The International Air Transport Association (IATA) on Monday forecast that the combined net profits of global airlines will halve during 2026 to reach $23 billion (€20 billion), down from previous estimates of $41 billion, and about half of the $45 billion in 2025 profits.
The etihad pointed out that the rise in jet fuel prices caused by the war in Iran is threatening the sector's historical gains, despite the sector recording unprecedented numbers in travel traffic, as the number of passengers is expected to reach 5.1 billion passengers, an increase of 2.4% year-on-year, while the jump in the sector's total revenues will pass the $1.165 trillion barrier with a growth of about 9.4%.
Willie Walsh, IATA's general manager, explained that the war-related turmoil in the Middle East has put airlines in front of a very limited margin of safety, quipping that the company's profit share per passenger will drop to just $4.50, which is not enough to even buy a sandwich in the stadiums of the World Cup.
Higher operating expenses
According to IATA, airline operating expenses jumped 13% to $1.12 trillion, driven by a terrifying increase in fuel bills that grew by nearly 40% to $350 billion from $252 billion last year, with fuel alone accounting for a third of operating costs.
IATA noted that companies have had to absorb a large portion of these increases to protect passengers, causing a sharp drop in net profit margin from 4.2% in 2025 to just 2% this year, in conjunction with additional pressures imposed by aircraft charter and maintenance costs, and spending on carbon offset programs.
The report showed an unbalanced regional landscape, as Gulf airlines received the hardest blow for being at the heart of the geopolitical conflict, and the report predicted that they would officially slip into the zone of financial losses due to the disruption of operations and the shifting of flight routes, while the rest of the world resisted to stay in the green space but with very modest profit rates.
How did the "Iran War" stifle global aviation?
According to the International Aviation Association, the sharp decline in aviation profits for 2026 is due to the "double supply shock" left by the ongoing war in the Middle East, and the war has not only caused security concerns on shipping lanes but also led to the closure of vital airspaces, forcing companies to take longer alternative routes that consume huge amounts of fuel.
At the same time, threats to energy facilities and strategic waterways in the Arabian Gulf have led to a crazy jump in the prices of crude oil and jet fuel, causing the energy bill to rise by 40% in one go.
The etihad said that this crisis was accompanied by a complex global economic environment that is already suffering from slowing growth, and high inflation rates that caused an increase in maintenance, spare parts and labor costs, which deprived the aviation sector of reaping the benefits of the "historic boom" in the number of passengers that exceeded 5 billion people.