The global airline industry is expected to remain profitable in 2026, but earnings will be sharply reduced as carriers grapple with continued Iran-US war disruptions, surging fuel prices and softer demand.
According to the latest financial outlook from International Air Transport Association (IATA), global airline net profits are forecast to fall to US$23 billion in 2026 – roughly half the US$45 billion estimated for 2025.
For travel and tourism stakeholders, the figures highlight an industry still carrying strong passenger demand, but under growing cost pressure.
“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,” said Willie Walsh, IATA’s director general.
The oil price shock has tested airline financial resilience as net margins have been squeezed to 2.0% globally.
“Net profit per passenger is expected to fall to US$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,” added Walsh.
Demand remains resilient – at a cost
Despite the weaker financial outlook, airlines are expected to carry a record 5.1 billion passengers in 2026, up 2.4% year-on-year. The passenger load factor is forecast to continue to set record highs, with airlines expected to fill 84.0% of all seats in 2026.
Total industry revenues are also expected to reach US$1.165 trillion in 2026, up 9.4% from 2025.
Passenger ticket revenues are expected to climb 9.2% (US$839 billion), while ancillary revenues – including seat selection, baggage and onboard purchases – are forecast to grow 12.6% to US$165 billion, overtaking air cargo as a revenue contributor for the first time since 2019.
However, net profit per passenger is expected to fall from US$9.10 in 2025 to US$4.50 in 2026 – spotlighting how thin airline margins remain despite record demand.
Fuel costs become the defining challenge
IATA expects airline fuel costs to surge nearly 40% to US$350 billion this year, driven by the fallout from the ongoing Middle East conflict. Jet fuel prices are forecast to rise almost 70% year-on-year (US$152 per barrel).
Globally, airlines have hedged roughly one third of their expected fuel consumption for 2026, which helps smooth short-term cost volatility but does not eliminate exposure to sustained price increases, said IATA.
Additionally, since airlines bear the cost of Sustainable Aviation Fuel (SAF), the extra amount needed is expected to reach US$4.3 billion in 2026 for an anticipated volume of 2.4 million tonnes of SAF being available (0.8% of total fuel consumption).
At the regional level, “all are in the black but with sharply reduced financial performance, with the exception of the Middle East,” said IATA’s Walsh.