Global airlines are facing a significant challenge as their 2026 net profit forecast has been reduced to $23 billion, down from $45 billion in 2025. This downgrade is a result of soaring fuel expenses triggered by the ongoing conflict in the Middle East, according to a report by the International Air Transport Association (IATA).
The IATA, representing over 370 airlines worldwide and accounting for 85% of global air traffic, released its annual outlook report in Rio de Janeiro. The industry is now projected to achieve a combined net profit of $23 billion in 2026, a substantial decrease from the previous estimate of around $41 billion and the 2025 figure of $45 billion.
IATA Director General Willie Walsh highlighted that the Middle East conflict led to a surge in oil prices, causing jet fuel costs to spike. This situation is expected to result in a 70% year-on-year increase in average jet fuel prices, adding $100 billion to the industry’s collective fuel expenses this year.
The aviation sector is witnessing a scenario where demand remains steady despite airlines implementing fare and rate hikes to manage the escalating costs. However, growth is anticipated to slow down, with a projected increase of 2.1% for the passenger business and 0.7% for cargo, as per Walsh.
Net margins of airlines are forecasted to contract from 4.2% to 2.0% in what is anticipated to be a challenging year for all carriers, particularly those still reeling from the impact of the Covid pandemic and those operating in the Gulf region.
IATA’s surveys indicate that 86% of travelers anticipate airfares to align with oil prices, with 49% planning to spend more on travel this year compared to the previous year. Additionally, 43% intend to maintain their travel expenditure at the same level.
Walsh expressed optimism regarding a robust northern summer peak season, driven by the favorable consumer outlook. However, uncertainties loom over the sustainability of increased connectivity costs for travelers and shippers in the face of higher fuel prices.
He also raised concerns about airlines grappling with elevated fuel expenses due to less efficient fleets than anticipated, stemming from ongoing disruptions in the aerospace supply chain that hinder timely aircraft and engine deliveries.
