Airline industry profitability halved amid Middle East disruptions and rising fuel costs
The International Air Transport Association (IATA) has sharply downgraded its financial outlook for the global airline industry, citing disruptions in the Middle East and soaring fuel prices, Qazinform News Agency cites WAM.
Net profit for 2026 is projected at 23 billion US dollars, nearly half the 45 billion US dollars earned in 2025, and well below the earlier forecast of 41 billion US dollars.
Net profit margin is expected to fall to 2.0%, down from 4.2% in 2025. Profit per passenger will drop to 4.50 US dollars, compared with 9.10 US dollars last year.
Operating profit is forecast at 48 billion US dollars, down from 76.4 billion US dollars in 2025, with margins shrinking to 4.1%.
Jet fuel prices are expected to average 152 US dollars per barrel, nearly 70% higher than in 2025. Total fuel expenses will surge from 252 billion US dollars to 350 billion US dollars.
Middle Eastern carriers are expected to post losses due to airspace shutdowns and weak demand, while airlines in other regions remain profitable but at reduced levels.
Passenger numbers are forecast to reach 5.1 billion, up 2.4% from 2025, with load factors hitting a record 84%.
Cargo volumes are expected to rise slightly to 71.7 million tonnes.
Global GDP growth is projected to slow to 2.5%, inflation to rise to 5%, and trade growth to fall to 1.9%.
Fuel costs are expected to rise by nearly 40% from 252 billion US dollars in 2025 to 350 billion US dollars in 2026. This is based on an expected average price of crude oil at 95 US dollars/barrel (Brent) for the year (up 37% from 69 US dollars in 2025). Jet fuel prices are expected to average 152 US dollars/barrel for the year (up almost 70% on 90 US dollars in 2025). The crack spread (premium for jet fuel over Brent crude oil) is expected to average 57 US dollars/barrel, an historic high.
Willie Walsh, IATA’s Director General, noted that “war-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” adding that smaller carriers with weaker balance sheets are struggling the most.
As stated previously, Europe was facing a critical risk of jet fuel shortages following the complete cessation of shipments from the Middle East in April. The disruption, triggered by the conflict and the closure of key shipping routes, comes at a precarious time as the aviation industry prepares for the peak summer travel season.