The conflict in the Middle East has seen a halving of airline profitability, according to the latest data from global industry body IATA.

Latest numbers released at the organisation’s AGM in Rio de Janeiro, forecast global annual net profit for the sector of $23 billion in 2026, down from $45 billion in 2025.

Willie Walsh, IATA’s outgoing director general said net profit per passenger is now so low it won’t be enough to buy a hot dog at the upcoming FIFA World Cup in the US.

The war on Iran and resulting hike in fuel prices has seen an aviation take an overall hit globally, but there are regional variances with Middle East carriers falling into the red.

In other regions airlines are forecast to remain profitable but at a much-reduced level compared to forecasts prior to the beginning of hostilities.

Walsh said: “War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse.

“Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%.

“All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices. Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year’s level.

“Smaller carriers that started the year with weak balance sheets are certainly struggling.

“At the regional level, all are in the black but with sharply reduced financial performance, with the exception of the Middle East.

“The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war.

“These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”

Key industry financial metrics highlighted by IATA at the AGM included:

• Airlines are expected to achieve a combined total net profit of $23.0 billion in 2026, which is roughly half the previously projected $41 billion. It is also roughly half the $45 billion net profit estimate for 2025.
• The net profit margin is expected to be 2.0% in 2026, roughly half the previously projected 3.9%. It is also less than half the 4.2% estimate for the 2025 net profit margin.
• Net profit per passenger transported is expected to be $4.50, half the $9.10 achieved in 2025.
• Operating profit in 2026 is expected to be $48.0 billion (down from $76.4 billion in 2025) for a net operating margin of 4.1% (down from 7.2% in 2025).
• Return on invested capital (ROIC) is expected to be 4.3% (down from 6.6% in 2025). This is below the 8.5% estimated weighted average cost of capital.
• Total industry revenues are expected to reach $1.165 trillion in 2026 (up 9.4% on the $1.065 trillion in 2025).
• Passenger load factor is forecast to continue to set record highs with airlines expected to fill 84.0% of all seats over the year. That is an improvement on 83.5% in 2025.
• Passenger numbers are expected to reach 5.1 billion in 2026 (up 2.4% on 2025).
• Cargo volumes are expected to reach 71.7 million tonnes in 2026 (up 0.2% on 2025).

IATA said the airline industry as a whole suffers from low margins and returns below the cost of capital even when market conditions are favourable.

Walsh added: “Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines.

“Net profit per passenger is expected to fall to $4.50, half of what it was last year. Under the circumstances, that shows resilience.

“But it won’t even buy you a hot dog at most of the FIFA World Cup venues and it does not leave much of buffer should other costs or taxes start rising.”