At the start of 2026, Europe's carriers were cautiously optimistic that the year would bring healthy sales and – with a bit of luck – even better profits than last year. Demand had been strong, with passengers showing determination to fly even if underlying economic conditions were not particularly great. Consumers seemed willing to prioritise travel and to pay for pricey premium seats. The North Atlantic market, a key earnings driver for legacy carriers, remained buoyant, even if Europeans were increasingly cautious about flying west. And the South Atlantic market was booming. Within Europe, tourists had been flocking south to leisure destinations in search of sun. Meanwhile, a lack of capacity was constraining supply and enabling carriers to keep prices high, and load factors regularly hit the 90s. In recent weeks, carriers have reported bumper earnings, giving share prices a boost. Air France‑KLM's stock jumped by a tenth on its full‑year earnings release in mid‑February; IAG was up 43% over the year to its 26 February peak. Even currency markets had been supportive. In the 12 months to 27 February, the euro appreciated 9% against the dollar, helping carriers to reduce costs – often denominated in the greenback – while earnings in euros and pounds strengthened. IATA estimates that a 1% weakening of the dollar typically lifts global airline profits by 1%. But with the launch of military action by the US and Israel on 28 February, the mood of optimism has taken a serious hit. The immediate impact is on legacy carriers which have already suspended routes to the region and, if the conflict drags on, could see damage to long-term demand. Cirium data shows that 7.6% of the combined long-haul capacity of IAG, Air France-KLM and Lufthansa Group is to the Middle East. There is also the impact on their wider networks. Already shut out of Russian airspace following Moscow's invasion of Ukraine, carriers had rerouted flights to Asia south over Iran and the Middle East. Those routes are now closed, leaving just a narrow gap over Azerbaijan and Armenia – countries that were fighting as recently as 2023 – as the sole eastbound passage. Flight‑tracking data shows this space jam‑packed with aircraft. The extra complexity and distance will have knock‑on effects on fuel burn, crew planning and aircraft utilisation. European carriers have long argued they are disadvantaged versus Asian rivals on eastern routes, and the latest developments exacerbate that gap. Longer‑term implications centre on fuel. This accounted for 27% of European airlines' costs last year, estimates Dutch bank ING. That compares with 32% in 2023, when prices were higher. "When jet fuel prices go up, this quickly leads to higher costs," says Rico Luman, ING’s senior sector economist for transport. "Higher fuel prices could quickly erode tight margins in the short run for tickets already sold, forcing airlines to adjust pricing to protect revenues." Cirium Ascend Consultancy global head Stephen Burnside has pointed out that a $1 per‑barrel move in jet fuel adds roughly $2.86 billion to industry fuel spend. On that basis, global airline profits would be largely wiped out at around $76/bbl Brent. As of 4 March, Brent stood at $82.5/bbl, up about 14% week on week. In a bid for protection, European carriers have increased their focus on fuel hedging in recent years after being burned earlier in the decade. But exposure remains uneven. Wizz Air was 83% hedged through end‑March, it said when reporting financial results on 26 January, but coverage drops to 55% for the following 12 months. Even if that ratio has since improved, relatively small fuel price moves could still hit its bottom line, just as it emerges from GTF‑related groundings. It also has high exposure to the Middle East, with operations in Jordan, the United Arab Emirates and Saudi Arabia, plus a large presence in Israel. Turkish Airlines said in November that it was 50% hedged for the year to end‑March and only 23% for the following 12 months, leaving it heavily exposed. Other carriers are better-shielded. Ryanair said on 26 January it was 84% hedged until end‑March and 80% for fiscal 2027. EasyJet said on 29 January it was likewise 84% hedged until end‑March but just 62% for the following six months. IAG indicated on 27 February that its modelled assumption was to be hedged at the same level, 62%, for 2026, leaving it relatively exposed. However, it also disclosed that, at end‑December 2024, derivatives in place would have generated a €1.6 billion gain if fuel prices had risen 40% in 2025. If replicated this year, that would clearly provide a meaningful buffer. Air France‑KLM said on 19 February that it was 70% hedged through the first quarter and 69% through the second. Lufthansa Group, meanwhile, typically hedges a high proportion of its needs. Across the full year 2025, the German group was 90% hedged. The group is likely to provide an update on this with its annual results on 6 March. Even with hedges, fuel bills will rise and future hedging costs increase. Consumers will ultimately pay more. Some comfort may come from comparisons with US carriers, which typically do not hedge fuel at all, and many Asian airlines, which hedge less actively than European counterparts. "For US carriers, that means they bear more fallout but still feel the impact of higher prices," Luman notes. Fuel risks are exacerbated by the fragile state of kerosene supply. Energy information provider ICIS observes that the market was already tight before shipping through the Strait of Hormuz, a key corridor for global energy markets, was severely disrupted. "There is a real crunch on jet fuel supply," one trader told ICIS. Europe is particularly exposed, with more than half its jet fuel imports coming from the wider Arab Gulf. "European middle distillate is very reliant on Middle East exports, with upwards of 800,000 barrels per day flowing into Europe. While some of this will be from West Coast Saudi, the majority transits the Strait of Hormuz,” said Michael Connolly, head of refining at ICIS (which, like Cirium, is RELX-owned). "This will quickly draw down on European inventories if transit through the strait remains limited." ICIS warns of potential shortages, noting that jet fuel is more vulnerable than other refined products because specification differences limit substitution. If Middle East supplies dry up, Europe would need to source jet fuel from North America, "and that will be very expensive", one source told ICIS. Adding to the pressure, a flight to safety has pushed the dollar higher, erasing around a third of the euro's gains over the past year and delivering another hit to profits. The ultimate scale of the impact will depend on how long the disruption lasts. Conflict in the Middle East last year led to rapid schedule cuts, but most suspensions were short‑lived and carriers still delivered record results. This time could be different. The aims of the military action are unclear but could include regime change. US officials have not ruled out deploying ground troops. President Trump said on 2 March the bombing was set to last "four or five weeks" but could run "far longer than that", taking it well into April. Matthew Borie, chief intelligence officer at Osprey Flight Solutions, said during a 4 March briefing that at the start of the conflict Iran likely had around 50,000 Shahed drones, enough for it to maintain launches "extending out for three months". Iran has been able to "learn from their experience in Ukraine, literally with the same drones", he says. "Their ability to launch these types of attacks in a consistent frequency of hundreds a day has been shown already and there is no indication that the activity is going to dissipate." For airlines, that risks turning what might have been a short, sharp shock into a serious drag on their summer prospects.

