Global airline industry profits are forecast to rise to $41bn (£32bn) in 2026, supported by low fuel prices and steady economic growth, according to a new outlook Up Next paper, published by aircraft leasing firm Avolon.
If achieved, 2026 would mark the fourth consecutive profitable year for airlines, helping the sector recover more than 80% of the $182bn lost during the Covid pandemic.
Avolon said India, the UAE and Saudi Arabia are expected to drive the next phase of aviation growth. The three countries have a combined aircraft order backlog of more than 3,000 planes, more than double their current in-service fleets. Around 900 aircraft are due to be delivered over the next three years.
However, the report warns that airlines risk missing growth opportunities due to a global shortage of aircraft. Order backlogs at Airbus and Boeing now stretch beyond 11 years, supporting higher lease rates and stronger aircraft values. This has increased the strategic importance of aircraft held by leasing companies.
Regional growth uneven
In its 2026 Outlook: Up Next paper, Avolon said aviation growth will vary by region. Europe’s recovery is being led by low-cost carriers, while major airlines focus on consolidation. In the US, network airlines are increasingly relying on profitable loyalty and credit card businesses, while low-cost carriers continue to struggle to adapt their networks.
Asia-Pacific growth remains constrained by limited aircraft availability, with China alone needing around 1,000 new aircraft in the near term.
Fuel prices boost airline finances
Lower fuel costs played a major role in airline performance in 2025, cutting industry fuel bills by $8bn, or around one-fifth of total profits. Avolon expects this trend to continue in 2026, helping airlines strengthen balance sheets despite rising labour and maintenance costs.
Manufacturers and lessors benefit
Despite geopolitical uncertainty, airlines placed orders for more than 2,000 aircraft with Airbus, Boeing and Embraer in 2025. Demand is shifting towards larger aircraft, with the A321neo outselling the A320neo by three to one in recent years. The A330neo is also benefiting as the only new passenger widebody available before 2032.
Aircraft leasing firms are playing an increasingly important role. Eleven lessors now hold investment-grade credit ratings, and around $120bn worth of aircraft is expected to be delivered in 2026. Lessors are forecast to finance about half of global aircraft deliveries, supporting the transition to newer, more fuel-efficient fleets.
Key risks and forecasts
Avolon highlighted risks from geopolitical tensions, trade uncertainty and growing competition from artificial intelligence for capital and skilled labour. However, global economic growth remains resilient, with most major economies expected to expand in 2026.
The report makes several forecasts for the year ahead, including a recovery in US low-cost carriers, the return to service of more than 150 grounded Pratt & Whitney-powered aircraft, rising lease rates for widebody jets, and preparations for a potential new aircraft programme launch in 2027.
Jim Morrison, Chief Risk Officer of Avolon, commented: “Global connectivity and economic growth continue to be supported by the aviation sector, underpinned by strong demand and lower fuel costs. India, the UAE, and Saudi Arabia are emerging as the next engines of growth with order backlogs that are double their current in-service fleet.
“With an industry requirement to finance around US$120 billion of new aircraft in 2026, lessors will continue to play a vital role as a driver of the transition of the global fleet to lower emissions new-technology aircraft.”
“Airline financial performance continues to strengthen, with the industry expected to record its fourth consecutive year of profitability.
“Airlines’ ability to capture sector tailwinds will be impacted by a shortage of new aircraft deliveries and the long order backlogs at Airbus and Boeing.
“Well-capitalised lessors with order books of new-technology aircraft are strongly positioned to outperform in the current market”
The paper was co-authored by Avolon’s Chief Risk Officer Jim Morrison and Senior Vice President of Portfolio Strategy Ross McKeand.
