‘Not Quite as Bad as You Might Think’: IBA on Disruption from Middle East Conflicts

Free for nonsubscribers By Charles Alcock Sept. 8, 2026, © Leeham News and Analysis: As the Iran war enters its seventh month, airlines are still pondering the best—or perhaps least bad—response to the Middle East market disruption, according to the latest analysis from London-based consultancy IBA. In a briefing on Sept. 4, the IBA team indicated that, for now, carriers are largely still focused on tactical decisions related to the crisis, which chief economist Stuart Hatcher concluded has proved to be “not quite as bad as you might think.” “No one is looking at this in a super long-term way, given that the situation was expected to be short-term at the outset,” Hatcher reflected. “Generally, [airline seat] capacity has recovered since August, after five months of being negative.” That said, IBA said that carriers are now facing longer-term decisions as to when to place planned fleet orders against a backdrop of stubbornly high, margin-suppressing fuel prices. They are also in touch with lessors about how they could obtain newer, more fuel-efficient aircraft more quickly and how they might get reductions on lease rates. Last week, crude oil barrel rates fluctuated by $20 in further signs of energy insecurity triggered by new attacks and counterattacks between U.S. and Iranian forces. This week has brought the added element of conflict between Houthi forces in Yemen and Saudi Arabia. According to IBA, the crack spread—the differential between crude oil prices and the cost of refined products like Jet A—is now between four to seven times higher than the long-term base rate. “Prolonged exposure to these costs for carriers using older aircraft prolongs the pain, because [fuel price] hedging won’t last indefinitely.” These factors were reflected in airlines’ second quarter results, according to IBA’s head of consulting Dan Taylor, who said that operating margins showed decline after the first four months of the conflict, with carriers outside the region having to contend with disruption to long-haul routes. The degree to which airlines have been able to hedge on fuel pricing was once of the main variances, he observed. While North American airlines having mainly been less exposed to fuel price spikes, they are generally less hedged and so this could catch up with them in the absence of a permanent and complete reopening of the Strait of Hormuz. Looking ahead to the fourth quarter, IBA anticipates airlines will conduct further fine tuning across their networks to deploy more efficient equipment on longer sectors. More of the Europe-Asia traffic is now avoiding the Gulf, where traffic volumes remain at least 3.5 % down, and African traffic volumes have also taken a hit. “The financials will continue to look worse due to fuel prices and also inflationary pressure from maintenance and employee costs,” Taylor said. “Overall, the risk outlook is deteriorating.” In the still-longer term, IBA sees what it calls aviation’s “climate transition” toward imposed reductions in carbon dioxide and other emissions as another key concern for airline leaders. “Climate risk will become capital risk throughout the value chain, and are clients are now worrying about this,” Taylor explained. Pressure to replace fuel-inefficient older aircraft will raise new doubts about the value durability of these assets. But beyond that, IBA expects that airlines will need to confront higher liability from complying with green aviation mandates, such as increased use of sustainable aviation fuel, especially beyond 2030 when mandates harden and free allowances disappear. just info Boeing delivered 51 aircraft in August, 3.8% fewer than in July and 10.5% below last year’s level. “The company shipped 41 737 MAX jets but just four 787 Dreamliners, down from nine Dreamliners in August 2025. Boeing has now delivered 54 Dreamliners this year while holding to its target of 90 to 100. Hitting the midpoint would require another 41 handovers over the final four monthsan average of more than ten per month.” BOEING DELIVERS 51 AIRCRAFT IN AUGUST, REACHES 418 IN 2026 Boeing delivered 51 commercial aircraft in August, taking its total for the first eight months of 2026 to 418 aircraft, its highest tally for the period since 2018. “The August total comprised 42 aircraft from the 737 family, including 41 737 MAX jets and one 737 NG, as well as four 787 Dreamliners, three 767s and two 777 freighters.”