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Airlines face an extra $100bn in jet fuel costs this year after the Iran war sent prices spiralling higher, a global industry group has warned.
As a result the industry’s combined net profits are expected to halve from $43bn in 2025 to $23bn this year, with the average margin dropping from 4.2 per cent to 2 per cent, according to the International Air Transport Association.
“There are clearly wafer-thin margins,” said Willie Walsh, the former British Airways boss who is now director-general of Iata, at its annual meeting in Rio de Janeiro.
The industry has already seen one major bankruptcy in 2026 — Spirit Airlines in the US — and is braced for further collapses in the coming months. Walsh said times were difficult “especially for those whose balance sheets had not yet recovered from Covid”.
Jet fuel prices doubled after the Iran war that started in February led to the closure of the Strait of Hormuz, gumming up a vital waterway for the global oil sector. But even though prices are expected to ease later in the year, Iata forecasts that the industry would still face an average increase of 70 per cent this year.
The sector’s fuel bill was being further driven up by less efficient, ageing planes because of “failures” by aircraft and engine-makers to deliver enough models to the carriers, Walsh said.
The average age of aircraft is now above 15 years, a record high, with the industry facing a backlog of 18,000 planes.
“Airlines face higher fuel costs with fleets that are less efficient,” said Walsh, adding this led to “missed efficiency gains, increased maintenance and higher lease rates”.
Iata calculated that flying older planes had cost airlines some $11bn in higher fuel bills during 2025. “Higher fuel prices only make that worse,” Walsh added.
He told engine groups to “get back to making great engines that work and that last,” to applause from the airline chief executives gathered at the Iata meeting. “Allowing these failures to extend into next decade is totally unacceptable,” he added.
Echoing comments from airline executives that demand was still strong, Walsh said that demand was “holding up” despite many carriers increasing ticket prices to offset higher costs.
Iata found that 86 per cent of travellers “expect fares to track the oil price”, while some 49 per cent “expect to spend more on travel” this year.
Brent crude prices have jumped as high as $120 a barrel during the conflict, from just above $70 a barrel when it kicked off, but have since come back to $93 a barrel.
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