IATA: Middle East conflict and fuel shortages could cut airline profits by half in 2026.

By Dickson Omobola

The International Air Transport Association (IATA) has projected that airline profits will be cut by half in 2026 compared with 2025, citing disruptions caused by the war in the Middle East and a sharp rise in fuel prices as the main reasons.

In its most recent financial outlook for the global airline sector, IATA said that profits are expected to fall from $45 billion in 2025 to $23 billion in 2026.

The outlook indicates that airlines operating in the Middle East are likely to report losses due to weak demand and operational interruptions, whereas carriers in other regions are expected to remain profitable, albeit at lower levels.

Speaking on the matter, IATA’s Director General Willie Walsh said: “War‑related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worst. Globally, airlines are expected to see profitability halve compared with 2025. Profits will shrink from $45 billion in 2025 to $23 billion this year, and margins will fall from 4.2 percent to 2.0 percent. All airline bottom lines are suffering from the rapid 70 percent rise in jet fuel prices. 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. Smaller carriers that started the year with weak balance sheets are certainly struggling.”

“At the regional level, all are in the black but with sharply reduced financial performance, with the exception of the Middle East. 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.”

“Even in the best of times, 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 2.0 percent globally.”

“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 $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.”

The post Middle East war, fuel crisis to halve airline profits in 2026 – IATA appeared first on Vanguard News.