…The Middle East is the strongest region in terms of net profit margin and profit per passenger. Carriers in the region are forecast to earn $6.8 billion in net profit.
…Global operating profits are projected at $67 billion on 2025, and in 2026, it is expected to be $72.8 billion
TUE DEC 09 2025-theGBJournal| Africa airlines future looks to stay grim and less profitable, as Low GDP per capita across much of the continent limits discretionary spending, making air travel highly price sensitive and restricting its growth potential, the International Air Transport Association (IATA) said on Tuesday.
According to the latest IATA Global Outlook for Air Transport, carriers in the continent are forecast to earn $0.2 billion in net profit, far below peers, as demand is further constrained by visa restrictions, restrictive bilateral agreements, and high passenger charges.
”Moreover, African carriers face the highest unit costs globally, with average cost per ATK near 140 US cents, almost double the industry average. Among the many factors contributing to the high cost of operations in Africa are high fuel costs, fragmented markets, older fleets, and average corporate tax rates of 28% (the highest among all regions).
Until these constraints ease, Africa’s airline industry will operate with thin margins and limited resilience, even as traffic expands faster than the global average,” IATA said.
Meanwhile, airline industry is on track to $1 trillion in revenues for the first in 2025. This is expected to outpace operating expense growth of 4.2% to $981 billion, leading to a $1.5 billion improvement in industry-wide net profitability in 2026.
Global operating profits are projected at $67 billion on 2025, and in 2026, it is expected to be $72.8 billion, a net operating margin of 6.9% (improved on the 6.6% expected for 2025).
Total industry revenues are expected to reach $1.053 trillion in 2026 (up 4.5% on the $1.008 trillion expected revenues in 2025).
Airlines are also 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).
”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,” Willie Walsh, IATA’s Director General.
Passenger numbers are expected to reach 5.2 billion in 2026 (up 4.4% on 2025), while cargo volumes are expected to reach 71.6 million tonnes in 2026 (up 2.4% on 2025).
Similarly, load factors are forecast to continue to set record highs with airlines expected to fill 83.8% of all seats over the year 2026, while 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,” the report said.
Regional Performance
Europe
Europe is projected to deliver the strongest financial performance in absolute terms among all regions, with $14 billion in net profit and a margin of 4.9% in 2026.
The IATA report said European airlines show disciplined capacity management and strong load factors. Low-cost carriers are performing particularly well, expanding at double-digit rates and outperforming full-service carriers on net profit margin, fueled by strong intra-European traffic and leisure market. Traffic growth is moderating as the market matures and amid tepid economic conditions in the Euro zone where GDP growth lags the global average.
On the cost side, the strength of the Euro has provided a partial offset to inflationary pressures, particularly in fuel and leasing expenses, helping carriers maintain margins despite volatility in input costs.
The regulatory cost burden is increasing with the ReFuelEU initiative requiring a 2% SAF blend at EU airports from 2025. This coincides with mounting operational headwinds: labor unrest, drone disruptions, and persistent air traffic control bottlenecks.
Asia Pacific
Passenger demand remains robust, with China and India leading regional expansion, driven by rising tourism activity and the growing middle classes. Easing visa requirements for Chinese group tours to South Korea and for visitors to China are expected to stimulate short-term inbound demand, particularly during peak holiday periods.
Overcapacity remains a challenge amid a slower recovery in international traffic putting pressure on yields. Deflationary pressures are also driving yields lower in China. Nevertheless, Asia Pacific remains the largest contributor to global traffic growth, with load factors projected to reach 84.4% in 2026, an all-time high for the region.
While Chinese exports to the US have declined, substitution effects have helped offset the impact of trade tensions, as Chinese goods have found alternative markets.
Latin America
Traffic growth remains robust driven by economic stability and enhanced intra-regional connectivity.
Demand between the Americas has softened, though this has been offset by increased regional flows and a solid transatlantic performance, highlighting the adaptability of carriers in the face of shifting travel patterns.
Operating profitability is anticipated to rebound again in 2026, benefiting from the gradual strengthening of the region’s fundamentals. However, currency fluctuations remain a critical headwind. Although 2025 saw temporary relief with local currencies appreciating, volatility is expected to continue to challenge cost management and profitability.
With several major carriers in the region realizing the benefits of Chapter 11 restructuring, the region’s environment has shifted from crisis-driven survival to cautious, efficiency-focused rebuilding.
Middle East
The Middle East is the strongest region in terms of net profit margin and profit per passenger.
Carriers in the region are forecast to earn $6.8 billion in net profit.
This performance, the IATA report says, attests to the difference a positive regulatory operating environment can make, and to the region’s strategic position as a global connecting hub.
Passenger demand continues to be robust, driven by long-haul traffic and the expansion of hub carriers. Governments and airlines are doubling down on infrastructure investments to secure long-term growth.
While geopolitical tensions remain a feature of the regional landscape, they are not expected to negatively impact growth, particularly as efforts to secure lasting peace continue.
Middle Eastern carriers are mitigating aircraft delivery delays through retrofit programs and fleet life extensions, though capacity growth will remain constrained in the near term.
North America
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.
Overall revenues are expected to grow by 4.5% to $1.053 trillion, IATA said in it outlook.
”This is expected to outpace operating expense growth of 4.2% to $981 billion, leading to a $1.5 billion improvement in industry-wide net profitability in 2026.”
IATA notes that 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%.”
”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 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,” said Walsh.
