Middle East Disruptions And High Fuel Prices Halve Airline Industry Profitability

 

Welcome back! This week we send our greetings from Rio de Janeiro, Brazil, having gathered for the 82nd IATA Annual General Meeting (AGM). Top leadership from airlines, the aviation value chain, and governments engaged in deep conversations on complex topics as the airline industry continues to face complex and dynamic operating, business, and geopolitical environments. Thanks to the ~1,500 industry leaders, officials and media who attended. Every meeting, every panel, and every debate helps aviation become an even more powerful strategic force driving social and economic prosperity. Thank you to all of the sponsors, speakers, delegates, and staff for truly elevating this event. And a big thank you (with extra leg room) to LATAM Airlines Group for being warm and generous hosts. Let's get to it.

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Middle East Disruptions and High Fuel Prices Halve Airline Industry Profitability

Our latest financial outlook for the global airline industry shows a halving of profitability as a result of war-related Middle East disruptions and high fuel prices.

The regional landscape, however, is highly differentiated. At the geographic center of the Middle East war, airlines in the Middle East are expected to collectively fall into the red with weak demand and operational disruptions.

All other regions are expected to deliver profits, but at reduced levels from previous projections.

Highlights include:

• Airlines are expected to achieve a combined total net profit of $23.0 billion in 2026 which is roughly half the previously projected $41 billion. It is also roughly half the $45 billion net profit estimate for 2025.
• The net profit margin is expected to be 2.0% in 2026, roughly half the previously projected 3.9%. It is also less than half the 4.2% estimate for the 2025 net profit margin.
• Net profit per passenger transported is expected to be $4.50, half the $9.10 achieved in 2025.
• Operating profit in 2026 is expected to be $48.0 billion (down from $76.4 billion in 2025) for a net operating margin of 4.1% (down from 7.2% in 2025).
• Return on invested capital (ROIC) is expected to be 4.3% (down from 6.6% in 2025). This is below the 8.5% estimated weighted average cost of capital. The gap highlights again the structural weakness of the airline industry where profitability shocks quickly erode capital efficiency.
• Total industry revenues are expected to reach $1.165 trillion in 2026 (up 9.4% on the $1.065 trillion in 2025).
• The passenger load factor is forecast to continue to set record highs with airlines expected to fill 84.0% of all seats over the year. That is an improvement on 83.5% in 2025.
• Passenger numbers are expected to reach 5.1 billion in 2026 (up 2.4% on 2025).
• Cargo volumes are expected to reach 71.7 million tonnes in 2026 (up 0.2% on 2025).

Willie Walsh, IATA's Director General, on the outlook:

"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."

Even in the best of times, the airline industry as a whole suffers from low margins and returns below the cost of capital.

The oil price shock has tested airline financial resilience as net margins have been squeezed to 2.0% globally.

Read the full 2026 Global Outlook for Air Transport.

Tags: Willie Walsh, IATA