In light of the mounting evidence that the economy is falling apart — United Airlines said today that if demand starts to fall off noticeably, the airline will either have to raise fares or reduce capacity — given the specter of $100 a barrel oil.

According to Dow Jones, United CFO Jake Brace told those at the Goldman Sachs Transportation Conference in New York yesterday that with crude oil prices approaching $100 a barrel, United and other airlines eventually will have to deal with those skyrocketing prices by either raising fares further or reducing capacity rather than flying with too many empty seats.

“Either the industry passes on the higher fuel prices or we’re going to have to lower capacity, but you have to make the equation work,” he said in comments to the conference in New York.

Brace said United has a little more than 100 aircraft unencumbered by debt, including 50 Boeing 737s, “that we could ground whenever we needed to if the demand environment were such that it didn’t make sense to fly those planes.”

The 100 planes would represent more than a fifth of United’s mainline fleet of about 460 aircraft, as of Dec. 31.

It also has 13 narrow-body airplanes and one 757 coming off lease in 2008 that also could help it adjust capacity.

Ticker: (UAUA:Nasdaq)

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