Middle East war, fuel crisis to halve airline profits in 2026 – IATA

By Dickson Omobola

International Air Transport Association, IATA, has forecast that airline profitability will halve in 2026 compared to 2025, fingering war-related disruptions in the Middle East and rising fuel costs as major factors.

IATA, in its latest financial outlook for the global airline industry, said profits are expected to decline from $45 billion in 2025 to $23 billion in 2026.

According to the outlook, airlines in the Middle East are expected to collectively slip into losses due to weak demand and operational disruptions, while carriers in other regions are projected to remain profitable, but at lower levels.

Speaking on the development, IATA’s 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 $45 billion in 2025 to $23 billion this year. 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.”

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