Even as travelers keep flying, airlines’ profits could be cut in half, thanks in part to the stranglehold Iran has imposed on the global oil supply, according to a global trade group for the industry.
The airline sector’s net profit for the year is projected to collapse to $23 billion from $45 billion in 2025, while its net margins plummet to 2%, less than half of the 4.2% they were last year, said Willie Walsh, the outgoing director general of the International Air Transport Association (IATA).
Some of the airlines that could be most affected are those with weaker balance sheets and those that serve the Persian Gulf, he added.
Driving this contraction is the Iran war, which has now stretched into its fourth month. It has forced airlines to reroute flights to avoid conflict zones in the Middle East, making planes burn more fuel.
But more importantly, Tehran’s subsequent actions to cut off the Strait of Hormuz, through which 20 million barrels of oil a day passed before the war, has sent oil and fuel prices soaring.
