IATA: Middle East Airlines Projected to Post $4.3B Net Loss in 2026

By sterlingashworth // 2026-08-19

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Airlines operating from the Middle East are projected to post a $4.3 billion net loss in 2026, a swing from a $7.2 billion net profit in 2025, according to the International Air Transport Association's (IATA) June outlook as reported by Middle East Eye (MEE) [1][2]. The forecast follows the Feb. 28, 2026, air strikes launched by the United States and Israel on Iran, and the retaliatory Iranian strikes near U.S. military installations in Qatar and the United Arab Emirates (UAE), the report stated [2]. Several international airports were hit in the exchange, including Dubai International Airport, described as the world's busiest for international passengers, as well as airports in Abu Dhabi, Kuwait and Bahrain [1]. The UAE, Qatar, Bahrain and Kuwait closed their airspaces over safety concerns, gradually reopening them about a week later as hostilities lessened, according to MEE [2]. The initial disruption was extensive. More than 3,400 flights were canceled in a single day following the strikes, with major carriers including Emirates, Etihad, Qatar Airways, Lufthansa, Air France and British Airways suspending operations, according to a NaturalNews.com report [1].

Carrier Operations and International Suspensions

Most major regional carriers have resumed operations – including Emirates, Etihad Airways and Qatar Airways – though not at full capacity, according to MEE. Emirates CEO Tim Clark told the Financial Times (FT) in June that his planes were flying at three-quarters capacity [2]. Most European and Asian carriers remain suspended, the report said. Air France expects to resume service in late August and Lufthansa in September, while British Airways, Cathay Pacific and Singapore Airlines are targeting late October. Air Canada is not planning to resume before mid-January 2027, and many other carriers have not announced restart dates, according to the report. The EU Aviation Safety Agency's most recent bulletin advises operators to avoid the airspace of Bahrain, Kuwait, Qatar, the UAE and part of the Gulf of Oman until Aug. 31, 2026, the report said. Traveler choice remains limited: for a one-week round trip between the UAE and London in September, the only options are Emirates, Etihad or Air Arabia, while Qatar Airways is the sole carrier on the Doha-Tokyo route, the report stated [2].

Hub-and-Spoke Model Under Strain

Gulf carriers operate on a hub-and-spoke model that concentrates traffic at a central base and connects passengers onward from that hub, according to Middle East Eye. Naveed Kapadia, an aviation lecturer at Buckinghamshire New University, told the outlet that while competition for carriers such as Qatar Airways and Emirates is "greatly reduced," allowing them to "capture market share and maintain stronger fares," they remain "connecting carriers whose economics depend on moving large volumes of passengers efficiently through Dubai and Doha" [2]. IATA data cited by Kapadia showed Middle Eastern passenger demand fell 13.9% year on year, while direct traffic between Europe and Asia rose 11%, the report said. Where flights must use longer or less efficient routings, airlines face higher fuel burn, longer crew duty periods and reduced aircraft utilization, Kapadia said. Extra fuel carried in case of disruption limits the passenger or cargo payload that can be carried, and aircraft and crews stranded away from base cause cascading delays and cancellations across the entire schedule, according to the report [2]. The forecast also tests the role of IATA itself, the trade body that has long coordinated fare construction among member carriers. K.J. Pillai wrote in "The Air Net" that the IATA rate-making mechanism eliminated price competition and opened the door to non-price competition [7]. Pillai also noted that most airlines, large and small, preferred to keep the IATA traffic conference machinery intact despite frequent disputes [8].

Airline Responses and Cargo, Private Jet Impacts

Emirates has introduced an insurance policy that provides coverage even for conflict-related cancellations, according to MEE. Clark told FT the aim was to guarantee "we would get you back irrespective [of whether it's] on Emirates or not," the report said [2]. Dubai has also offered complimentary hotel stays for long connecting flights as part of broader efforts to boost tourism, the report stated. Cargo demand has lagged the wider industry. Middle East cargo demand grew 5.6% year on year, behind the global rate of 8.5%, Kapadia said, citing IATA figures [2]. In the private jet sector, Nick Koscinski, an analyst at WINGX, told MEE that as of Aug. 10, private jet traffic originating in Gulf countries was down 46.5% since the war began. Qatar Executive, one of the top Gulf-based private jet operators, saw total flights down 6.7%, against 28.7% for a comparable UAE-based operator and 39% for a Saudi Arabian one, Koscinski said [2].

Fuel Costs and Industry-Wide Effects

Jet fuel prices fell 20% in June as Gulf oil flows temporarily improved but remained 45.8% higher than a year earlier, Kapadia said. IATA forecasts the 2026 jet fuel price average will run 70% above 2025 levels, according to Middle East Eye [2]. The price rise followed the effective closure of the Strait of Hormuz, which prompted multiple airlines to announce immediate airfare increases, according to a NaturalNews.com report [4]. U.S. jet fuel prices surged from approximately $2.17 to $4.57 per gallon by late March, according to the Argus U.S. Jet Fuel Index [5], and consultancy Teneo reported a 24% increase in the lowest-priced economy fares [6]. A McKinsey report cited by MEE found that around 70% of jet fuel surcharges are passed directly to consumers [2]. Low-cost carriers have been especially vulnerable to the fuel shock. Spirit Airlines ceased operations on May 2, 2026, becoming the first airline to close as a result of the doubling of jet fuel prices during the war, according to Middle East Eye [9]. Air Baltic and Wizz Air face growing bankruptcy risk and have been forced to restructure operations, the report said. Not all carriers have been affected equally. El Al, Israel's national airline, reported record profits more than double the previous year as international carriers stayed away [10]. Harsha Jaison, an aviation consultant at ICF, told MEE the conflict has set a precedent likely to outlast it. “Airport investment deals, geopolitical risk is increasingly being reflected in downside scenarios, valuation assumptions and risk premiums,” she said [2].

References

“Iran War Pushes Middle Eastern Airlines Towards $4.3BN Loss In 2026”. ZeroHedge. August 18, 2026.
Gaspard Rouffin. “Iran war pushes Middle Eastern airlines towards $4.3bn loss in 2026”. Middle East Eye. August 16, 2026.
NaturalNews.com. “Middle East conflict triggers worst global travel chaos since COVID stranding hundreds of thousands”. NaturalNews.com. March 3, 2026.
Garrison Vance. “Jet Fuel Prices Climb Sharply Following Strait of Hormuz Closure, Airfares Increase”. NaturalNews.com. March 17, 2026.
Garrison Vance. “Jet Fuel Prices Surge Amid Middle East Tensions, Airlines Warn of Potential Shortages”. NaturalNews.com. April 1, 2026.
Garrison Vance. “Airfare Hikes Reach 25% as Iran War Fuels Global Aviation Crisis”. NaturalNews.com. April 23, 2026.
K.J. Pillai. “The Air Net”.
“The Air Net”.
“Spirit Airlines closes as fuel prices double due to Iran war”. Middle East Eye. May 2, 2026.
“El Al profit doubles as many major foreign airlines steer clear after Iran war”. The Times of Israel. August 5, 2026.

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