Airline profits to halve as fuel costs jump by $100 billion: IATA
This photo shows the aircraft of the low-cost Irish airline Ryanair parked at Thessaloniki airport “Makedonia” in Thessaloniki on May 7, 2026. Ryanair will close its base at Thessaloniki Airport in October 2026, informing staff of the move. The decision follows a dispute over increased airport fees imposed by operator Fraport Greece. (Photo: Sakis Mitrolidis / AFP via Getty Images)
Sakis Mitrolidis | Afp | Getty Images
The International Air Transport Association has warned that global airlines can expect profits to halve in 2026 as the rising cost of jet fuel continues to squeeze the industry.
IATA’s outgoing director general stated that oil prices and jet fuel costs increased after the US-Iran conflict started on February 28 Willie WalshThis adds to the challenges airlines have faced in recent years, from the Covid-19 pandemic to the war in Ukraine.
“As a result, we expect average jet fuel prices to be 70% higher on an annual basis,” Walsh said in his report on the State of the Global Air Transport Industry, released Sunday. he said. “This will add $100 billion to our collective fuel bill this year.”
Although travel demand remains resilient, airlines are increasing fares to cope, but growth will inevitably be slower, Walsh said.
“Given all this, we expect profitability to halve from 2025,” Walsh added. “Net profit will fall from $45 billion to $23 billion in 2026, and net margins will fall from 4.2% to 2.0%.”
According to Walsh, airlines whose balance sheets have not recovered from Covid-19 and those operating in the Gulf will be most affected.
The IATA survey showed that 86 percent of travelers expect prices to be in line with oil prices, while 49 percent expect to spend more on travel this year than last.
“The biggest unknown is how long passengers and shippers can tolerate higher connection costs,” Walsh said.
According to IATA data, the conflict in the Middle East caused oil prices to rise above $100 per barrel in March, and the price of jet fuel increased by 103% in March compared to the previous month. Jet fuel prices According to IATA, there was a 62.4% increase on an annual basis in the week ending June 5.
Meanwhile. US carriers spent 56.4 percent more on jet fuel in March than in February. Ministry of Transport In May. They spent a total of $5.06 billion on fuel in March, up from $3.23 billion in February; This was 30% more than what they paid in March 2025.
How are the airlines doing?
german airline Lufthansa It said in a statement on May 6 that it expects to incur 1.7 billion euros ($1.96 billion) in extra fuel costs this year, with the war creating “tremendous challenges”.
Also Irish low cost carrier ryanair It hedged 80% of its summer fuel and saw after-tax profits rise 40% to around 2.3 billion euros in the year ending March.
Ryanair CEO Michael O’Leary told CNBC in April that he expected other European carriers to struggle if jet fuel costs remained high.
“We think some of our European airline competitors will face real financial difficulties if prices remain high for much longer this summer,” O’Leary said.
“I think there will be failures,” O’Leary added. “If it continues at $150 a barrel in July, August and September then you will see European airlines fail and that will probably be good for Ryanair’s business in the medium term.”
— CNBC’s Leslie Josephs contributed to this report.
