IATA Cuts 2026 Profit Forecast for Global Aviation Industry Due to Middle East War

The global airline industry has cut its 2026 profit forecast by nearly half due to the economic fallout of the war in the Middle East.

In its annual report released Sunday, the International Air Transport Association (IATA), which represents more than 370 airlines accounting for almost 85 percent of global air traffic, projected that the industry’s total net profit will reach $23 billion in 2026.

This figure is significantly lower than its previous forecast of approximately $41 billion and is also below the $45 billion recorded by the sectorin 2025.

The report noted that the war in the Middle East, which has driven up fuel costs and disrupted major air routes, has exposed the vulnerability of an industry that operates on thin profit margins.

It forecast that airlines’ fuel bill will rise to around $350 billion this year, compared with approximately $252 billionin 2025.

At the same time, IATA expects industry revenues to increase by 9.4 percent to about $1.16 trillion this year, supported by stable travel demand, higher ticket prices, and growing income from ancillary services such as seat upgrades and onboard services.

Commenting on the outlook, IATA Director General Willie Walsh said that there are two main factors, the first is the sharp rise in jet fuel prices, which has exceeded what anyone, as he thinks, expected.

The second, Walsh noted, is the disruption facing airlines in the Middle East region. He suggested that this combination has led to lower forecasts.

As such, Walsh further indicated that he predicts some smaller airlines to go bankrupt or be acquired by larger carriers during this year and next year, once the full impact of higher fuel costs becomes apparent.

He also expects airlines to discontinue unprofitable routes in order to protect their profit margins.