The International Air Transport Association (IATA) has projected that global airline profits will decline sharply from an estimated $45 billion in 2025 to $23 billion in 2026, according to its latest financial outlook report. Despite this global downturn, IATA indicated that African airlines are expected to remain profitable in 2026, even as challenges intensify worldwide.
Reasons for the Decline
In a statement released on Tuesday, IATA Director-General Willie Walsh attributed the significant drop in financial performance primarily to the ongoing Middle East conflict and soaring jet fuel prices. He noted that the net profit margin for global airlines is anticipated to be just 2 percent in 2026, roughly half of the 3.9 percent projected for 2025.
Furthermore, Walsh highlighted that net profit per passenger transported is expected to fall to $4.5 in 2026, down from $9.1 in 2025. Operating profit is forecast at $48 billion, a decrease from $76.4 billion in 2025, resulting in a net operating margin of 4.1 percent compared to 7.2 percent previously. Return on invested capital (ROIC) is also expected to decline to 4.3 percent from 6.6 percent, remaining below the estimated weighted average cost of capital of 8.5 percent.
Revenue and Traffic Projections
Despite the profit slump, total industry revenues are projected to reach $1.165 trillion in 2026, representing a 9.4 percent increase from $1.065 trillion in 2025. The passenger load factor is forecast to hit a record high, with airlines expected to fill 84 percent of seats, up from 83.5 percent in 2025. Passenger numbers are anticipated to grow to 5.1 billion in 2026, a 2.4 percent rise from the previous year, while cargo volumes are expected to reach 71.7 million tonnes, a modest 0.2 percent increase.
Opportunities for African Airlines
IATA observed that Africa's major hub airlines are experiencing strong passenger traffic growth as international flights increasingly reroute away from parts of the Middle East. This shift is creating fresh revenue opportunities for leading carriers on the continent, particularly those with extensive connections between Africa, Europe, and Asia.
However, IATA cautioned that African airlines would face significant cost pressures that could limit earnings growth. Walsh stated, "The region's profitability is expected to weaken as a result of cost-side vulnerabilities, especially concerning the supply and price of fuel." He added that high fuel costs remain a major concern for African carriers.
Fuel Cost Impact
Globally, jet fuel prices are expected to surge by nearly 70 percent in 2026, rising from an average of $90 per barrel in 2025 to $152 per barrel. Fuel costs are projected to account for more than 31 percent of airlines' operating expenses worldwide, according to IATA.
Structural Challenges
IATA noted that while African airlines stand to gain from the rerouting of global traffic, the financial benefits are likely to be concentrated among a handful of established hub carriers with strong international networks. Fragmented operators across the continent are expected to struggle under the weight of rising operating costs and weaker financial positions.
The association identified several structural challenges hindering the growth of African aviation, including inadequate infrastructure, fragmented airspace management, and limited cooperation among countries. Walsh emphasized, "Structural constraints continue. Weak infrastructure, fragmented airspace, and limited cross-border coordination reduce network efficiency and raise operating costs."
Overall, global airlines are expected to generate revenues of $1.165 trillion in 2026, a 9.4 percent increase over the previous year, but profitability remains under severe pressure.
