New Delhi: Global airlines’ 2026 net profit forecast has been halved to $23 billion from $45 billion in 2025 due to escalating fuel costs driven by the Middle East conflict, according to an IATA outlook report released on Sunday.
The International Air Transport Association (IATA), which represents more than 370 airlines accounting for about 85 per cent of global air traffic, said in its annual report, released in Rio de Janeiro, that it now expects the industry to post a combined net profit of $23 billion in 2026, well below a previous projection of about $41 billion and down from $45 billion in 2025.
“When war broke out in the Middle East in March, oil prices jumped, and jet fuel prices skyrocketed. As a result, we expect average jet fuel prices to be 70 per cent higher year-on-year. That will add $100 billion to our collective fuel bill this year,” IATA Director General Willie Walsh said.
The positive, however, is that demand is holding up, even as airlines are raising fares and rates to cope. But growth will inevitably be slower, 2.1 per cent for the passenger business and 0.7 per cent for cargo, he said.
Net margins of airlines are expected to shrink from 4.2 per cent to 2.0 per cent in what is seen as a tough year for all airlines, especially those whose balance sheets had not yet recovered from Covid and those operating in the Gulf.
IATA’s polling suggests that 86 per cent of travellers expect fares to track oil prices. In line with that, 49 per cent expect to spend more on travel this year than last. An additional 43 per cent plan to spend the same.
That bodes well for a strong northern summer peak season. The big unknown is how long travellers and shippers can tolerate the higher costs of connectivity, Walsh pointed out.
He also pointed out that airlines face higher fuel costs with fleets that are less efficient than planned, because the aerospace supply chain continues its failure to deliver aircraft and engines as promised.
“The aircraft order backlog is over 18,000. And the average fleet age has reached a record 15.2 years. Moreover, being short over 5,000 more fuel-efficient replacement aircraft that we had counted on means missed efficiency gains, not to mention higher lease rates and increased maintenance costs. In total, supply chain failures cost airlines at least $11 billion in 2025. Today’s higher fuel prices will only make that worse,” Walsh added.
(IANS)