Turboprop manufacturer ATR is confident its planned production ramp-up from this year will generate more aircraft orders in the future by opening up nearer-term delivery slots. Last year, ATR received 60 gross orders from nine customers, which translated to 50 net orders and a backlog of "over 160 units". It had received 56 orders in 2024, up from 40 in 2023. ATR highlights that last year's orders from Taiwanese carrier UNI Air (a subsidiary of EVA Air) and Air Algerie, for 19 and 16 ATR 72-600s respectively, were its largest airline orders since 2017. Its 32 deliveries last year compare with 35 in 2024 and 36 in 2023. ATR had previously intended to increase production following a sharp reduction amid the pandemic, but the plan was delayed amid persisting supply-chain bottlenecks. Hopeful that this year will be a turning point, it aims to lift annual production to around 60 aircraft by 2030. Senior vice-president of commercial Alexis Vidal is optimistic that increased production will not dilute ATR's book-to-bill ratio, which last year reached 1.6. "We will want to continue to sell more [aircraft] and grow the orderbook," Vidal told Cirium at the airframer's 2025 results briefing in Toulouse on 18 February. "As long as the market continues to grow and we continue to demonstrate there is a case for regional mobility, [we] can sell more. To be honest, I think we would sell more if we were already at 40, 50, 60 aircraft [a year]." He believes order numbers will grow with increased production because it will open up delivery slots and provide "faster capacity". "We are, in a way, constrained by supply, but growing, and we have a stronger demand," he says, adding: "I'm confident that we can continue to ramp up production and sell more than 50 or 60 aircraft a year." ATR is in the process of reactivating a second final assembly line, FAL North, at its facility within Airbus's production site at Toulouse airport. FAL North had been dormant since the pandemic. Prior to Covid, the two assembly lines had combined capacity for up to 110 aircraft a year. Today, ATR has no delivery slots for new orders before 2028. Its production peaked in 2015, when it delivered 88 aircraft (and gathered 76 orders). The figures dipped to 80 deliveries and 36 orders in 2016. Deliveries were flat in 2017, but orders grew to 113. The company delivered 76 aircraft and booked 52 orders in 2018. In 2019, its deliveries totalled 68 and orders 79. ATR has been the sole Western regional turboprop manufacturer since De Havilland Canada ended Dash 8-400 production in 2021, focusing instead on aftermarket support and reconditioning of existing aircraft. However, Deutsche Aircraft is developing an updated, stretched version of the Dornier 328, lifting its capacity from 32 passengers to 40. Service entry of the D328eco is targeted for 2027. NEW COMPETITION The end of Dash 8-400 production may have placed ATR in a stronger position, but Vidal highlights that regional turboprops face increasing competition from narrowbodies on routes to secondary airports. "You're not head-to-head against a direct competitor of similar-size aircraft," he says: "What we see [now] is an interesting competition on our side against larger aircraft or ground transportation. "We are in a mobility [environment] that commands us to not just think about the cost per trip or the performance versus a direct competitor, but instead what can we bring to the mobility ecosystem at large by flying much faster than a car or train [and] what is the cost competitiveness we need to achieve for that." Despite the new rivals above and below, Vidal is certain demand for regional turboprops is "clearly strong, and mobility is growing". He adds: "We are here to see the demand, to stimulate it ourselves [and] turn ground transportation into air travel." The turboprops delivered by ATR at its production peak in 2015 and by De Havilland Canada that year are now approaching 12 years of age and therefore suited to "transitioning careers". "We see a very strong market demand for replacement," says Vidal, adding that 70% of ATR's 2025 orders were for replacement. "When we look at the next five years, we believe that even 80% of our sales would be commanded by replacement, just because 12-15 years ago, it was the peak production of the turboprop industry." ATR foresees demand for 2,100 new regional turboprops by 2044, and predicts that deliveries during the first 10 years of the forecast period will primarily be used for replacement.

London City airport has launched a public consultation on plans to introduce a shallower landing approach which could allow larger aircraft such as the Airbus A320neo to operate there for the first time. The proposal would add a 4.49‑degree approach alongside the airport's existing steep 5.5‑degree one, which currently restricts the types of aircraft able to serve it. The new procedure would be enabled by high‑precision satellite‑based navigation and would apply only to authorised aircraft, while most flights would continue adhering to the current approach. If approved, the change would pave the way for aircraft such as the Airbus A320neo, which offers greater seating capacity compared with the aircraft types currently operated at London City, such as the Embraer 195 and Airbus A220. London City says the move would allow it to accommodate future passenger growth with fewer flights overall. It cites estimates that enabling larger, quieter aircraft would result in around 76,000 fewer flights over the next 12 years compared with current procedures. Overall noise exposure would be reduced for some 110,000 local residents. The airport says the change would support growth towards its government‑approved cap of 9 million passengers a year. The proposal could also encourage new airlines and routes. In January 2025, London City said it had applied to the UK Civil Aviation Authority to be certificated for Airbus A320neo operations with a new required navigation performance procedure.