The global airline industry is on course to see its net profit halve to $23 billion in 2026, as the war in the Middle East and a sharp spike in jet fuel prices squeeze margins across nearly every region, the International Air Transport Association (IATA) said on Saturday.
The revised forecast represents a sharp deterioration from the $45 billion net profit recorded in 2025 and falls well short of the $41 billion IATA had previously projected for 2026. The net profit margin is now expected to reach just 2.0 percent, down from 4.2 percent last year.
“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” said Willie Walsh, IATA’s Director General. “Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%.”
Jet fuel prices are expected to average $152 per barrel in 2026, a rise of nearly 70 percent on the $90 per barrel recorded in 2025. Fuel costs across the industry are forecast to climb from $252 billion last year to $350 billion, lifting jet fuel’s share of total operating expenses to 31.4 percent from 25.4 percent. Airlines have hedged roughly one third of their expected fuel consumption for 2026, which limits short-term volatility but does not insulate carriers from sustained price increases.
Net profit per passenger is expected to fall to $4.50 in 2026, half the $9.10 recorded last year. Total industry revenues are still forecast to grow 9.4 percent to $1.165 trillion, but operating expense growth of 13 percent to $1.117 trillion is expected to outpace that recovery.
“Net profit per passenger is expected to fall to $4.50, half of what it was last year,” Walsh said. “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.”
Despite the profit squeeze, airlines are expected to carry 5.1 billion passengers in 2026, up 2.4 percent on 2025, with load factors forecast to reach a record 84.0 percent. Total revenues from passenger tickets are projected at $839 billion, with average real return airfares expected to be $462, some 26.3 percent lower in real terms than in 2016.
The picture varies sharply by region. Middle East carriers are expected to collectively post a net loss of $4.3 billion in 2026, a dramatic reversal from the $7.2 billion profit the region recorded in 2025. Capacity reductions, flight cancellations and the near-complete shutdown of certain airspace corridors at the start of the conflict have driven up operating costs while depressing load factors.
“The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war,” Walsh said. “These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”
European airlines are forecast to earn $9.6 billion, down from $13.0 billion in 2025, hampered by high fuel exposure, continuing airspace restrictions over Russia and rising living costs weighing on consumer demand. North American carriers are expected to post $9.4 billion in profits, compared to $12.4 billion last year, with the region’s move away from fuel hedging meaning higher costs are passed through more rapidly.
Asia Pacific airlines are projected to earn $6.6 billion, down from $9.8 billion, partly offset by traffic gains on Europe-Asia routes as passengers seek alternatives to routing through Gulf hubs. Latin America is forecast at $1.2 billion, reduced from $1.9 billion, with currency depreciation and limited balance sheet flexibility adding to the pressure.
Africa is expected to generate just $0.1 billion in net profit, down from $0.3 billion in 2025, as hub carriers benefit from rerouted traffic but structural constraints limit their ability to capitalise on the shift.
Supply chain pressures continue to compound the industry’s difficulties. The global aircraft backlog reached 18,100 in May 2026, up from 17,000 in 2024, representing more than 50 percent of the active commercial fleet. The shortage has pushed aircraft lease rates to record highs and raised maintenance costs as airlines extend the operational lives of older aircraft.
Return on invested capital is expected to reach 4.3 percent in 2026, below the 8.5 percent estimated weighted average cost of capital, highlighting the industry’s persistent structural vulnerability to external shocks.
IATA polling conducted across 15 countries in April 2026 found that 97 percent of travellers expressed satisfaction with their most recent travel experience, while 79 percent said they considered air travel good value for money. Some 93 percent indicated plans to travel at the same or higher level over the coming 12 months compared to the previous year.
