Iata set to slash airline profit outlook amid fuel shock

09:59

By: Dakir Madiha

Iata set to slash airline profit outlook amid fuel shock

Global airline executives are gathering in Rio de Janeiro for a major industry meeting as the sector faces mounting pressure from a sharp rise in jet fuel costs linked to the war in Iran. The International Air Transport Association is expected to significantly cut its previous 2026 profit forecast of 41 billion dollars, with industry estimates pointing to a potential decline of more than 35 percent in earnings this year before a possible recovery in 2027.

Fuel markets have tightened since the escalation of military conflict involving the United States, Israel and Iran. Jet fuel prices have surged to their highest levels since the war in Ukraine, driven by disrupted supply routes and higher refining margins. In Europe, key indicators of refinery profitability for aviation fuel reached record highs in March, more than tripling compared with pre-conflict levels, according to industry data. The shock has pushed airlines into higher operating costs across major international routes.

Air carriers in the United States have reported a sharp rise in fuel spending, with monthly costs increasing by more than half in March compared with the previous month. Airlines have responded by raising baggage fees, cutting available seats and adjusting flight schedules. Similar measures have been adopted globally as carriers try to protect margins in an environment of volatile energy prices and weaker demand conditions on some long haul routes.

Policy officials have sought to calm concerns over supply stability, stating that there are no immediate signs of widespread flight cancellations. However, energy authorities have warned that risks remain if tensions affect critical shipping corridors such as the Strait of Hormuz. While alternative suppliers have helped offset some shortages in recent months, industry leaders continue to describe the situation as structurally constrained, with limited short term relief expected.