Airline industry profits to halve in 2026 on Middle East fuel shock: IATA

Global airline industry net profits are expected to fall to $23 billion in 2026, roughly half the $45 billion recorded in 2025, as a near-70% surge in jet fuel prices and Middle East war-related disruptions weigh heavily on margins, the International Air Transport Association said June 7.

Net profit margins are forecast to compress to 2.0% from 4.2% in 2025, with net profit per passenger falling to $4.50 from $9.10, IATA said in its annual financial outlook released at its AGM in Rio de Janeiro.

According to IATA, jet fuel is expected to average $152/b in 2026, up 69% year-over-year from $90/b in 2025, based on an assumed Brent crude price of $95/barrel.

The jet crack spread vs crude is projected to average at a historic high level of $57/barrel, lifting fuel's share of total airline operating costs to 31.4% from 25.4% in 2025.

On June 5, Platts assessed the Jet CIF NWE Cargo premium over ICE LSGO at $76.5/mt, while the equivalent crack spread was assessed at $53.6/bbl.

Total fuel expenditure is expected to rise nearly 40% to $350 billion, even as consumption remains flat at about 104 billion gallons.

Airlines have hedged roughly one-third of their 2026 fuel needs, though many have hedged against crude rather than jet fuel directly, leaving significant crack-spread exposure.

Middle Eastern carriers are expected to slip into collective loss, facing near-complete airspace shutdowns at the outbreak of hostilities and ongoing operational uncertainty.

All other regions remain profitable, though at sharply reduced levels.

Total revenue is forecast at $1.165 trillion, up 9.4% year-over-year, driven by fare increases and ancillary revenue growth as airlines work to offset higher costs.

Passenger ticket revenue is seen at $839 billion, with yields expected to rise 7% as load factors hit a record 84.0%.

Operating expenses are, however, forecast to grow faster at 13% to $1.117 trillion, leaving operating profit at $48 billion and return on invested capital at 4.3%, well below the estimated 8.5% weighted average cost of capital.

GDP growth is forecast to slow to 2.5% in 2026 from 3.4% in 2025, while inflation is expected to rise to 5.0% and world trade growth to fall sharply to 1.9% from 4.6%.

Aircraft supply constraints continue to cap capacity growth, with the global order backlog reaching 18,100 units in May 2026, over 50% of the active fleet, as deliveries remain below pre-pandemic peaks.