The International Air Transport Association warned Sunday that global airline profits will fall by half in 2026, as the Middle East war drives jet fuel prices to historic highs and disrupts key air corridors across the Gulf region.
The industry body now expects combined net profit of $23 billion this year, down from $45 billion in 2025, as fuel bills surge by nearly $100 billion
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The International Air Transport Association warned Sunday that global airline profits will fall by half in 2026, as the Middle East war drives jet fuel prices to historic highs and disrupts key air corridors across the Gulf region.
The revised IATA forecast puts combined industry net profit at $23 billion for the current year — a steep drop from the $45 billion recorded in 2025 and far short of the $41 billion the group had previously anticipated. The net profit margin is forecast to fall to 2.0%, from 4.2% in 2025, while on a per-passenger basis, net earnings are forecast to fall to $4.50, compared with $9.10 in 2025, as higher fuel costs eat into returns.
Jet fuel prices are expected to average $152 per barrel in 2026, up nearly 70% from $90 per barrel in 2025, according to IATA. Collectively, those higher prices are projected to lift the industry's annual fuel expenditure to roughly $350 billion, compared with $252 billion in 2025, pushing fuel's share of total operating costs from 25.4% to 31.4%.
"War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse," IATA Director General Willie Walsh said in a statement. "Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%."
Even so, demand is holding up well enough that total revenues are projected to climb 9.4% to $1.165 trillion, buoyed by elevated fares and growing ancillary income streams. The problem is that costs are expanding even faster — operating expenses are forecast to rise 13% to $1.117 trillion, swamping much of the revenue improvement.
The regional picture is uneven. Carriers based in the Middle East — Emirates, Qatar Airways, and Etihad Airways among them — are forecast to swing to a collective net loss of $4.3 billion in 2026, reversing a $7.2 billion profit the prior year, after conflict-related airspace shutdowns severely disrupted their operations. All other regions are expected to remain profitable, though at reduced levels. North American airlines are forecast to earn $9.4 billion, down from $12.4 billion, while European carriers are projected at $9.6 billion, down from $13.0 billion.
Walsh cautioned that airlines with the thinnest financial cushions are most exposed to the fuel shock, and told Reuters he anticipates a wave of bankruptcies and consolidation among smaller operators in the coming months. U.S. low-cost carrier Spirit Airlines ceased operations last month; Walsh pointed to it as the first airline to fail as a direct consequence of the Iran war.
The fuel shock comes as airlines are already contending with other headwinds. As Quartz has reported, carriers including Delta, JetBlue, and United raised checked baggage fees and pared schedules after jet fuel prices in the U.S. nearly doubled from pre-war levels. Alaska Air Group suspended its full-year 2026 earnings guidance in April, citing fuel price volatility as the primary source of uncertainty.
Walsh said fares are rising to recoup some costs but noted that airlines are still absorbing a portion of the fuel price increase. "Net profit per passenger is expected to fall to $4.50, half of what it was last year," he said in a statement. "Under the circumstances, that shows resilience."
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