Staff Writer
The global airline industry’s profitability has been cut roughly in half due to war-related disruptions in the Middle East and higher fuel prices, according to the latest financial outlook released by the International Air Transport Association (IATA).
The industry is now expected to generate a combined net profit of US$23.0 billion in 2026, down from a previous projection of US$41 billion and almost half of the estimated US$45 billion recorded in 2025.
Net profit margins are forecast to fall to 2.0% in 2026, compared with 4.2% in 2025.
Despite the decline in profitability, overall revenues are expected to rise 9.4% to US$1.165 trillion in 2026, driven by continued growth in passenger demand.
Passenger numbers are projected to reach 5.1 billion, up 2.4% from 2025, while cargo volumes are expected to edge up 0.2% to 71.7 million tonnes.
However, the report highlights increased pressure on profitability across the sector.
Operating profit is forecast to fall to US$48.0 billion in 2026 from US$76.4 billion in 2025, while return on invested capital is expected to drop to 4.3%, below the estimated weighted average cost of capital of 8.5%, highlighting structural weaknesses in the industry.
Regional performance is expected to vary sharply.
Airlines in the Middle East are projected to fall into losses due to weak demand and operational disruptions linked to the conflict, while other regions are still expected to remain profitable, albeit at reduced levels compared to earlier forecasts.
Fuel costs remain a pressure point, with jet fuel prices reportedly up about 70%.
Net profit per passenger is expected to fall to US$4.50, down from US$9.10 in 2025.
IATA director general Willie Walsh said the combined impact of geopolitical instability and rising fuel prices has significantly weakened industry performance, noting that airlines are “bearing the brunt” of the fuel price shock.
He added that while carriers have adjusted fares and improved efficiency, these measures have not been enough to offset rising costs.
Walsh also pointed out that, even in stronger years, the airline industry typically operates on thin margins and returns below its cost of capital, meaning that external shocks quickly erode profitability.
