Rio de Janeiro [Brazil], June 7 (ANI): Global airline industry profits are expected to halve in 2026 as the conflict in the Middle East and a sharp rise in jet fuel prices weigh heavily on carriers worldwide, according to the latest financial outlook released by the International Air Transport Association (IATA).

IATA said airlines are expected to post a combined net profit of USD 23 billion in 2026, down from an estimated USD 45 billion in 2025 and significantly lower than the earlier forecast of USD 41 billion.

'War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,' said Willie Walsh, IATA's Director General.

'Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from USD 45 billion in 2025 to USD 23 billion this year. And margins will shrink from 4.2 per cent to 2.0 per cent,' Walsh said.

The industry body said the net profit margin is expected to fall to 2 per cent in 2026 from 4.2 per cent in 2025, while net profit per passenger transported is projected to decline to USD 4.50 from USD 9.10 last year.

According to IATA, the biggest challenge facing airlines is the surge in fuel costs. Jet fuel prices are expected to average USD 152 per barrel in 2026, nearly 70 per cent higher than the USD 90 per barrel average in 2025.

'All airline bottom lines are suffering from the rapid 70 per cent rise in jet fuel prices,' Walsh said.

'Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year's level,' he added.

Despite the profitability hit, the airline industry is still expected to generate record revenues of USD 1.165 trillion in 2026, up 9.4 per cent from USD 1.065 trillion in 2025. Passenger numbers are projected to rise 2.4 per cent to 5.1 billion, while airlines are expected to fill a record 84 per cent of available seats.

Passenger ticket revenues are forecast to increase to USD 839 billion, supported by a 7 per cent rise in ticket yields as airlines attempt to recover part of the fuel cost shock.

However, IATA warned that operating expenses are expected to grow faster than revenues. Total industry costs are projected to rise 13 per cent to USD 1.117 trillion, largely driven by fuel expenses, which are expected to jump nearly 40 per cent to USD 350 billion.

The association said airlines remain vulnerable because profitability in the sector has historically been low.

'Airlines are bearing the brunt of the fuel price shock,' Walsh said.

'Net profit per passenger is expected to fall to USD 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 a buffer should other costs or taxes start rising,' he added.

Regionally, IATA said all major airline markets are expected to remain profitable except the Middle East, where carriers are projected to slip into losses amid flight disruptions, airspace restrictions and weaker transfer traffic caused by the ongoing conflict.

'The Gulf carriers face operational uncertainty following a near-complete shutdown of airspace at the outbreak of the war,' Walsh said.

'These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable,' he added.

IATA also flagged slower global economic growth, rising inflation, aircraft supply chain constraints and geopolitical uncertainty as additional risks facing the airline industry in 2026. (ANI)