Global airlines could face bankruptcies within weeks if the conflict in the Middle East persists, according to Gediminas Ziemelis, chairman of Avia Solutions Group, an aircraft services business, who warned that rising fuel costs and collapsing demand are placing severe strain on the industry.
Speaking in an interview with Bloomberg, Ziemelis said that if the war in Iran continues for more than a month, “we may see potential first bankruptcies” among airlines worldwide, adding that the situation is beginning to resemble the disruption experienced during the Covid-19 pandemic.
The warning comes as oil prices have surged by around 50% since the conflict began, reaching roughly $100 a barrel, sharply increasing operating costs for airlines. Fuel typically accounts for about 25% of airline expenses, and the increase has pushed profitability to its limits, Ziemelis said.
At the same time, airlines are facing operational disruption as airspace closures across the Middle East force carriers to reroute flights between Europe and Asia, increasing journey times and costs. Thousands of flights have been cancelled following missile and drone attacks in the region, with airlines evacuating aircraft.
Carriers in the Middle East have been hit hardest. Airlines including Qatar Airways, Gulf Air, flydubai and Air Arabia are conducting internal reviews to cut costs and preserve cash, with some losing millions of dollars per day, according to Ziemelis.
Beyond fuel costs, the industry is also facing sharply rising insurance premiums. Ziemelis said war-risk insurance surcharges for flights operating near conflict zones can reach as much as $50,000 per flight, adding that “the insurance market is going crazy”.
Demand is also weakening. Bookings in the region are down 63%, while cancellation rates have increased by 163%, contributing to lower passenger loads and forcing airlines to reduce routes and raise fares.
Avia Solutions Group has responded by redeploying aircraft away from the Middle East, shifting capacity towards markets including Asia and Brazil. Of six aircraft leased in the region, only one remains in operation, Ziemelis said.
Credit rating agency Fitch Ratings has already revised Avia Solutions’ outlook to negative from stable, citing the potential impact of the conflict on revenue and liquidity in 2026.
Despite the disruption, Ziemelis said the crisis could create opportunities for stronger operators. “After Covid all companies which survived made extraordinary record profits,” he said. “So sometimes crisis is opportunity.”