The International Air Transport Association on Friday cut its 2026 profit forecast for the global airline industry by nearly half, citing record jet fuel prices and disruption from the conflict in the Middle East. IATA now expects airlines to earn $23 billion in net profit, down from the $45 billion it projected before the outbreak of war between the U.S. and Iran.
The trade group said total industry revenues are expected to reach approximately $1.17 trillion this year, with a net profit margin of 2.0% — less than half the 4.2% margin previously anticipated. IATA estimates that the industry’s fuel bill will climb to $351 billion, lifting fuel’s share of total operating costs to 31.4%.
The reduced outlook comes more than three months after the U.S.-Iran conflict began, which has disrupted shipping lanes and sent jet fuel prices surging. Last week, the International Energy Agency projected that global oil demand would fall by 1.1 million barrels a day this year as supply disruptions and high prices curb consumption.
In a separate assessment of the aviation sector, Citi analyst Samuel Seow said he is cautiously optimistic about Qantas Airways’ rollout of ultra-long-haul services. In a note to clients, Seow said the investment case for Qantas’s initial Sydney-London nonstop route appears reasonable. He noted that the Australian carrier currently generates a 20% revenue-per-average-seat-kilometer premium on its comparable Sydney-Perth route. The Airbus A350 aircraft Qantas is using on the new routes can also carry more freight, he added.
Seow said that by rolling out ultra-long-haul services on more proven and profitable routes first, Qantas is de-risking the early stages of the project. Citi maintains a “buy” rating on Qantas shares and a 12-month target price of A$10.40. Shares traded at A$9.99 ahead of the market open.
Meanwhile, shipping disruptions through the Strait of Hormuz continue to weigh on business sentiment, according to a survey by Oxford Economics. The firm said more than two-fifths of businesses polled after the announcement of a tentative U.S.-Iran agreement expect transit through the strategic waterway to remain below pre-war levels for the rest of 2026 and into 2027.
Oxford Economics said the businesses surveyed still expect subdued global growth in the near term but have become less concerned about the possibility of severe economic fallout from the conflict. “The perceived risk of a global recession has fallen back towards the level seen immediately before the outbreak of the war,” said Jamie Thompson, the firm’s head of macro scenarios.