Airlines’ Profits Fall 50% Amid Middle East Disruptions and Rising Fuel Costs, IATA Reports

Chinedu Eze

The International Air Transport Association (IATA) has announced that airlines will finish 2026 with a profit of $23.0 billion, half of the previously projected $41 billion, citing the Iran war and high fuel prices as key factors.

IATA revealed the figures during its latest global financial outlook presentation at the ongoing 82nd IATA Annual General Meeting and World Air Transport Summit in Rio de Janeiro, Brazil.

According to the association, the combined net profit for airlines in 2026 is expected to be $23.0 billion, roughly half of the $41 billion forecasted earlier and also about half of the $45 billion net profit estimate for 2025.

The global body also disclosed that the net profit margin is projected to be 2.0 % in 2026, roughly half the previously projected 3.9 % and less than half the 4.2 % estimate for 2025.

Net profit per passenger transport is expected to be $4.50, half the $9.10 achieved in 2025, while operating profit in 2026 is projected to be $48.0 billion (down from $76.4 billion in 2025) for a net operating margin of 4.1 % (down from 7.2 % in 2025).

IATA also disclosed that return on invested capital (ROIC) is expected to be 4.3 % (down from 6.6 % in 2025). The association noted this is below the 8.5 % estimated weighted average cost of capital, highlighting the structural weakness of the airline industry where profitability shocks quickly erode capital efficiency.

The total industry revenues are expected to reach $1.165 trillion in 2026 (up 9.4 % on the $1.065 trillion in 2025); the passenger load factor is forecast to continue setting record highs with airlines expected to fill 84.0 % of all seats over the year, an improvement on 83.5 % in 2025.

Passenger numbers are expected to reach 5.1 billion in 2026 (up 2.4 % on 2025), while cargo volumes are projected to reach 71.7 million tonnes in 2026 (up 0.2 % on 2025).

“War‑related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse. 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 % to 2.0 %,” said IATA’s Director General, Willie Walsh.

“All airline bottom lines are suffering from the rapid 70 % 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,” said IATA’s Director General, Willie Walsh.

IATA remarked that even in the best of times, the airline industry as a whole suffers from low margins and returns below the cost of capital, stressing that the oil price shock has tested airline financial resilience as net margins have been squeezed to 2.0 % 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,” said Walsh.