Global airline profits to halve to $23 bn in 2026 amid fuel shock triggered by West Asia conflict: IATA

Global airline industry profits are expected to nearly halve this year as surging jet fuel costs triggered by the Middle East conflict squeeze margins despite continued growth in passenger traffic, according to the International Air Transport Association (IATA).

In its latest outlook, IATA said net profits of airlines worldwide are projected to decline to USD 23 billion in 2026, cutting the industry's net profit margin to 2% from stronger levels seen in recent years.

The industry body said airlines are facing an unprecedented fuel shock following disruptions to energy supplies after the closure of the Strait of Hormuz.

Jet fuel prices have roughly doubled since late February, while fuel availability has come under pressure in several regions, including Europe, the US West Coast and parts of Asia, it said.

Despite the cost pressures, airlines are expected to remain profitable due to higher ticket prices, resilient travel demand and constrained capacity.

Industry revenues are forecast to rise 9.4% in 2026 as carriers pass on part of the increased fuel burden through higher fares and ancillary charges.

However, elevated fuel prices, longer flight routings, airspace disruptions and a weakening global economic backdrop are expected to weigh heavily on earnings.

"Net profit is expected to fall to USD 23 billion, cutting the net margin to 2%, the weakest outcome since the Covid years," IATA said.

Global passenger traffic is forecast to grow 2.1% this year, slower than previously expected, while air cargo demand is projected to expand by just 0.7% as the conflict disrupts major logistics hubs and reduces available capacity.

The report said airlines have limited ability to absorb the sharp increase in fuel costs, forcing carriers to raise fares even as economic growth slows and consumers become more cautious with discretionary spending.

According to IATA, the industry's operating profit, measured by earnings before interest and taxes (EBIT), is expected to come in at USD 48 billion in 2026, translating into an operating margin of 4.1% compared with 7.2% estimated for 2025.

The association warned that profitability remains highly vulnerable to further increases in fuel prices.

If current fuel costs remain above their baseline assumptions through the end of the year, the global airline industry could slip into losses and witness a decline in traffic.