The International Air Transport Association (IATA) released its latest financial outlook for the global airline industry showing a stabilization of profitability even as supply chain issues persist.
It said that airlines are expected to achieve a combined total net profit of US$41 billion in 2026 (up from US$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%.
Operating profit in 2026 is expected to be US$72.8 billion (up from US$67.0 billion in 2025) for a net operating margin of 6.9% (improved on the 6.6% expected for 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.
Meanwhile, cargo volumes are expected to reach 71.6 million tonnes in 2026 (up 2.4% on 2025). Passenger numbers are expected to reach 5.2 billion in 2026 (up 4.4% on 2025).
"Airlines are expected to generate a 3.9% net margin and a US$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," said Willie Walsh, director general at IATA.
"Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability," he added.
While strong performance of airlines in the face of a changing and challenging operating environment is impressive, IATA noted that the fact that the airline industry collectively does not generate earnings that cover its cost of capital remains an issue to be resolved.
"Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies," Walsh said, adding that they stand at the core of a value chain that underpins nearly 4% of the global economy and supports 87 million jobs.
"Yet Apple will earn more selling an iPhone cover than the US$7.90 airlines will make transporting the average passenger. And even within the air transport value chain, airline margins are totally out of balance, particularly when compared to margins of engine and avionics manufacturers and many of our service suppliers."
"Imagine the additional power that airlines could bring to economies if we could re-balance value chain profitability, reduce regulatory and tax burdens, and alleviate infrastructure inefficiencies," the IATA director general added.
Air cargo's performance is of particular interest, Walsh said, as it has "defied many predictions of gloom" to hold its own amid rapidly changing trading conditions.
"The resilience in air cargo has been particularly impressive. As trade flows adapt to a protectionist US tariff regime, air cargo has been the hero of global trade buoyed in part by robust ecommerce and semiconductor shipments to support the boom in AI investments," Walsh said.
"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," he added.
Overall revenues are expected to grow by 4.5% to US$1.053 trillion. IATA said this is expected to outpace operating expense growth of 4.2% to US$981 billion, leading to a US$1.5 billion improvement in industry-wide net profitability in 2026.
Macro-economic factors impacting airlines are mixed for 2026. On the positive side, GDP growth is expected to be largely stable at 3.1% and inflation is expected to ease slightly to 3.7%. World trade growth is, however, expected to be anemic at 0.5%.
IATA said air cargo revenue is forecast to reach US$158 billion in 2026 (up 2.1% on US$155 billion in 2025).
"This moderate expansion is driven by continued growth in cargo, particularly in time-sensitive shipments and e-commerce volumes (+2.6% growth in cargo tonne kilometers or CTK in 2026, slowing from +3.1% growth in 2025)," Walsh said.
"Coupling these factors with tightening capacity, cargo yields are expected to remain stable (-0.5% on 2025) and elevated (approximately 30% above pre-pandemic levels), despite a broader slowdown in global trade," he added.
Overall, the 2026 cost outlook points to a more balanced environment. IATA noted that fuel relief is offset by rising non-fuel pressures, but the broader slowdown in inflation is helping to stabilize the cost base.
Fuel efficiency gains are expected to be just 1.0% as supply chain issues continue to hamper fleet renewal and push the average aircraft age to over 15 years, the highest ever.
The cost of compliance with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is expected to grow to US$1.7 billion for 2026 (up from US$1.3 billion for 2025).
The incremental cost of airline purchases of Sustainable Aviation Fuel (SAF) is expected to reach US$4.5 billion in 2026, with the expectation of 2.4 million tonnes of SAF being available (0.8% of total fuel consumption).
IATA noted that 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," it said, adding that 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," it said.
