"Airlines worldwide" face a new crisis from the Iran-Iran conflict, with expectations of shrinking profits and soaring fuel costs.

"Global airlines" prepare to meet under the IATA forum amid pressure from the Iran-Iran conflict. Moody's warns that aviation industry profits could fall by more than 35% by 2570.

On June 4, 2026, at 1:17 PM, Reuters reported that executives from leading airlines around the world, preparing to attend the annual meeting of the International Air Transport Association (IATA) in Rio de Janeiro, Brazil, from June 6-8, are facing their biggest challenge since the COVID-19 pandemic. The conflict between Iran and the United States and its allies has resulted in soaring jet fuel costs, forced flight routes to bypass high-risk areas, and increased pressure on the profitability of airlines worldwide.

The conference is considered the most important forum in the aviation industry, bringing together executives from airlines, aircraft manufacturers, suppliers, and financial institutions from around the world.

IATA, which represents over 370 airlines accounting for approximately 85% of global air travel, had predicted that the aviation industry would achieve record profits of $41,000 billion this year before the war with Iran erupted.

However, analysts and industry executives expect IATA may revise down its forecast at this meeting.

Key issues expected to be discussed include soaring aviation fuel prices, energy supply risks from the Strait of Hormuz, airspace closures in the Middle East, aircraft delivery delays, and difficulties in achieving the Net Zero target by 2050.

Many airlines have begun responding by raising ticket prices, cutting unprofitable routes, and tackling liquidity issues to cope with rising costs. At the same time, the high price of sustainable aviation fuel (SAF) and its limited supply are making the industry's carbon reduction targets even more challenging.

Moody's Ratings downgraded its outlook for the global airline industry from "stable" to "negative" last week.

Moody's stated that soaring oil prices due to the Iran-Iran conflict and uncertainty in the Strait of Hormuz will significantly impact airline profits this year, and projected that industry profits could fall by more than 35% in 2569 before beginning to recover in the following year.

IATA data also shows that global passenger volumes in April contracted for the first time since the post-COVID recovery, with airlines in the Middle East being particularly hard hit.

Air India's outgoing CEO, Campbell Wilson, said that rising fuel prices and the closure of several airspaces have made some routes no longer economically viable.

Southwest Airlines stated that U.S. airlines have been able to raise ticket prices seven times since February without impacting travel demand, but the price increases are still insufficient to offset all fuel costs.

Middle Eastern airlines such as Emirates, Qatar Airways, and Etihad Airways are facing a significant test as their business models rely on connectivity through regional aviation hubs. While the war hasn't destroyed the Gulf hub model, longer detours increase fuel consumption and significantly boost costs.

Conversely, airlines offering direct flights between Asia and Europe, such as Lufthansa Group, Air France-KLM, Singapore Airlines, and Cathay Pacific, may benefit from this situation.

In addition to rising fuel costs, the industry is also facing delays in aircraft deliveries from Boeing and Airbus, forcing many airlines to use older, more fuel-inefficient aircraft.

United Airlines CEO Scott Kirby stated that the biggest problem currently isn't the aircraft themselves, but the shortage of engines and parts, and estimated that between 800 and 900 aircraft worldwide are out of service due to engine issues.

Furthermore, rapidly rising costs have led to increased discussions about mergers and acquisitions within the aviation industry, particularly among airlines with low profit margins that cannot fully pass on costs to passengers. This signal is reflected in the bankruptcy of Spirit Airlines last month, as well as the wave of mergers and acquisitions in various regions worldwide.

Reference: www.reuters.com

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