This photo shows an aircraft of the Irish low-cost airline Ryanair parked at Thessaloniki Airport “Macedonia” in Thessaloniki on May 7, 2026. Ryanair will close its base at Thessaloniki Airport in October 2026 and notify staff of the move. The decision follows a dispute over an increase in airport fees imposed by operator Fraport Greece. (Photo by Sakis Mitrolidis/AFP via Getty Images)
Sakis Mitrolidis | AFP | Getty Images
The International Air Transport Association has warned that global airlines are expected to see their profits halved in 2026 as rising jet fuel prices continue to weigh on the industry.
Willie Walsh, IATA’s outgoing executive director, said oil prices have soared since the U.S.-Iran conflict began on February 28, driving up jet fuel costs and adding to the challenges airlines have faced in recent years, from the coronavirus pandemic to the war in Ukraine.
“As a result, we expect average jet fuel prices to rise 70% year-on-year,” Walsh said in a report on the state of the global air transport industry published Sunday. “This will increase our bulk fuel bill by $100 billion this year.”
Walsh noted that while travel demand remains strong and airlines are raising fares in response, growth will inevitably slow.
“Given all of this, we expect profitability to halve from 2025,” Walsh added. “Net income in 2026 will decline from $45 billion to $23 billion, and net profit margin will decline from 4.2% to 2.0%.”
Walsh said airlines whose balance sheets have not yet recovered from COVID-19 and those operating in the Gulf region will be hit the hardest.
According to an IATA poll, 86% of travelers expect fares to match oil prices and 49% expect to spend more on travel this year than last.
“The big unknown is how much higher connectivity costs will be tolerated by travelers and shippers,” Walsh said.
The Middle East conflict caused oil prices to soar to more than $100 a barrel in March, while jet fuel prices rose 103% month-on-month in March, according to IATA data. Jet fuel prices rose 62.4% year-on-year in the week ending June 5, according to IATA.
meanwhile. U.S. airlines spent 56.4% more on jet fuel in March than in February, according to data released by the Department of Transportation in May. Fuel spending totaled $5.06 billion in March, up from $3.23 billion in February and 30% more than what was paid in March 2025.
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german airlines Lufthansa German Airlines It also announced on May 6 that it expects to incur additional fuel costs of 1.7 billion euros ($1.96 billion) this year as the war poses “tremendous challenges”.
Plus, Ireland’s low-cost airlines ryanair has hedged 80% of its summer fuel needs and boosted its after-tax profits by 40% to nearly 2.3 billion euros in the year ending March.
Ryanair CEO Michael O’Leary told CNBC in April that he expected other European airlines to struggle if jet fuel costs remained high.
“If prices remain high for an extended period of time this summer, we believe many of our European competitors will face serious financial difficulties,” O’Leary said.
“There will be failures,” O’Leary added. “If it stays at $150 a barrel through July, August and September, it will bankrupt European airlines and will probably be good for Ryanair’s business in the medium term.”
-CNBC’s Leslie Josephs contributed to this report.
