The International Air Transport Association (IATA) has projected that profits of global airlines will sharply drop this year due to war-related disruptions in the Middle East and rising jet fuel prices
The IATA, in its latest Outlook Report on the aviation industry, reported that airlines were expected to post a combined net profit of $23 billion in 2026, representing about half of the $45 billion estimated for the operators last year and far below its earlier projection of $41 billion net profits for the current year.
The association also noted that carriers in the Middle East are likely to slip into losses due to weak demand and operational disruptions, while airlines in other regions are expected to remain profitable, albeit at reduced levels.
Commenting on the Outlook Report’s findings, IATA Director-General, Willie Walsh said: “War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worst. Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from $45bn in 2025 to $23bn this year.
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“And margins will shrink from 4.2 per cent to 2.0 per cent. All airline bottom lines are suffering from the rapid 70 per cent rise in jet fuel prices. Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year’s level. Smaller carriers that started the year with weak balance sheets are certainly struggling.
“At the regional level, all are in the black but with sharply reduced financial performance, with the exception of the Middle East. The Gulf carriers face operational uncertainty following a near-complete shutdown of airspace at the outbreak of the war. These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.
“Even in the best of times, the airline industry as a whole suffers from low margins and returns below the cost of capital. The oil price shock has tested airline financial resilience as net margins have been squeezed to 2.0 per cent globally.
“Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines. Net profit per passenger is expected to fall to $4.50, half of what it was last year. Under the circumstances, that shows resilience. But it won’t even buy you a hot dog at most of the FIFA World Cup venues, and it does not leave much of a buffer should other costs or taxes start rising”, Walsh added.
IIATA further stated that the industry’s net profit margin would decline to 2.0 per cent in 2026, compared to 4.2 per cent recorded in 2025 and below the previously projected 3.9 per cent while net profit per passenger transported would drop to $4.50 in 2026 from $9.10 achieved in 2025.
Similarly, it projected that operating profit would fall to $48 billion in 2026 from $76.4 billion in 2025, while the net operating margin would decline to 4.1 per cent from 7.2 per cent over the same period.
The association also predicted that the industry’s return on invested capital would decrease to 4.3 per cent in 2026 from 6.6 per cent in 2025, remaining below the estimated weighted average cost of capital of 8.5 per cent, noting that the gap underscores the structural challenges facing the global airline industry, where profitability shocks can quickly undermine capital efficiency.
