Airline Profitability Expected to Stabilise at 3.9% Net Margin in 2026

Shreya Majumder
Jan 16
3 min read

Published: 16 January 2026

Written by: Shreya Majumder

IATA forecasts steady profits amid structural challenges and rising costs

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The global airline industry is forecast to enter a period of relative stability, with profitability expected to hold steady despite economic and operational pressures. According to IATA’s latest outlook, airlines worldwide are projected to generate a combined net profit of $41 billion in 2026, up slightly from $39.5 billion in 2025. While this sets a new record, net margins remain at 3.9%, highlighting the sector’s ongoing challenge to convert scale into stronger returns.

On a per-passenger basis, airlines are expected to earn $7.90 in net profit, unchanged from 2025 and below the 2023 peak of $8.50. Operating profits are forecast to rise to $72.8 billion, delivering a 6.9% margin, up from 6.6% the previous year. However, returns on invested capital will remain at 6.8%, still below the estimated cost of capital of 8.2%, underscoring structural weaknesses.

Industry revenues are expected to surpass $1 trillion, driven by steady passenger growth, resilient cargo demand and expanding ancillary services. Load factors are forecast to reach a record 83.8%, with passenger numbers climbing to 5.2 billion and cargo volumes hitting 71.6 million tonnes.

Willie Walsh, IATA’s Director General, described the outlook as encouraging given headwinds such as supply chain disruptions, geopolitical instability and rising regulatory costs. He noted that airlines have built greater resilience into their business models, enabling them to absorb shocks and maintain profitability. However, Walsh highlighted the imbalance across the aviation value chain, where airlines earn far slimmer margins than manufacturers and service providers. Addressing regulatory burdens, taxation and infrastructure inefficiencies could unlock greater economic value.

Air cargo remains a bright spot, supported by e-commerce growth and shifting trade patterns. Passenger ticket sales are expected to reach $751 billion, while ancillary revenues grow to $145 billion, accounting for nearly 14% of total revenue. Cargo revenues are forecast at $158 billion. Costs remain high, with fuel still representing over a quarter of operating expenses and labour becoming the largest cost driver.

Environmental compliance costs are rising as airlines invest in Sustainable Aviation Fuel and CORSIA obligations, though SAF still accounts for less than 1% of total fuel use.

Regional performance varies: Europe leads profitability, the Middle East remains strongest per passenger, Asia-Pacific drives traffic growth, and North America stays stable despite labour challenges. Latin America and Africa continue to face structural hurdles.

Despite thin margins, air travel offers strong value, with fares lower than a decade ago and high passenger satisfaction. The outlook signals stability but underscores the need for a more balanced and sustainable economic model.

Brookfield Aviation works closely with airlines on recruitment and workforce planning, supporting operators as they manage costs, efficiency, and capability in a low-margin environment. With profitability under pressure, access to experienced aviation professionals remains a critical factor in sustaining operational performance.

We also advocate for fair and transparent practices across the industry, ensuring that profitability does not compromise accessibility or passenger trust. Building a resilient future for aviation starts with the right people, and Brookfield Aviation delivers them.