Airlines' Profits To Halve In 2026 Due To Middle East War, High Fuel Prices

2026-06-07 02:20:03

(MENAFN- Khaleej Times) Global airlines' profits will halve this year due to the Middle East war, the International Air Transport Association (Iata) said on Sunday in its latest financial outlook for the global airline industry.

Airlines are expected to achieve a combined total net profit of $23 billion in 2026, which is roughly half the previously projected $41 billion. It is also roughly half the $45 billion net profit estimate for 2025.

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The net profit margin is expected to be 2.0 per cent in 2026, roughly half the previously projected 3.9%. It is also less than half the 4.2 per cent estimate for the 2025 net profit margin.

Net profit per passenger transported is expected to be $4.50, half the $9.10 achieved in 2025.

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Operating profit in 2026 is expected to be $48 billion, down from $76.4 billion in 2025 for a net operating margin of 4.1% (down from 7.2% in 2025).

Total industry revenues are expected to reach $1.165 trillion in 2026, up 9.4 per cent on the $1.065 trillion in 2025.

Middle East

The global aviation body said airlines in the Middle East are expected to collectively fall into the red with weak demand and operational disruptions. All other regions are expected to deliver profits, but at reduced levels from previous projections.

It projected that Middle East carriers will post $4.3 billion loss in 2026 as compared to $7.2 billion in profit in 2025. The airlines will see $21.4 per passenger loss compared to $31.5 profit during the comparative period

“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%. All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices,” said Willie Walsh, IATA's Director General.

“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,” he said.

“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,” added Walsh.

The passenger load factor is forecast to continue to set record highs with airlines expected to fill 84.0 per cent of all seats over the year. That is an improvement on 83.5 per cent in 2025.

Passenger numbers are expected to reach 5.1 billion in 2026, up 2.4 per cent on 2025.

Cargo volumes are expected to reach 71.7 million tonnes in 2026, up 0.2 per cent on 2025.

Iata said passenger ticket revenues are expected to reach $839 billion in 2026, up 9.2 per cent on $768 billion in 2025.

Cargo revenue is forecast to reach $162 billion in 2026, an increase of 7.2 per cent.

Fuel costs are expected to rise by nearly 40 per cent from $252 billion in 2025 to $350 billion in 2026, based on an expected average price of Brent at $95 a barrel for the year, up 37 per cent from $69 in 2025.

Iata sees jet fuel prices averaging $152 a barrel for the year, up almost 70 per cent in 2025.

Non-fuel costs are forecast to be $767 billion, up 4.0 per cent on $737 billion in 2025.

Iata said disruptions at Middle Eastern hubs have created additional opportunities for Asia-based carriers to capture cargo traffic, particularly on Europe-Asia trade lanes.