The International Air Transport Association (IATA) has released a new financial outlook showing that airline profitability continues to “stabilise” despite ongoing supply chain challenges.
In full-year 2026, the IATA expects airlines to deliver a combined total net profit of $41bn in 2026 (up from $39.5bn in 2025).
While this would set a new record in absolute terms, net profit margin is expected to remain unchanged from 2025 at 3.9%.
Net profit per passenger transported is expected to be $7.90 — which would be below the 2023 high of $8.50 and unchanged from 2025.
Willie Walsh, director general of the IATA, said the net profit and net margin forecasts are “welcome news” considering the headwinds the industry has faced and will continue to face going into 2026.
In addition to supply chain bottlenecks, other headwinds include geopolitical conflict, sluggish global trade, and growing regulatory burdens.
“Airlines have successfully built shock-absorbing resilience into their businesses, and that is delivering stable profitability,” said Walsh.
However, the IATA director general warned that the airline profitability will remain limited due to the fundamental contradictions of the business model and its capital costs.
“While strong performance of airlines in the face of a changing and challenging operating environment is impressive, the fact that the airline industry collectively does not generate earnings that cover its cost of capital remains an issue to be resolved,” he said.
“Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies.”
Walsh noted, for example, that Apple earns more selling an iPhone cover than the $7.90 that airlines earn from transporting the average passenger.
He added that, even within the air transport value chain, airline margins are “totally out of balance” when compared to those of engine and avionics OEMs and many service providers.
“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,” said Walsh.
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), which is estimated to be 8.2% in 2026.
Overall revenues are expected to grow by 4.5% to $1.053 trillion. This is expected to outpace operating expense growth of 4.2% to $981bn, leading to a $1.5bn 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%.
Alongside its latest financial outlook, the IATA has also updated its analysis of aerospace supply chain bottlenecks.
While deliveries of new aircraft began to pick up in late 2025 and production is expected to accelerate in 2026, demand is still forecast to outstrip the availability of aircraft and engines.
The normalisation of the structural mismatch between airline requirements and production capacity is unlikely to take place before 2031-2034, said the IATA, due to irreversible losses on deliveries over the past five years and a record-high order backlog.
Delivery shortfalls now total at least 5,300 aircraft, and the order backlog has surpassed 17,000 aircraft — a number equal to almost 60% of the active fleet.
This backlog is equivalent to nearly 12 years of the current production capacity. Historically, this ratio was steady at around 30-40% of the active fleet.
Aircraft in storage (for all reasons) exceed 5,000 aircraft — one of the highest levels in history despite the severe shortage of new aircraft.
Walsh said that airlines are feeling the impact of the aerospace supply chain challenges across their business, in the form of higher leasing costs, reduced scheduling flexibility, delayed sustainability gains, and increased reliance on “suboptimal” aircraft types.
“Airlines are missing opportunities to strengthen their top-line, improve their environmental performance, and serve customers,” he said.
“Meanwhile, travellers are seeing higher costs from the resulting tighter demand/supply conditions.
“No effort should be spared to accelerate solutions before the impact becomes even more acute.”