The International Air Transport Association (IATA) has projected that global airline profits are expected to reduce by half in 2026 due to disruptions caused by the Middle East conflict, which has led to a dramatic surge in jet fuel prices.
In its latest outlook released on Sunday at the Annual General Meeting in Rio de Janeiro, IATA projected that the industry’s total net profit will fall to $23 billion in 2026. This reflects a sharp decline from the $45 billion recorded for 2025. The net profit margin is expected to be at just 2.0%, down from 4.2% in the previous year.
“Airlines are expected to achieve a combined total net profit of $23.0 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,” IATA stated in a press statement announcing the release of the June 2026 Global Outlook for Air Transport.
While the global industry struggles with reduced profitability, airlines in the Middle East are facing an even more severe crisis. IATA forecasts that the region will be the only market to slip into a net loss in 2026, with projected losses of $4.3 billion.
“At the geographic center of the Middle East war, airlines in the Middle East are expected to collectively fall into the red with weak demand and operational disruptions, IATA stated, adding that “All other regions are expected to deliver profits, but at reduced levels from previous projections.”
The air transport body further predicted that net profit per passenger transported will drop to $4.50, half of the $9.10 recorded in 2025, while return on invested capital (ROIC) is expected to be 4.3%, down from 6.6% in 2025. “The gap highlights again the structural weakness of the airline industry where profitability shocks quickly erode capital efficiency,” it explained.
For the total industry revenues, IATA said they are expected to reach $1.165 trillion in 2026 (up 9.4% on the $1.065 trillion in 2025).
Commenting on the outlook, IATA’s Director General, Willie Walsh, said the disruptions associated with the crisis in the Middle East and rising fuel costs have gravely impacted the global airline industry and would cause a significant drop in profitability in 2026.
The primary driver is the ongoing US-Israel-Iran war, which has caused significant operational disruptions. The fuel crisis was triggered by the closure of the Strait of Hormuz, which removed approximately 10 million barrels of oil per day from the global market.
Globally, the rapid escalation of fuel costs is the most significant factor eroding airline balance sheets. Walsh said airlines are suffering from the rapid rise in jet fuel prices, which, according to him, is above 70%.
While noting that the additional cost is being recovered by adjusting prices and improving efficiency, the IATA director general, however, pointed out that “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.”
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Walsh said Gulf carriers face “operational uncertainty following a near-complete shutdown of airspace.” These carriers, which rely heavily on transit passengers between Asia, Europe, and Africa, are suffering from flight cancellations, rerouting, and reduced transfer traffic. “These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable,” Walsh added.
He further stated that airlines have been bearing the brunt of the fuel price shock, noting that while air fares are rising, airlines are still absorbing part of the hike in their bottom lines.
Despite the halving of profits, IATA notes that the situation does not constitute a crisis comparable to the COVID-19 pandemic. Passenger numbers, it said, are still expected to grow 2.4% to 5.1 billion in 2026, while cargo volumes are expected to reach 71.7 million tonnes in 2026, suggesting that demand for air travel remains resilient even as airlines raise fares to cope with higher costs.
“Under the circumstances, that shows resilience,” Walsh said, though he noted that the net profit per passenger of $4.50 “won’t even buy you a hot dog at most of the FIFA World Cup venues.”
Victor Ezeja is a Nigerian journalist skilled in producing insightful news analyses, feature stories, and interviews that simplify complex issues and drive informed public discourse. His work combines rigorous research, balanced reporting, and compelling storytelling to highlight developments shaping industries and society. Victor, who holds a Master's Degree in Mass Communication, specializes in energy, aviation, business, and economic reporting. He can be reached via @VICTOREZEJA on X