Asian airlines brace for plunge in profit

MANILA, Philippines — Airlines in the Asia-Pacific region are bracing for a 36-percent reduction in profit per passenger this year due to cost pressures in jet fuel and currency depreciation against the dollar.

In a forecast, the International Air Transport Association (IATA) said Asian carriers like Cebu Pacific and Philippine Airlines (PAL) would see their margins tighten in 2026.

IATA expects net profit by Asian airlines to shrink by a third to $6.6 billion this year, from $9.6 billion in 2025.

Moreover, margins will become thinner at 2.1 percent, as airlines have to spend more to buy jet fuel. This will result in a profit reduction of 36 percent to $3.4 per passenger, from $5.3, shoving Asia’s aviation industry to its worst year since 2022.

Likewise, IATA attributed the gloomy outlook to the declining value of Asian currencies against the dollar. The peso, for instance, has been slumping to historic lows recently, recording its worst closing rate of 61.75 to $1 on May 19.

“Cost pressures are amplified by the depreciation of several Asian currencies, which raises local currency cost of US-dollar denominated expenses, most notably fuel,” IATA said.

Aviation demand in Asia-Pacific will still expand, but at a slower pace of 5.1 percent, as consumers choose to defer travel plans with airfares hitting the roof.

There are opportunities for Asian carriers, though, particularly in the European corridor, because the Middle East is still struggling to return to normal capacity following recent tensions.

These opportunities, however, are minimal compared to the downside created by the geopolitical conflict in the Middle East. IATA also said Europe is rolling out tighter regulations for low-value shipments, and this could offset any gains from redirecting cargo traffic.

Globally, IATA said the industry’s income is likely to be slashed to $23 billion this year, from $45 billion in 2025. The revised profit estimate is 44-percent lower than the earlier projection of $41 billion.

In the Philippines, carriers are already feeling the pain of higher jet fuel costs, with earnings taking a punch to the gut in the first quarter.

PAL’s net income slipped by one percent to P4.28 billion, while Cebu Pacific recorded a net loss of P400 million.