Arab airlines set to record a collective net loss of €3.82 billion in 2026, AACO report reveals
Arab airlines are projected to record a collective net loss of €3.82 billion in 2026 due to geopolitical uncertainties and fluctuating financial conditions, according to the Arab Air Carriers' Organization (AACO).
Meeting this week in Doha for its annual general meeting, AACO represents 39 Arab airlines across the Middle East and North Africa. The association provides a joint framework for cooperation in areas including aeropolitical affairs, digital transformation, and sustainable aviation fuel. The projected losses come as the global airline industry's net profit is expected to fall to around $23 billion (€20.5 billion), its lowest level in 12 years excluding the COVID-19 period.
The report highlights that performance among AACO members will "vary considerably depending on hub locations and exposure to conflict-affected markets." Despite these challenges, the industry is "expected to remain profitable" in 2026, though at a slower pace due to higher energy costs and operational disruptions.
Fuel costs rising
Fuel expenses are becoming an increasingly significant burden for airlines. The report indicates that fuel will account for 31.4% of global industry operating costs, rising to 37.3% for AACO members – up from 25.4% and 27.9% respectively in 2025. Additionally, air cargo traffic is projected to decline by 5.2% across the region.
EU regulatory concerns
During the AGM, AACO raised concerns over the EU's proposed Emissions Trading System (ETS), warning it could infringe on regional airspace and create unfair additional costs. The organization adopted a Resolution on Aviation and the Environment opposing the extension of ETS to flights departing from the European Economic Area and landing in third countries within a 5,000-kilometre radius of Frankfurt Airport by 2029.
Teffaha emphasized that the EU's approach exceeds targets agreed upon by the International Civil Aviation Organization (ICAO), potentially forcing Arab carriers to face double costs for emissions reductions. This could occur if the EU ETS and the existing Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) framework do not recognize each other's charges.
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