The Iran war has slashed global airline profits.
IATA forecasts airlines will generate $48 billion in operating profits in 2026, a 37% drop from last year, as soaring fuel expenses cut into profitability.
Total fuel expenses are forecast to jump 39% to $350 billion on flat usage, IATA data shows.
“Airlines are bearing the brunt of the fuel price shock,” said IATA director general Willie Walsh at the trade group’s annual meeting in Rio de Janeiro on 7 June. “While airfares are rising, airlines are still absorbing part of the hike in their bottom lines.”
Airlines are forecast to bring in $1.17 trillion in revenue, a 9.4% increase from last year, as they raise fares and fees to cover the increased expenses.
The additional revenue is not enough to cover surging costs, cautions IATA chief economist Marie Owens Thomsen.
“In general, the industry has taken half of fuel price increases on their own margins, no matter how small they always have been, and they have passed half of the fuel price increases on to consumers,” she says.
Airline traffic is forecast to increase just 2.1% this year, less than half of the 5.3% increase in 2025. Total passenger yields are forecast to increase 7.5% compared to just 0.7% last year.
The crisis is weighing the most on Middle Eastern carriers as traffic shifts elsewhere amid war concerns and airspace closures, says Thomsen. Asian and European airlines are benefitting the most as they pick up much of that traffic from the Gulf.
The benefits Asian and European airlines are seeing from the additional traffic, however, is countered by the fuel situation.
“There’s not an airline in the world that’s not going to feel the impact of the higher fuel prices,” says Thomsen.
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