Global airline profits to halve in 2026, says IATA

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Airlines face an extra $100 billion in jet fuel costs in 2026 after the Iran war sent prices soaring, the International Air Transport Association (IATA) has warned.

The industry’s combined net profits are expected to halve from US$43 billion last year to US$23 billion in 2026, with the average margin dropping from 4.2% to 2%, according to the organisation. Jet fuel costs are expected to rise by nearly 40% from US$252 billion in 2025 to US$350 billion this year.

IATA Director General Willie Walsh said: “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 US$45 billion in 2025 to US$23 billion this year. And margins will shrink from 4.2% to 2%.

“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.”

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Walsh, speaking at the IATA General Meeting and World Air Transport Summit in Rio de Janeiro, Brazil, added: “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.”

An IATA passenger survey revealed that traveller confidence remains high even with a proliferation of conflicts, including war. Overall, 41% said they were planning to travel more in the coming 12 months than in the previous year, with an additional 52% indicating plans to travel at the same level.

However, 81% indicated that they are concerned about disruptions due to geopolitical conflict, with 71% booking closer to the date of travel to avoid surprises. Nonetheless, 68% indicated that they have not changed their travel habits at all.

British Airways

British Airways Chief Executive Sean Doyle also warned that fares will have to rise further if fuel prices stay high, as airlines continue to manage the repercussions from the Middle East war. “There’s no getting away from if fuel goes up, fares have to go up,” he said on the sidelines of the meeting.

The airline will raise fares more on long-haul services than short-haul, betting that business travellers will be able to bear the higher cost more easily than consumers taking shorter flights, the Financial Times reported.

“When people’s purpose to travel is business and doing deals . . . those price increases are kind of peripheral to the reason they’re travelling,” Doyle said. “A brand like British Airways, which has got a lot of long-haul, corporate and premium, we’d expect maybe to have more pass-through of prices than maybe a carrier who’s solely competing for leisure short-haul.”

Despite recent increases, airfares had failed to keep pace with inflation, he said, meaning many prices were the same today as in the 1990s. Meanwhile, Walsh said times were difficult “especially for those whose balance sheets had not yet recovered from Covid”. The sector has already seen one major bankruptcy in 2026 with Spirit Airlines in the US and fears further collapses in the coming months.

Walsh said: “Airlines are bearing the brunt of the fuel price shock. While airfares 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 buffer should other costs or taxes start rising.”

Looking forward, the 83rd IATA annual general meeting is to be held in Xiamen, China, from 30 May to 1 June 2027.

For more information, visit www.iata.org