Global Airline Profit Forecast Cut by $18B as Costs Rise

By Elena Vasquez

IATA’s June 2026 forecast cut expected global airline profits to $23 billion from $41 billion, an $18 billion, roughly 44% reduction. The estimated global airline fuel bill rose to $350 billion from $252 billion in 2025.

The revision is a forecast, not a reported result, but it quantifies the pressure behind WestJet CEO Alexis von Hoensbroech’s warning that Canadian aviation is running out of financial shock absorbers. Von Hoensbroech called for a “Canadian National Aviation Strategy,” framing a global dispute over who bears fuel, airport, tax, labor, passenger-rights and environmental costs.

What is WestJet asking Canada to change?

Von Hoensbroech’s Calgary speech advances five arguments with direct implications for fares, routes and the inventory available to travel sellers:

• Rising jet-fuel prices limit airlines’ ability to pass sudden cost increases to passengers.
• Airport charges and taxes affect fares, route viability and carrier competitiveness.
• Government financing of competitors can preserve service while distorting price competition and airline market share.
• Passenger rights and environmental requirements add operating costs, leaving carriers to recover them through fares or lower margins.
• The lack of a coordinated national strategy affects tourism, trade, regional access and aviation investment.

WestJet’s strongest economic claim is that fuel-price shocks expose existing financial weaknesses rather than create them. Airlines with strong margins, capital access, efficient operations and supportive infrastructure can absorb higher fuel more easily than carriers burdened by debt and taxes and constrained by weak pricing power.

That argument still requires context:

• Canada’s geography is enormous, but its population is relatively small.
• Some communities depend on air travel for essential access rather than discretionary tourism.
• Public support can preserve routes that would otherwise disappear.
• Reducing passenger protections could shift financial risk from airlines to travelers.
• Government-backed infrastructure investment is not necessarily equivalent to subsidizing an airline’s operating losses.

Air Canada has an international network and premium-revenue opportunities that smaller domestic and regional carriers lack. Government financing can be a lifeline for vulnerable carriers, while WestJet argues it can also undermine commercial pricing. Canada’s commercial balance is therefore between affordable regional access, sustainable competition and public support for routes that cannot cover their costs.

How are costs changing airline economics?

American Airlines reported that fuel and related taxes increased $4.4 billion, or 55.2%, in the first nine months of 2026 from the prior-year period. The expense increase does not equal an equal profit decline, but it shows the scale of cost pressure facing American, Delta, United and low-cost carriers alongside labor inflation.

U.S. airlines also focus on air traffic control modernization, infrastructure reliability and congestion, which affect connection reliability, on-time performance and the number of bookable seats sold through travel platforms.

European carriers Lufthansa, Air France-KLM, Ryanair and IAG face high airport and navigation charges, fuel prices, regulatory costs, sustainable aviation fuel mandates and environmental policies. IATA projects Europe’s airline net margin, or profit as a share of revenue, at 3.1% in 2026, down from an estimated 4.5% in 2025.

Carriers respond through fuel hedging, capacity management, policy lobbying and network adjustments; these levers change seat availability, fares and the routes sellers can package.

In a May 2026 policy brief, Lufthansa said it was removing approximately 20,000 flights from its schedule through October. Its summer capacity reduction measured just under 1% in available seat-kilometers, with one seat-kilometer representing one seat flown one kilometer.

The group linked rising kerosene prices, high German government charges and declining viability on marginal routes. That combination supports WestJet’s exposure argument, although one group’s schedule change does not establish a global trend.

The comparison identifies Ryanair’s airport withdrawals and Emirates’ fuel hedging but supplies neither a withdrawal count nor hedge coverage. For sellers, airport exits reduce local departures and connecting options, while hedging changes how much fuel cost reaches fares.

Gulf carriers Emirates, Qatar Airways and Etihad operate within a different state-led model. Gulf governments combine airport investment, hub development, tourism, logistics and international connectivity, giving hubs a route and distribution advantage while raising questions about fair competition. These airlines still face fuel costs, airspace disruption and geopolitical exposure, so the model does not eliminate risk.

That state involvement complicates WestJet’s broader argument against government intervention: public infrastructure can expand connectivity and carrier share without being equivalent to financing an airline’s operating losses.

Singapore Airlines, Qantas, Cathay Pacific and Indian carriers face fuel-price exposure, currency fluctuations, airport-capacity constraints and route disruptions. Their responses include hedging, fleet modernization, network adjustments and selective fare increases, all of which alter capacity and price availability for sellers.

IATA reports that some Asian carriers gained traffic diverted from disrupted Gulf connections. The reported traffic shift gives hubs in Asia a share benefit while reducing connecting inventory elsewhere.

In an October interview, von Hoensbroech said WestJet was preparing for high fuel prices to persist through 2027 and possibly 2028. His statement is a planning assumption, not a realized result, but it extends the revenue question from short-term margin pressure to route profitability and fleet investment.

Pressure also divides unevenly because exposure depends on fuel hedges, aircraft efficiency, route length, currency exchange rates, market concentration and fare-raising ability. IATA’s forecast supports WestJet’s broad cost argument, but it does not isolate Canadian taxes, subsidies or fare effects, so the competition claim remains unquantified.

What should travel sellers watch?

Lufthansa’s reported 20,000-flight reduction is the clearest operational signal in the available data. More route removals, fewer frequencies and lower available seat-kilometers would shrink bookable inventory, potentially lift fares and shift distribution toward hubs with deeper connections and greater capacity to absorb costs.

Air traffic control disruption and Gulf airspace interruptions could also redirect traffic, as IATA’s reported diversion into Asia shows. The next tests are realized 2026 margins, October schedules and whether fuel remains elevated through 2027-28; sustained pressure would favor fewer, more efficient routes and larger connecting hubs.