U.S. passenger airlines recorded a combined after-tax net loss of $966 million in the first quarter of 2026, reflecting a significant deterioration in industry profitability compared with the same period last year, according to the latest report from the U.S. Bureau of Transportation Statistics (BTS).
The quarterly report, which covers all 22 scheduled passenger airlines in the United States, showed that the industry moved deeper into the red after posting a net loss of $209 million in the first quarter of 2025. The result also marked a sharp reversal from the stronger performances recorded through much of last year, when airlines generated net profits of $4 billion in the second quarter, $1.6 billion in the third quarter and $633 million in the final quarter of 2025.
Despite the net loss, U.S. airlines reported a pre-tax operating profit of $912 million during the period, indicating that non-operating costs and other financial factors weighed heavily on overall earnings.
According to BTS, total operating revenue for the quarter reached $63.4 billion, while operating expenses stood at $62.4 billion. Passenger fares remained the industry’s largest revenue source, contributing $46.2 billion or 72.9 percent of total operating revenue, although this represented a slight decline from 74.1 percent recorded a year earlier. Revenue from baggage fees increased to $1.9 billion, accounting for 3 percent of total revenue.
On the cost side, labour remained the largest expense category at $23.3 billion, representing 37.3 percent of total operating expenses. Fuel costs rose to $10.9 billion, accounting for 17.5 percent of expenses, compared with 17 percent during the corresponding period in 2025.
Domestic operations generated an after-tax net loss of $531 million, compared with a loss of $158 million in the first quarter of 2025. International operations also weakened considerably, with the 17 U.S. airlines operating international services posting a combined after-tax net loss of $435 million, compared with a $52 million loss recorded a year earlier.
The report highlighted a decline in profitability margins across the industry. Systemwide net income margin fell to negative 1.5 percent in the first quarter of 2026 from negative 0.4 percent in the same period of 2025. International operations were particularly affected, recording a net income margin of negative 2.8 percent.
While the Bureau of Transportation Statistics did not attribute the losses to any specific factor, the increase in fuel expenses during the quarter added pressure to airline finances. Industry observers expect fuel-related costs to remain a major concern as airlines navigate ongoing volatility in global energy markets.
The latest figures underscore the challenges facing U.S. carriers despite strong passenger demand, as rising operating costs and thinner margins continue to weigh on financial performance across both domestic and international networks.
