Airlines Face Profit Crunch as Jet Fuel Costs Surge 70% in 2026

TLDR

• IATA cut its 2026 global airline profit forecast from $41bn to $23bn
• Jet fuel prices are expected to average $152 per barrel, up nearly 70% from 2025
• European airline profits are forecast to fall 26%, from $13bn to $9.6bn
• Middle East airlines are expected to swing to a $4.3bn loss from a $7.2bn profit
• Fuel costs are set to rise 40% to $350bn, taking up 31.4% of total operating expenses

The International Air Transport Association has cut its 2026 global airline profit forecast by nearly half. The industry body now expects combined net profits of $23 billion this year, down from $45 billion in 2025 and well below the $41 billion it had previously projected.

The main reason is fuel. Jet fuel prices are expected to average $152 per barrel in 2026. That is up almost 70% from $90 per barrel in 2025. The rise is linked to disruptions caused by the ongoing conflict in the Middle East.

Total fuel costs across the industry are forecast to jump 40%, from $252 billion in 2025 to $350 billion this year. That would push fuel’s share of total operating expenses from 25.4% to 31.4%.

Net profit per passenger is expected to fall from $9.10 in 2025 to just $4.50 this year. Total industry revenue is still growing, up 9.4% to $1.165 trillion, but expenses are growing faster. Total operating costs are forecast to reach $1.117 trillion.

European Airlines Hit Hard

European carriers are among the hardest hit. IATA forecasts their combined net profit will drop from $13 billion in 2025 to $9.6 billion in 2026, a fall of around 26%. Profit per passenger drops from $10.30 to $7.50.

European airlines hedged around 70% of their fuel needs before the crisis. That has cushioned some of the blow. But IATA warns that higher costs will start feeding through as those hedges expire.

Shares in major European airlines fell on Monday. IAG, Air France-KLM, Lufthansa, and Wizz Air all dropped between 1.47% and 2.1%. EasyJet fell just 0.86%, making it the relative outlier.

IATA also noted that parts of Europe are still dealing with airspace restrictions over Russia. A weaker economic backdrop and slower household spending are expected to add further pressure.

Regional Damage Varies

The Middle East has seen the sharpest damage. Airlines in the region are forecast to post a net loss of $4.3 billion in 2026, compared to a $7.2 billion profit in 2025. Passenger demand in the region is expected to fall 11.4%.

North American carriers are forecast to earn $9.4 billion, down from $12.4 billion. Asia Pacific is projected to fall from $9.8 billion to $6.6 billion.

Return on invested capital is expected to drop to 4.3%, below the estimated 8.5% weighted average cost of capital. Walsh said smaller carriers with weak balance sheets are “certainly struggling.”

Despite the pressure, total passenger numbers are still forecast to reach 5.1 billion in 2026, with the load factor hitting a record 84%.

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