Airline net profit forecast to halve in 2026, IATA warns, amid fuel prices and Middle East disruption

The International Air Transport Association (IATA) said global airline net profit is forecast to fall to USD 23 billion in 2026. IATA linked the weaker outlook to Middle East disruptions and higher fuel prices. The group also expects the net profit margin to drop to 2 per cent in 2026, as costs rise faster than earnings.

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IATA said airlines are likely to earn USD 4.50 per passenger in 2026. That is about half the USD 9.10 recorded in 2025. The association represents more than 370 airlines, including Air India, IndiGo, Air India Express, SpiceJet and Akasa Air. Its members make up around 85 per cent of global air traffic.

IATA airline profit outlook for 2026

In its financial outlook, IATA said the 2026 net profit estimate of USD 23.0 billion is sharply lower than earlier forecasts. It is roughly half the previously projected USD 41 billion. It is also about half of IATA’s USD 45 billion net profit estimate for 2025.

IATA Director General Willie Walsh said conflict-linked disruption and fuel inflation are pressuring results. "All airline bottom lines are suffering from the rapid 70 per cent rise in jet fuel prices.\" Walsh said airlines are recovering some costs through price changes and efficiency steps. Walsh added that these moves are not enough to protect earlier profit levels.

Walsh said fares are increasing, while airlines still take part of the hit in their accounts. \"Airfares are rising, and airlines are still absorbing part of the hike in their bottom lines,\" Walsh said. Walsh added: \"the expected net profit per passenger of USD 4.50 wont even buy you a hot dog at most of the FIFA World Cup venues, and it does not leave much of a buffer should other costs or taxes start rising.\"

IATA fuel costs and jet fuel prices in 2026

IATA projected fuel costs of USD 350 billion in 2026, up nearly 40 per cent. Fuel spend was USD 252 billion in 2025, IATA said. The forecast assumes Brent crude averages USD 95 a barrel in 2026. That is up 37 per cent from USD 69 in 2025.

Jet fuel is expected to average USD 152 a barrel in 2026, IATA said. That compares with USD 90 in 2025, almost a 70 per cent rise. IATA also expects the crack spread to average USD 57 a barrel. It described that premium over Brent as a historic high.

IATA said total fuel use in 2026 is expected to match 2025 levels. Consumption is forecast at 104 billion gallons for both years. With volumes flat, IATA attributed the higher expense share to price rises. Jet fuel is seen at 31.4 per cent of operating costs in 2026, up from 25.4 per cent.

IATA revenue and passenger demand in 2026

IATA expects total airline industry revenue to rise to USD 1.165 trillion in 2026. That would be 9.4 per cent higher than USD 1.065 trillion in 2025. Despite better revenue, IATA expects profitability to stay under pressure. Higher fuel costs and disruption risks are key factors.

Passenger demand is expected to remain strong in 2026, IATA said. Passenger numbers are forecast to reach 5.1 billion, up 2.4 per cent from 2025. The passenger load factor is expected at 84 per cent in 2026. That is slightly higher than the 83.5 per cent recorded in 2025.

IATA’s outlook showed airlines facing growing revenue alongside sharper cost stress in 2026. Profit is forecast at USD 23 billion, while margins are expected at 2 per cent. Higher jet fuel prices, linked to Brent at USD 95 a barrel, are a central driver. Even with fuller flights and 5.1 billion passengers, IATA expects limited room for further cost shocks.

With inputs from PTI