West Asia Disruptions, High Fuel Prices To Halve Airline Industry Profitability In 2026 - IATA
KUALA LUMPUR, June 7 (Bernama) -- Airlines’ total net profit in 2026 is expected to be US$23 billion (US$1 = RM4.02), about half the previous projection of US$41 billion, as a result of war-related disruptions in West Asia and high fuel prices, the International Air Transport Association (IATA) said.
The regional landscape, however, is highly differentiated, it said.
“At the geographic centre of the (West Asia) war, airlines in (that region) are expected to collectively fall into the red with weak demand and operational disruptions. All other regions are expected to deliver profits, but at reduced levels from previous projections,” the association said in a statement today.
IATA said total industry revenues are expected to reach US$1.16 trillion in 2026, up 9.4 per cent from $1.065 trillion in 2025, while passenger load factor is forecast to continue to set record highs with airlines expected to fill 84.0 per cent of all seats over the year, an improvement on 83.5 per cent in 2025.
Among others, passenger numbers are expected to reach 5.1 billion in 2026 (up 2.4 per cent on 2025) and cargo volumes are expected to reach 71.7 million tonnes in 2026 (up 0.2 per cent on 2025).
Explaining further, IATA director general Willie Walsh said the Gulf carriers face operational uncertainty following a near-complete shutdown of airspace at the outbreak of the war.
“These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable,” he said.
Even in the best of times, Walsh said, the airline industry as a whole suffers from low margins and returns below the cost of capital.
The oil price shock has tested airline financial resilience as net margins have been squeezed to two per cent globally, he added.
Airlines are bearing the brunt of the fuel price shock.
“While air fares are rising, airlines are still absorbing part of the hike in their bottom lines. 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,” said Walsh.
As for fuel cost, IATA said it is expected to rise by nearly 40 per cent to US$350 billion in 2026 from US$252 billion in 2025. This is based on an expected average price of crude oil at US$95 per barrel (Brent) for the year, up 37 per cent from US$69 in 2025.
Jet fuel prices are expected to average US$152 per barrel for the year, up almost 70 per cent from US$90 in 2025, the association said.
The crack spread (premium for jet fuel over Brent crude oil) is expected to average $57 per barrel, an historic high, said IATA, which represents over 370 airlines accounting for some 85 per cent of global air traffic.
-- BERNAMA
