- Airline CEOs are facing higher fuel prices, but executives said in Brazil at the industry’s largest annual gathering that demand is largely holding up.
- The International Air Transport Association's outgoing director general said the biggest question for the industry is how long travelers and shippers can tolerate higher costs.
- Despite the fuel surge, carriers are also continuing to buy jets thanks to scarce delivery slots.
RIO DE JANEIRO — Hundreds of airline leaders gathered in Brazil this week at the International Air Transport Association's annual assembly to discuss high fuel costs, sharply lower profits, engine reliability issues and elusive emission reduction goals, among other things.
Toward the end of the assembly in Rio de Janeiro, news broke that Iran and Israel
traded strikes for the first time since a ceasefire went into effect in April. For airline executives who have faced ongoing turmoil since the first U.S. and Israeli strikes on Iran on Feb. 28, it seemed like just one more blip in the whipsawing chaos of 2026. Those airline leaders' stance so far has been to wait and see.
Here are some takeaways from the gathering:
Fuel costs have more than doubled in some places since the beginning of the Iran war, as the Strait of Hormuz, a key shipping lane, has been effectively closed for much of the time.
IATA said airlines globally are absorbing a
$100 billion increase in their fuel costs this year, which along with airspace closures due to Middle East attacks curtailing travel, will likely halve airline profits this year.
Willie Walsh, the outgoing director general of the organization, said net profits will fall from $45 billion in 2025 to $23 billion in 2026, and that net margins would drop from 4.2% last year to 2% this year.
While fares are up, airlines haven't been able to cover the full fuel bill this year, so profits will take a hit.
Airline executives told CNBC that customers continue to book.
Etihad Airways, based in Abu Dhabi, in the United Arab Emirates, initially felt the effect of the Middle East turmoil this year with lower demand. But Antonoaldo Neves, group chief executive officer of Etihad Aviation Group, said in an interview that the number of tickets are about the same as pre-conflict, seasonally adjusted.
United Airlines CEO Scott Kirby, who runs the second-most profitable airline in the U.S., said customers continue to book, even though fares are up about 20% and could rise further if fuel costs continue to increase.
He said the resilient bookings surprised even him. "I think the economy is stronger than people think," he told CNBC in an interview. The U.S. is also more insulated from oil supply shocks than other regions because it produces so much.
Summer bookings are strong, and airlines are also getting better at managing capacity with high fuel prices, cutting more unprofitable routes and reducing frequencies. The big question remains what happens after the main summer and fall peaks.
"That bodes well for a strong northern summer peak season," Walsh said of current trends. "The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity."
The other question is where fuel prices go from here.
"If prices will remain the same, yeah, for sure, less people be able to afford to travel," said Kamil Al-Awadhi, former Kuwait Airways CEO and IATA's vice president for Africa and the Middle East.
Airplane manufacturers said they're not seeing a slowdown in orders because of higher fuel prices.
Airbus and Boeing continue to be sold out of some of their most popular jets through the beginning of the next decade. Airlines generally plan for fleet growth years in advance, and the bulk of an aircraft's price is paid when a carrier receives it.
Etihad's Neves told CNBC that he wants to buy even more jets to top off his existing orderbook of dozens of planes, though he didn't give a number, only saying it's "more than 10."
A spokesman for Brazilian airplane maker Embraer said that one risk is that customers don't exercise options to increase their existing orders, but so far the company isn't seeing that.
Boeing is set to report orders and deliveries for May on Tuesday morning.
Iconic U.S. budget airline Spirit Airlines in May succumbed to years of problems. It had been dealing with an engine recall, a failed merger and changing consumer tastes all while managing a mountain of debt. But the jump in fuel prices was the last straw for the discounter, it told U.S. bankruptcy court this spring.
IATA's Walsh said at the conference that high fuel costs could push other airlines to collapse as well.
That means that more profitable, cash-rich carriers, which have done better at capitalizing on the K-shaped economy and a shift in demand toward high-fare luxury travel, are on better footing than some that are more price sensitive.
Airline CEOs are
frustrated with engine makers who promised increased fuel efficiency in new-generation engines. The fuel savings are there, but they're getting gobbled up by disappointing reliability that forces airlines to have the engines serviced earlier than they thought, executives said.
On top of that, there aren't enough of them produced to satisfy carriers, as
Boeing and Airbus ramp up output.
Alexis von Hoensbroech, CEO of Canada's WestJet, told CNBC in an interview before the IATA meeting that the new engines promising fuel savings of around 15% or more compared with earlier models were "engineering marvels."
"However, as you push the limits, it sometimes comes at the cost of reliability, and what we all are seeing is that those engines have to go into unscheduled maintenance far more frequently than prior engine generations," he said.
Companies like
GE Aerospace and Rolls-Royce, which have enjoyed a windfall from increased demand, said they have been busy with fixes and added overhaul capacity.<small>Source: CNBC</small>
Business
5 takeaways from airline CEOs' biggest annual gathering
CNBC
June 09, 2026
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