More traffic, but halved profits for airlines in 2026, Industry forecast

The global airline industry is bracing for a year of increased passenger numbers but significantly diminished profits, according to projections from the International Air Transport Association (IATA). While airlines expect to carry 5.1 billion passengers in 2026, a 2.4% rise from the previous year, their net profits are forecast to drop from $45 billion in 2025 to $23 billion in 2026. This represents a halving of profitability and a reduction in net profit margins from 4.2% to 2.0%.

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I don’t see this as a crisis.

IATA Director General Willie Walsh attributed the profit squeeze primarily to rising fuel costs and disruptions stemming from the conflict in the Middle East. "War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse," Walsh stated. He noted that while airlines are absorbing some of the fuel price hikes, passing on only part of the increase through higher ticket prices, their bottom lines are suffering. Revenue for IATA member airlines is still projected to grow by 9% to $1.165 trillion.

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You’re looking at an industry that is forecasting growth.

Despite these challenges, Walsh characterized the industry's performance as resilient, especially when considering the impact of geopolitical instability. He highlighted that even with these headwinds, the industry is still forecasting growth. "If you extract the impact of the Middle East, we're looking at growth of 3.5 percent," he said. The average net profit per passenger is expected to be around $4.50, a stark decrease from the previous year.

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War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse.

Profitability is expected to vary significantly by region. Middle Eastern airlines are projected to face losses, while European carriers are anticipated to be the most profitable with a 3.1% net margin, followed by North America (2.5%) and Asia-Pacific (2.1%). Walsh expressed confidence in demand, noting that average ticket prices have fallen over the past decade, making air travel more accessible despite current cost pressures.

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Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2 per cent to 2.0 per cent.