The high price of jet fuel, caused by the Iran war, will cut the airline industry's 2026 profit by 44%, IATA forecasts.
The airline trade group, which is winding up its Annual General Meeting on Monday in Rio de Janeiro, now forecasts a net profit of $23 billion for the world's airlines, down from its $41 billion projection last December.
IATA estimates that the airlines' net profit was $45 billion last year.
The downturn relates directly to a surge in fuel prices. IATA estimates that jet fuel costs will increase 40% this year, from $252 billion last year to $350 billion in 2026, with jet fuel prices averaging $152 per barrel, up almost 70% from $90 per barrel in 2025.
The trade group said that total jet fuel consumption this year will be unchanged from last year at 104 billion gallons, meaning that the increase in jet fuel expenditures will be caused solely by higher prices. IATA expects jet fuel to account for 31.4% of airline operating expenses this year, up from 25.4% in 2025.
"All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices," IATA director general Willie Walsh said in a statement.
Strong demand alleviates high fuel prices
He noted that smaller carriers that started the year with weak balance sheets are especially struggling. The most prominent airline failure since the fuel-price spike has been ultralow-cost carrier Spirit, which halted operations on May 2 following a long fight to stave off insolvency.
Airlines have been able to make up for some of their higher fuel costs with strong demand. IATA expects passenger ticket revenue this year to climb to $839 billion, up 9.2% from last year's $768 billion, while ancillary revenue will jump 12.6%, to $165 billion.
Yield (the average revenue airlines make per mile of flying by paying customers) is expected to grow an estimated 7% year over year, while passenger load factor is anticipated to be a record 84%.
Still, IATA expects an operating margins of just 2% this year, down from 4.2% last year, because operating expenses will increase 13%. Net profit per passenger will be just $4.50, according to the forecast.
"Under the circumstances, that shows resilience," Walsh said. "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."
Impacts from inflated fuel and of Iran war are being felt differently across the globe.
The Middle East, naturally, is the hardest hit. IATA is forecasting that the region's airlines will lose $4.3 billion this year, a loss of $21.40 per passenger. Last year, Middle Eastern carriers, led by Emirates and Qatar Airways, recorded a net profit of $7.2 billion.
For Middle Eastern carriers, said IATA, "the immediate recovery path is likely to be driven more by pricing than by a rapid return of volume. In the longer term, structural advantages should support a recovery in traffic, although potentially at lower margins, which could reshape the economics of the hub-based model."
In North America, IATA is now estimating a 2026 net profit of $9.4 billion, which would be a decrease from last year's $12.4 billion. Profit per passenger will drop from an estimated $10.80 in 2025 to $8.10 this year.