The International Air Transport Association expects global air passenger demand to grow at its slowest pace in several years in 2026, as the war in the Middle East drives up fuel costs. In a forecast cited by The Wall Street Journal’s Market Talk roundup, the trade body said traffic measured in revenue passenger kilometers is forecast to rise 2.1% year-on-year. “The sharp increase in oil prices and the even greater surge in fuel costs weigh on both our industry and the macroeconomic environment,” IATA said.
Regional outlooks diverged sharply. Middle East traffic is expected to contract 11.4%, while Europe, Asia Pacific and North America are forecast to grow 2.8%, 5.1% and 0.8%, respectively. African traffic is projected to rise 10%, IATA said.
The dollar declined Friday after President Trump pulled back from threats of further military strikes against Iran and said the two sides were nearing a deal. Trump said Iranian Supreme Leader Mojtaba Khamenei had signed off on the plan, which could be completed in coming days, according to the Journal. The DXY dollar index fell 0.1% to 99.803 as improved risk sentiment reduced safe-haven demand, Jefferies economist Mohit Kumar said. Lower oil prices also weighed on the currency given America’s position as a net oil exporter.
In Europe, shares of Fraport, operator of Frankfurt Airport, rose 5.2% to 70 euros after May traffic increased 2.7% year-on-year. Jefferies analysts said the company’s valuation was attractive and that free cash flow was boosted by higher pricing and lower capital expenditure.
Thailand’s airlines face a clouded earnings outlook for the second and third quarters, Maybank Securities analyst Boonyakorn Amornsank said. Fuel costs account for about one-third of total operating expenses for Asian airlines, and the full impact from elevated jet fuel prices is expected to hit second-quarter results after barely affecting first-quarter operations. Maybank maintained a neutral rating on Thailand’s aviation sector.
Middle East medical tourism to Thailand is showing signs of recovery, DBS Group Research analysts said, noting that tourist arrivals from the region picked up in May and that major Gulf carriers have largely restored flight frequencies. DBS said visitors from the Middle East account for 18% of Thailand’s medical tourism revenue.
Norway’s defense and aerospace group Kongsberg Gruppen issued new financial targets: 100 billion Norwegian kroner in revenue by 2029 and 150 billion kroner by 2033, with an earnings margin above 16%. Bank of America Securities analysts said the margin target was below consensus, though management described it as a floor rather than a ceiling. Bank of America lifted its price objective to 465 kroner from 425 kroner and kept its buy rating. Shares fell 1.3% to 298.10 kroner.
In Australia, smash-repair group AMA issued no trading update, which Bell Potter analyst Chris Savage said was a positive signal. Savage said traffic levels since April had been normal and that the absence of an update suggested earnings guidance remained on track. Bell Potter retained a buy rating on the stock.