Iata, profits halved in 2026: war in the Middle East and high fuel prices weigh heavily

On the cargo side, however, growth will be more moderate: transported volumes are expected to reach 71.7 million tonnes, an increase of 0.2%.

Particularly significant is the return on investment figure of 4.3%, down from 6.6% in 2025. The figure remains well below the weighted average cost of capital, estimated at 8.5%.

This situation highlights a structural fragility of the airline industry: even in the presence of record revenues and robust demand, external shocks such as geopolitical conflicts or soaring energy costs can quickly undermine the efficiency of capital utilisation and the ability to generate value for investors.

According to Willie Walsh, Director General of the International Air Transport Association (IATA), the industry is facing a particularly complex phase.

"The disruptions caused by the war in the Middle East and rising fuel costs have worsened the outlook for airlines. Globally, profitability is expected to halve by 2025, with profits falling from $45 billion to $23 billion and margins dropping from 4.2 per cent to 2 per cent," Walsh said.

The executive pointed out that the price of jet fuel increased by 70% very quickly. Although the companies are trying to offset some of the costs through fare adjustments and operational efficiency improvements, these measures will not be sufficient to maintain the profit levels of the previous year.

Walsh also highlighted the difficulties of the smaller carriers, which are facing the crisis with already fragile financial structures, while the large Gulf carriers have to deal with the operational uncertainty resulting from the near-total closure of airspace in parts of the Middle East.

Despite the challenges, the industry continues to ensure high levels of global connectivity. However, Walsh concludes, the economic impacts of the geopolitical situation and rising energy costs now seem inevitable.

Europe, heavily dependent on aviation fuel imports from the Gulf, is facing significant cost pressure. Some of this pressure is mitigated by pre-crisis hedging contracts amounting to 70 per cent of fuel requirements, but the higher costs will be progressively passed on to budgets as the hedges expire.

The Old Continent has benefited from direct connections between Europe and Asia replacing the Gulf hubs. However, some European areas continue to suffer from airspace restrictions over Russia. Iata notes that in a weakening macroeconomic environment, slower economic growth and rising energy costs risk weighing on household purchasing power.

According to Iata, onerous regulations, including Sustainable Aviation Fuels (SAF) obligations, as well as high airport and air navigation charges, weigh heavily on European airlines. Continuing industrial action in several markets contributes to operational disruptions and limits flexibility, as was recently the case in Germany. These factors, the organisation warns, could weaken Europe's competitive position, even once market conditions normalise.