Airlines forecast 49% profit drop in 2026 due to fuel costs

Airlines face a challenging year as fuel costs surge, threatening to nearly halve profits in 2026, according to the International Air Transport Association (IATA). The industry group predicts net profits will plummet from $45 billion in 2025 to $23 billion this year. This sharp decline is largely attributed to a projected 70% increase in aviation kerosene prices, a consequence of geopolitical tensions and the conflict in the Middle East. This will add approximately $100 billion to airlines' global fuel bill. Willie Walsh, IATA's Director General, highlighted the complex scenario, noting that the sector is grappling with supply chain issues, the war in Ukraine, and shifting trade policies, all exacerbated by the recent escalation in the Middle East. "It is a difficult year for all airlines," Walsh stated, emphasizing the greater strain on carriers still recovering from the COVID-19 pandemic. Despite the financial headwinds, IATA projects continued resilience in air transport demand. Passenger traffic is expected to grow by 2.1% and cargo by 0.7% in 2026, albeit at a slower pace than in prior years. Walsh also pointed to persistent aerospace supply chain problems, which delay the delivery of new, more efficient aircraft and contribute to an aging fleet with higher maintenance costs.