The global airline industry is on course to earn $23.0 billion in net profit in 2026, roughly half the $45 billion recorded last year, as conflict across the Middle East and a sharp rise in jet fuel prices erode margins across every region. The International Air Transport Association released the figures at its Annual General Meeting in Rio de Janeiro on 7 June.
The net profit margin is expected to fall to 2.0 per cent from 4.2 per cent in 2025, while net profit per passenger drops to $4.50 from $9.10. Operating profit is forecast at $48.0 billion, down from $76.4 billion in 2025, and the industry’s return on invested capital of 4.3 per cent sits well below the estimated 8.5 per cent weighted average cost of capital.
Fuel is the central pressure point. Jet fuel prices are expected to average $152 per barrel in 2026, up almost 70 per cent on the $90 per barrel average in 2025, based on an assumed Brent crude price of $95 per barrel for the year.
Total fuel costs are projected to reach $350 billion, up from $252 billion in 2025, lifting jet fuel’s share of total operating expenses to 31.4 per cent from 25.4 per cent. Airlines have hedged roughly one third of their expected 2026 fuel consumption, which softens short-term volatility but does not eliminate sustained exposure.
“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse. Globally, airlines are expected to see profitability halve compared to 2025. 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. 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. 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,” Willie Walsh, IATA’s Director General said in a statement.
Despite the squeeze, total industry revenues are expected to reach $1.165 trillion, up 9.4 per cent on 2025, as airlines push fares higher to recover costs. Passenger ticket revenues are projected at $839 billion, with yields rising 7 per cent. Load factors are forecast to set a record high of 84.0 per cent.
The regional picture is sharply divided. Middle Eastern carriers are expected to post a collective net loss of $4.3 billion in 2026, reversing a $7.2 billion profit in 2025. Demand measured in revenue passenger kilometres is forecast to fall 11.4 per cent in the region, with capacity down 4.4 per cent. The net margin for the region is projected at -6.1 per cent, and net loss per passenger at $21.40.
Every other region remains in profit, though all have seen forecasts reduced. North American airlines are expected to earn $9.4 billion (net margin 2.5 per cent), European carriers $9.6 billion (3.1 per cent), and Asia Pacific $6.6 billion (2.1 per cent). Latin America and Africa are both barely positive, at $1.2 billion and $0.1 billion respectively.
“Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines. Net profit per passenger is expected to fall to $4.50, half of what it was last year. Under the circumstances, that shows resilience. But it won’t even buy you a hot dog at most of the FIFA World Cup venues and it does not leave much of buffer should other costs or taxes start rising,” Walsh added.
Wider macro conditions are adding pressure. IATA expects global GDP growth to slow to 2.5 per cent in 2026 from 3.4 per cent in 2025, inflation to rise to 5.0 per cent from 4.1 per cent, and world trade growth to fall to 1.9 per cent from 4.6 per cent.
Despite the turbulence, passenger demand continues to grow. IATA forecasts 5.1 billion passengers in 2026, up 2.4 per cent on 2025. An IATA public opinion poll of 6,500 travellers across 15 countries, conducted in April 2026, found that 97 per cent expressed satisfaction with their last travel experience, and 68 per cent said they had not changed their travel habits at all.
