TLDR
- IATA slashed its 2026 worldwide airline profitability projection from $41bn down to $23bn
- Jet fuel costs projected to reach $152 per barrel on average, representing a nearly 70% jump from 2025 levels
- European carriers facing a 26% profitability decline, dropping from $13bn to $9.6bn
- Middle Eastern carriers expected to flip from $7.2bn profit to a $4.3bn loss
- Industry-wide fuel expenditure set to climb 40% to $350bn, accounting for 31.4% of all operating costs
The International Air Transport Association has dramatically slashed its profitability outlook for global airlines in 2026. The industry organization now anticipates combined net earnings of just $23 billion for the year, representing a steep drop from $45 billion recorded in 2025 and significantly below its earlier $41 billion estimate.
The primary culprit behind this downturn is aviation fuel. Industry analysts expect jet fuel to average $152 per barrel throughout 2026. This marks a dramatic surge of nearly 70% compared to the $90 per barrel seen in 2025. The spike is predominantly attributed to supply chain disruptions stemming from the continuing Middle East conflict.
Across the aviation sector, aggregate fuel expenditure is projected to surge 40%, climbing from $252 billion in 2025 to $350 billion in the current year. This increase will elevate fuel’s portion of total operating expenditures from 25.4% to 31.4%.
IATA Director General Willie Walsh expressed the situation bluntly. “Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%. It won’t even buy you a hot dog at most of the FIFA World Cup venues.”
Per-passenger net earnings are anticipated to tumble from $9.10 in 2025 to merely $4.50 this year. While overall industry revenues continue their upward trajectory, climbing 9.4% to $1.165 trillion, expenditures are accelerating at an even faster pace. Total operational costs are projected to hit $1.117 trillion.
European Airlines Hit Hard
European aviation companies are experiencing particularly severe impacts. IATA projects their collective net earnings will decline from $13 billion in 2025 to $9.6 billion in 2026, representing approximately a 26% reduction. Per-passenger profitability falls from $10.30 to $7.50.
European carriers had hedged roughly 70% of their fuel requirements before the crisis emerged. This strategic move has provided some protection against the shock. However, IATA cautions that escalating costs will increasingly impact results as these protective hedges reach expiration.
Major European airline stocks declined on Monday. IAG, Air France-KLM, Lufthansa, and Wizz Air all experienced drops ranging from 1.47% to 2.1%. EasyJet declined a more modest 0.86%, performing relatively better than its peers.
IATA additionally highlighted that certain European regions continue grappling with airspace limitations over Russian territory. A softer economic environment and constrained consumer spending are anticipated to compound these challenges.
Regional Damage Varies
The Middle East has experienced the most dramatic reversal. Regional airlines are projected to register a net loss of $4.3 billion in 2026, a sharp contrast to the $7.2 billion profit achieved in 2025. Passenger volumes in this region are expected to contract 11.4%.
North American airlines are forecasted to generate $9.4 billion in profits, down from $12.4 billion. The Asia Pacific region is projected to decline from $9.8 billion to $6.6 billion.
Return on invested capital is expected to slide to 4.3%, falling short of the estimated 8.5% weighted average cost of capital. Walsh noted that smaller operators with fragile financial positions are “certainly struggling.”
Despite these financial headwinds, total passenger volumes are still forecasted to reach 5.1 billion in 2026, with the load factor achieving a record 84%.
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