Aviation Debt: Aircraft ABS - 2026 Mid-Year Outlook

Research evidence excerpt

Aviation Debt: Aircraft ABS - 2026 Mid-Year Outlook

Airlines poised for fourth year of profits, even with war

Airline profitability improves in 2024 with further improvement in 2025

Airline industry net post-tax profit, $bn Airline industry net profit by region, $bn

$ bn % $bn

40 10%

0 0%

-40 -10% 5

0 -80 -20%

2022 2023 2024 2025E 2026F

Net post-tax profit (LHS, $bn) -5

-120 -30%

EBIT Margin (RHS, %)

Africa Asia Pacific Europe

-10

-160 -40% Latin America Middle East North America

-15 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026F

▪ Global airlines are poised for their fourth straight year of profitability in 2026, aided by generally positive economic conditions in most

parts of the globe and good growth in traffic in most regions, even with the disruptions caused by the onset of the Iran War. Fuel prices

have come down dramatically from their post-war peak of $4.50/gallon to just under $3.00/gallon today, but fuel remains elevated relative

to its approximately $2.00/gallon price at the start of 2026. Fuel prices represent approximately 25-35% of an airline’s expenses, so the

increase in fuel prices has put a drag on previous profit estimates for the industry. But even with the rise in fuel prices, the global airline

industry will be profitable overall with only the Middle East likely to report financial losses. Even at the 2026 peak of fuel prices, lessors

reported very few requests for rent reductions or deferrals. With the recent easing of fuel prices, we expect that such requests will remain

rare and believe that the overall airline credit environment will be favorable for aircraft ABS revenue collection.

Source: IATA Economics, Deutsche Bank

Deutsche Bank. Research Douglas W. Runte, CFA. douglas.runte@db.com.