Airline profits are expected to fall by half as fuel prices rise, says IATA

Pressured by rising fuel prices, airline profits are expected to fall by half in 2026 compared to 2025, estimates Iata (International Air Transport Association).

The entity projects that the figure will fall from US$45 billion to US$23 billion.

Iata's initial estimate for this year, presented at the end of 2025, was that the combined profit of global airlines would reach US$41 billion, with a net margin of 3.9%. Now, the expectation is that net margins will be 2% this year.

The drop mainly reflects the higher cost of QAV (aviation kerosene), which is expected to be 70% higher in 2026 in the annual comparison, representing more than 31% of the sector's total expenses.

The advance is expected to increase airline fuel costs by US$100 billion compared to 2025, according to IATA projections.

"It's a difficult year for all airlines, especially those whose balance sheets have not yet recovered from Covid-19. And, of course, for those operating in the Gulf," said IATA CEO Willie Walsh.

The executive highlighted, however, that demand is resisting the increase in fares promoted by airlines to minimize the higher price of QAV. "The big unknown is how long travelers and shippers will be able to tolerate the higher costs," said Walsh.

Iata research indicates that 86% of travelers expect air fares to keep pace with oil prices. In this sense, 49% expect to spend more on travel this year than last year. Another 43% plan to spend the same amount.

The entity's CEO also highlighted that, despite the most resilient demand to date, the sector's growth will inevitably be slower this year.

"We forecast growth of 2.1% for the passenger segment and 0.7% for the cargo segment," he added.

High interest keeps money away from US stock exchanges, says Zogbi | MONEY NEWS

Source: CNN