Arab airlines face $4.3 billion loss as conflict and costs squeeze hubs

US$4.3 billion in combined losses: that is the Arab Air Carriers’ Organization’s forecast for its member airlines in 2026, one year after they earned approximately US$11 billion. The projected US$15.3 billion deterioration captures a sharp reversal for carriers whose hubs connect passengers and freight far beyond the Middle East and North Africa. It is a forecast of the full-year result, not money already reported lost.⁠⁵

The pressure comes from both sides of the business. Conflict-related disruption is weakening traffic and complicating operations, while higher energy costs are consuming more of the money airlines spend. Passenger demand is expected to contract substantially faster than the flying capacity members offer. That leaves airlines facing less fully occupied aircraft just as their cost burden becomes harder to carry.⁠⁵⁠³

AACO made its annual report available electronically to delegates at its 59th annual general meeting in Doha, where working sessions took place on November 3, following the November 2 opening. Qatar Airways hosted the gathering, chaired by its group chief executive, Hamad Al-Khater. More than 200 executives and industry stakeholders attended. The association represents 39 airlines, including Qatar Airways, Emirates, Etihad Airways and Gulf Air. Its collective forecast does not mean that every member will lose money.⁠⁵⁠³

This is not a continuation of a bad 2025. Members finished that year with a 10.8% net margin. Passenger traffic grew 7.6%, ahead of capacity growth of 5.8%, while cargo traffic increased 4%. The airlines entered 2026 with a profitable business and growing demand.⁠⁵

In his industry address, AACO’s secretary general said the crisis that began in the region in late 2023 had widened its impact this year, placing renewed pressure on the air transport network. The outlook describes the resulting damage, but does not assign a dollar loss to any particular attack, closure or route diversion.⁠¹¹⁠⁵

The passenger measures account for distance, not simply the number of people boarding planes. Revenue passenger kilometres measure paying passengers multiplied by the distance travelled; available seat kilometres measure seats offered multiplied by distance flown. The gap between their projected declines matters: airlines are expected to reduce supply, but not quickly enough to match the fall in demand. AACO puts the 2026 passenger load factor—the share of seat capacity used—at 77%, down from 81.8% in 2025.⁠⁵⁠¹¹

Cargo is reversing too. Its projected contraction follows last year’s growth, measured in cargo tonne kilometres: freight weight multiplied by distance. This is a forecast of less transport activity, not an announced 5.2% fall in cargo revenue or a count of shipments already cancelled. For businesses using the region’s hubs, the concern is a network under operational strain while carrying less freight.⁠⁵

Fuel adds another squeeze. Euronews’s November 5 coverage of the annual report puts fuel at a projected 37.3% of member airlines’ operating costs in 2026, against 27.9% in 2025—a rise of 9.4 percentage points. Those are shares of the cost bill, not forecasts that fuel prices themselves will rise 37.3%. The comparable worldwide shares are 31.4% and 25.4%, leaving members facing a heavier projected fuel burden than the industry overall.⁠³

AACO expects its members’ operating margin to turn negative at minus 2.7%, compared with positive 11.8% in 2025. That measures earnings from running the business; it is distinct from the net result and is not another loss to add to the US$4.3 billion forecast.⁠⁵

The wider airline industry is slowing, but its outlook remains materially different. Global net profit is projected at about US$23 billion in 2026. According to the annual-report figures carried by Euronews, that would be the lowest profit in 12 years when the COVID-19 period and its aftermath are excluded. The qualification matters: this is not a claim that profits will fall below the pandemic-era results.⁠³

Worldwide passenger demand is expected to grow 2.1%, down from 5.3% in 2025, while global cargo growth is expected to slow from 3.3% to no more than 0.7%. Both still point to expansion, unlike the contractions forecast for AACO members. With worldwide passenger capacity growing more slowly than demand, global load factor is projected to rise to 83.9%, from 83.5%. The regional and global averages describe different operating conditions.⁠¹¹

Airlines also have limited room to solve their problems through fleet renewal. AACO says delayed aircraft, engines and spare parts constrain replacement plans and increase operating costs. The worldwide aircraft order backlog stood at 17,250 in 2025 and is expected to exceed 18,000 by the end of 2026. Its executive committee has directed a working group to study shared spare-parts inventories, potentially extending cooperation to procurement. That is an operational response under study, not a recovery already achieved.⁠⁵

The collective loss estimate sits alongside expansion plans. Qatar Airways told Euronews it was increasing winter flights to European destinations including London Heathrow and Frankfurt, as well as services across Asia, Africa and Australia. Emirates said it was continuing fleet retrofits backed by US$7 billion of investment and launched a daily Helsinki service in October. Growth plans at individual carriers do not invalidate an association-wide loss forecast. Nor do they establish which airlines will escape the downturn.⁠³

AACO expects performance to vary with hub location and exposure to conflict-affected markets. It has not allocated the projected US$4.3 billion loss carrier by carrier. That missing breakdown limits what the headline number can tell passengers, workers or investors about any particular airline.⁠⁵

The Doha meeting also opposed a proposed expansion of Europe’s emissions-trading rules from 2029 to flights departing the European Economic Area for countries outside it within 5,000 kilometres of Frankfurt Airport. AACO argues that the proposal infringes on sovereignty and warns of overlapping environmental obligations, including emissions reductions not being recognised across mandatory systems. This is a separate dispute over future regulation, not an established cause of the projected 2026 loss.⁠⁵

There is a currency caveat, too. AACO’s own announcement confirms the US-dollar forecast. Euronews rendered it as €3.82 billion, but the conversion date and methodology have not been established. The euro amount should not be read as a second, competing forecast or as an independently verified AACO estimate.⁠⁵⁠³

The final result remains exposed to how conflict, fuel costs and operational disruption develop through the rest of 2026. What the outlook already makes clear is the combination: weaker demand, less fully used passenger capacity, contracting cargo activity and a larger fuel-cost share. Worldwide airlines are still expected to make money. AACO’s members, taken together, are facing a much harsher year.⁠⁵⁠³