- Global Airline Profits to Fall as Fuel Bill Jumps to US$350bn
Global airlines have nearly halved their 2026 profit forecast after the Iran war triggered a sharp fuel cost shock, disrupted key air corridors and exposed the fragility of an industry still operating on thin margins.
The International Air Transport Association said it now expects the global airline industry to post combined net profit of US$23 billion in 2026, far below its previous projection of about US$41 billion and down from US$45 billion in 2025.
The downgrade, announced at IATA’s annual meeting in Rio de Janeiro, comes despite resilient passenger demand, fuller aircraft and industry revenues projected to rise above US$1.1 trillion this year.
The problem is cost.
Jet fuel prices have surged following the conflict in the Middle East, while the closure and restriction of key airspace have forced airlines to reroute flights, adding hours to journeys, increasing fuel burn and squeezing already tight capacity.
IATA Director-General Willie Walsh said the new forecast reflects the combined effect of higher fuel prices and disruption to Gulf-region airlines.
“There are two major factors: one is the significant increase in jet fuel prices, which has gone way higher than I think anybody would have expected, and then the disruption to the airlines in the Gulf region, so that combination has led us to reduce the forecast,” he said.
The Middle East conflict, triggered by United States and Israeli airstrikes on Iran, has created major operational uncertainty for airlines, especially carriers using Gulf hubs. Emirates, Qatar Airways and Etihad Airways are among those facing the greatest disruption after a near-complete shutdown of regional airspace at the start of the conflict.
IATA now expects airlines’ fuel bill to rise to about US$350 billion in 2026, compared with roughly US$252 billion in 2025, with fuel accounting for nearly one-third of operating costs.
That jump is wiping out the benefit of higher revenues and strong demand.
Profit per passenger is now expected to fall to about US$4.50, roughly half the level recorded last year.
Airlines are also expected to cut unprofitable routes to defend margins. That could keep fares high, particularly in markets where capacity is reduced but demand remains resilient.
“In an environment where demand remains pretty robust, but capacity comes down, that will likely lead to a situation where fares will remain elevated,” Mr Walsh said.
The warning will concern travellers, businesses and policymakers because air transport remains a critical enabler of tourism, trade, investment and global supply chains.
For African markets, including Ghana, the impact could be felt through higher airfares, reduced route frequency, weaker airline connectivity and increased travel costs for passengers and businesses.
Long-haul routes linking Africa to Europe, the Gulf and Asia could become more expensive if airlines continue to absorb higher fuel costs, rerouting expenses and capacity constraints.
Mr Walsh also warned that some smaller airlines could fail or be absorbed by larger carriers this year and next as the fuel shock intensifies.
Reuters reported that United States low-cost carrier Spirit Airlines shut down last month, becoming the first airline casualty of the Iran war.
The pressure is not only from fuel. Airlines are also struggling with aircraft shortages.
Delays at Boeing and Airbus have forced carriers to keep older, less fuel-efficient aircraft in service for longer, raising maintenance costs and weakening efforts to improve margins.
This means airlines are being hit from several directions at once: higher fuel prices, airspace disruption, aircraft delivery delays, older fleets, and rising operating costs.
IATA expects industry revenues to rise by 9.4 percent to around US$1.16 trillion this year, supported by steady travel demand, higher fares and growing income from extras such as seat upgrades and onboard services.
That contradiction defines the industry’s current position. Passengers are still flying. Airlines are still filling aircraft. Revenues are rising. But profits are being eaten away by fuel, disruption and capacity constraints.
For the aviation industry, the latest IATA forecast is a reminder that recovery from the pandemic did not remove structural vulnerability. Airlines remain exposed to shocks they cannot control: wars, airspace closures, oil prices, aircraft delays and currency movements.
For consumers, the message is less encouraging.
If airlines cut routes while demand holds up, fares are unlikely to fall soon. Travellers may face higher ticket prices, fewer route options and more schedule uncertainty.
For airlines, the challenge is even sharper: preserve margins without killing demand.
That balance will determine whether the industry can navigate the latest shock without triggering a wave of failures among weaker carriers.
The broader conclusion from IATA’s revised forecast is clear. The global airline industry may still be growing, but the Iran war has turned fuel back into the central threat to profitability.
And for an industry where even a good year can produce modest margins, a higher fuel bill can quickly turn recovery into turbulence.
