Middle East crisis, fuel costs to halve airline profits in 2026 — IATA

The global airline industry faces a significant downturn in profitability for 2026, with net profits expected to plummet to $23 billion, nearly half of the $45 billion estimated for 2025. The International Air Transport Association (IATA) attributes this sharp decline primarily to escalating jet fuel costs and ongoing disruptions stemming from conflicts in the Middle East.

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War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worst. Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from $45 billion in 2025 to $23 billion this year.

IATA Director-General Willie Walsh highlighted the severity of the situation, noting that a 70 percent surge in jet fuel prices is significantly impacting airline bottom lines. While airlines are attempting to recoup some costs through price adjustments and efficiency improvements, these measures are insufficient to maintain previous profit levels. The industry's net profit margin is forecast to shrink to 2.0 percent globally, down from 4.2 percent in 2025.

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And margins will shrink from 4.2 per cent to 2.0 per cent. All airline bottom lines are suffering from the rapid 70 per cent 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.

Geographically, the Middle East is identified as the sole region likely to experience losses, with Gulf carriers facing operational uncertainty and major financial impacts due to airspace shutdowns during the recent conflict outbreak. Although carriers in other regions are expected to remain profitable, their financial performance will be considerably reduced. The net profit per passenger is projected to fall to $4.50, a stark decrease from the previous year, underscoring the financial resilience challenges faced by the industry.

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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.