For airlines, the challenge is balancing fuel costs, fares and demand while avoiding excess capacity in markets where profitability has deteriorated.

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