Airlines are expected to achieve a combined total net profit of $41 billion in 2026 (up from $39.5 billion in 2025). While this would set a new record, the net profit margin is expected to be unchanged from 2025 at 3.9%. Net profit per passenger transported is expected to be $7.90 (below the 2023 high of $8.50, and unchanged from 2025), according to the latest financial outlook released by International Air Transport Association (IATA).
“Airlines are expected to generate a 3.9% net margin and a $41 billion profit in 2026. That’s extremely welcome news considering the headwinds that the industry faces—rising costs from bottlenecks in the aerospace supply chain, geopolitical conflict, sluggish global trade, and growing regulatory burdens among them. Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability,” says Willie Walsh, IATA’s director general.
Key takeaways:
- Operating profit in 2026 is expected to be $72.8 billion (up from $67.0 billion in 2025) for a net operating margin of 6.9% (improved on the 6.6% expected for 2025).
- Return on invested capital (ROIC) is expected to be 6.8% (unchanged from 2025). Despite deleveraging and improved operating profitability, ROIC is expected to remain below the weighted average cost of capital (WACC) estimated to be 8.2% in 2026.
- Total industry revenues are expected to reach $1.053 trillion in 2026 (up 4.5% on the $1.008 trillion expected revenues in 2025).
- Load factors are forecast to continue to set record highs with airlines expected to fill 83.8% of all seats over the year 2026.
- Cargo volumes are expected to reach 71.6 million tons in 2026 (up 2.4% on 2025).
- Supply chain challenges continue to constrain airlines’ ability to meet consumer demand for air transport. While some improvements are expected in 2026, the backlog in aircraft orders is expected to continue to grow. High load factors and yield stability are partially attributable to supply chain issues. However, the growth-constraining impact of supply chain challenges remains a drag on airline profitability. Even as aircraft deliveries are projected to increase significantly in 2026, the pace of new orders is outstripping production, causing the backlog to reach new highs and signaling that supply constraints, and their financial impact, will persist well beyond the near term.
- The regulatory cost burden on airlines is significant. While significant deregulation is being pursued in the United States, European regulators have yet to act on the recommendations of the Draghi report to make significant improvements in competitiveness by easing regulatory burdens. A case in point is the attempt to reform the European regulation on passenger rights (EU261), which has been watered down in ambition and convoluted with proposals to essentially make cabin baggage a passenger right irrespective of an airline’s business model or customer need.
- Infrastructure constraints are not expected to ease significantly in 2026. However, U.S. plans to renew its air traffic management system in the coming years would be a major improvement. While regulators have reaffirmed International Civil Aviation Organization principles for infrastructure charges, most have failed to use the principles to realize cost efficiencies.
· Conflict continues to hamper airlines with significant costs. Airspace closures, GNSS interference, and re-routing for both political and safety reasons are constraining operations and reducing efficiencies.
· North American profitability remains stable, but the region ceded its most profitable ranking to Europe in 2025.
· The United States suffered stagnating overall growth and a domestic market contraction in the face of policy uncertainty around tariffs, tighter immigration enforcement dampening both inbound and domestic travel, and a lengthy government shutdown. Capacity constraints, pilot shortages, engine reliability issues, and rising labor costs continue to restrict expansion. Despite these hurdles, airlines managed to protect margins in 2025, supported by stable yields and lower fuel prices. Performance, however, varies by business model. Low-cost carriers are under pressure, heavily exposed to the shrinking US domestic segment, growing passenger preferences for premium services, and facing the disadvantages of single-type fleets amid supply chain disruptions.
· Looking ahead, 2026 is expected to see some easing of these challenges and the opportunity for a gradual increase in demand.
“The resilience in air cargo has been particularly impressive. As trade flows adapt to a protectionist U.S. tariff regime, air cargo has been the hero of global trade buoyed in part by robust e-commerce and semiconductor shipments to support the boom in AI investments. Notably, air cargo enabled front-loading to deliver products ahead of tariff deadlines, and it flexibly accommodated demand surges as tariffed goods normally destined for the US found new markets. The critical role of air cargo is front and center as the global economy adjusts to new realities,” says Walsh.
