European airlines profits expected to fall 26% this year

The International Air Transport Association is forecasting the net profit of European airlines to drop from $13bn last year to $9.6bn this year, with profit per passenger declining from $10.30 to $7.50

Director general of the IATA Willie Walsh said war-related disruptions and rising fuel costs 'have shifted the outlook for airlines to the worse'.

The combined net profits of European airlines are expected to see a 26% decline during this year, the International Air Transport Association (IATA) has warned, as they are “highly reliant” on Gulf countries for jet fuel and are facing “significant cost pressure”.

In its latest financial outlook for the sector, the IATA said that some of the jet fuel costs are “mitigated thanks to a pre-crisis hedging ratio of 70% of its fuel needs, higher costs will feed through as hedges roll off”.

It is forecasting the net profit of European airlines to drop from $13bn (€11.28bn) last year to $9.6bn this year, with profit per passenger declining from $10.30 to $7.50.

“Europe has seen some traffic gains by providing direct connectivity between Europe and Asia, replacing some travel through Gulf hubs. However, parts of Europe are still suffering from airspace restrictions over Russia,” the IATA said.

“Importantly, a weakening macro-economic backdrop, with slower growth and rising energy costs, is expected to weigh on household purchasing power.” 

The IATA said that it expects airlines globally to achieve a combined net profit of $23bn this year, roughly half the previously projected $41bn. It is also roughly half the $45bn the net profit estimate for 2025.

Net profit per passenger transported is expected to be $4.50, half the $9.10 achieved in 2025. Total industry revenues are expected to reach $1.165tn this year, up 9.4% year-on-year.

Director general of the IATA Willie Walsh said war-related disruptions and rising fuel costs “have shifted the outlook for airlines to the worse”.

“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,” he said.

Global airline fuel costs are expected to rise by nearly 40% from $252bn in 2025 to $350bn this year.

“Globally, airlines have hedged roughly one third of their expected fuel consumption for 2026, which helps smooth short-term cost volatility, but does not eliminate exposure to sustained price increases,” the IATA said.

Total fuel consumption in 2026 is expected to remain unchanged from 2025 at 104bn gallons.