The global airline industry’s profitability is expected to halve in 2026 as the ongoing Middle East conflict and a sharp surge in fuel prices weigh heavily on carriers worldwide, according to the International Air Transport Association’s (IATA) latest industry outlook.
IATA now expects airlines to post a combined net profit of $23 billion in 2026, down from an estimated $45 billion in 2025 and nearly half of the $41 billion profit it had projected earlier for this year.
The industry’s net profit margin is forecast to fall to 2%, compared with 4.2% last year, while net profit per passenger is expected to drop to $4.50, roughly half the $9.10 achieved in 2025.
“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” said Willie Walsh, Director General of IATA.
“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,” he added.
The biggest challenge facing airlines this year is fuel. IATA expects average jet fuel prices to rise to $152 per barrel, up nearly 70% from $90 per barrel in 2025. As a result, the industry’s fuel bill is projected to surge from $252 billion to $350 billion, accounting for over 31% of total operating costs.
Despite the pressure on profitability, demand for air travel remains resilient. Passenger traffic is expected to reach a record 5.1 billion travellers this year, while airlines are forecast to achieve an all-time high load factor of 84%, meaning more seats will be filled than ever before.
Total industry revenues are expected to rise 9.4% to a record $1.165 trillion, driven by higher fares, strong passenger demand and growing ancillary revenues. However, operating expenses are forecast to increase at a faster pace of 13%, limiting airlines’ ability to convert revenue growth into profits.
The Middle East is expected to be the worst-hit region, with airlines forecast to collectively post a $4.3 billion loss in 2026 compared with a profit of $7.2 billion last year. Flight cancellations, airspace restrictions, weaker transfer traffic and higher operating costs are expected to weigh heavily on carriers in the region.
Elsewhere, airlines in Europe, North America and Asia-Pacific are expected to remain profitable, although earnings across all regions have been revised lower because of higher fuel costs and a weaker global economic outlook.
IATA also warned that aircraft supply-chain challenges continue to constrain growth. The industry’s backlog has climbed to 18,100 aircraft, representing more than half of the world’s active fleet, forcing airlines to keep older aircraft in service for longer and pushing up maintenance costs.
While the industry is expected to generate record revenues and carry more passengers than ever before, the latest outlook highlights how vulnerable airline profitability remains to geopolitical shocks and fuel price volatility.
For an industry expected to transport more than five billion passengers this year, airlines will ultimately earn just $4.50 per passenger, a reminder of the thin margins that continue to define global aviation.
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