"If the price stays like this, you're gonna feel it in Q2 too."
That was Scott Kirby, CEO of United Airlines, with the face of a guy warning you the slap is coming — but who will personally be sitting in first class when the turbulence hits.
Let's get to it.
Fuel blew up. And nobody hedged.
Since the United States and Israel struck Iran last Saturday, the price of jet fuel — the biggest cost for airlines after payroll — jumped 58% in one week. One damn week. The gallon hit $3.95 on Thursday, according to the Argus index.
And guess what? United, like most major American carriers, doesn't hedge fuel. None. Zero. Zilch.
Kirby even explained it with that CEO polish: "Nobody hedges anymore, and even if they did, protecting the crack spread is very difficult." The crack spread is the difference between crude oil prices and refined products. Translation from finance-speak: it's too complicated, so we just... cross our fingers and hope for the best.
That's like living in a flood zone and not buying insurance because "eh, the policy is complicated." Then when the water rises, you blame Mother Nature.
The bill is coming — and fast
When they asked Kirby when the higher fuel costs would hit ticket prices, he was surgical: "It'll probably start quickly."
No beating around the bush. None of that "we're monitoring the situation" crap that every gutless executive parrots on repeat. Kirby at least has the decency to warn you before reaching into your pocket.
And look, it's not like demand is falling. Quite the opposite. Booking revenue is 20% above the same period last year. In his words: demand "hasn't taken a single step backward."
In other words: they can pass on the cost. And they will.
The domino effect of Middle East chaos
More than 25,000 flights have been canceled in the Middle East since the strikes. Over a million people were left stranded. Dubai International Airport — the busiest in the world for international flights — turned into a disaster movie set. Doha, Qatar, same deal.
And here's the detail that shows just how beautiful capitalism is in its brutality: while the world burns — literally — United found a new goldmine.
Passengers from Australia and New Zealand who used to fly to Europe via the Middle East now need alternative routes. The result? United went from fewer than one booking per day on that route to over 1,000 daily bookings from Oceania to Europe.
From nearly zero to a thousand a day. In one week. If that's not a textbook case of "never let a good crisis go to waste," I don't know what is.
Kirby also mentioned that United is in talks with the Trump administration about possible charter flights to evacuate American citizens from the Middle East. Nothing confirmed yet, but notice the play: the company positions itself as a government partner, gets good press, and probably still makes money in the process.
What this means for your wallet
I'll be blunt: if you've got international travel booked in the coming months, brace yourself — and your credit card. Airlines aren't going to eat this cost. They never do. The bill always gets passed down to the passenger.
And if you're an investor, pay attention. The American carriers — United, Delta, American — are attending a JPMorgan conference in two weeks where they typically update their financial projections. It'll be either a cold splash of reality or a masterclass in forced optimism. Probably both at the same time.
The most ironic part of all? Demand is solid. People are still traveling. Revenue is climbing. But costs climbed faster. And nobody hedged.
It's that old lesson Nassim Taleb hammers until he's blue in the face: the risk that destroys you isn't the one you see coming — it's the one you chose to ignore because it was "too complicated to hedge."
United decided it was too complicated. And now, guess who's footing the bill?
Spoiler: it's you.
