• An IATA report has found that roughly 24 percent of current airline debt is due within the next 12 months, with the majority lying beyond the next two years.
• Rising fuel costs and increasing policy rates are adding pressure to airlines in the short-term,
• Asia Pacific is the region most exposed to the current refinancing requirements.

The International Air Transport Association (IATA), has found that around two thirds of airline debt matures beyond the next two years, yet 24 percent falls due within 12 months and, with central banks in the US, Europe and Japan having raised policy rates, much of it will need to be refinanced at a higher cost.

According to IATA, the rate rises have pushed ten-year government bond yields higher, lifting borrowing costs across the maturity spectrum. As existing debt rolls over, servicing costs will climb. The industry’s relatively long-dated debt profile offers some protection. IATA’s figures include both interest-bearing debt and aircraft finance lease liabilities, which typically run for several years. The largest block, 43 percent, is due in three to five years, which offers some reprieve as jet fuel costs continue to soar.

Asia Pacific most exposed

The regional picture is far from uniform. Airlines in Asia Pacific face the heaviest near-term burden, with 37 percent of their debt due within 12 months. The Middle East follows at 26 percent, then Latin America at 21 percent and Africa at 17 percent. European and North American carriers are better placed, at 15 percent and 12 percent respectively. The Middle East presents a split profile. Alongside its sizeable near-term obligations, the region holds the largest share of debt maturing after five years, at 18 percent. IATA has warned the industry that airlines combining heavier debt loads, shorter maturities and weaker credit ratings will pay the steepest ‘refinancing penalty.’

Squeezing investment

The consequences extend beyond the balance sheet. Once airlines have refinanced, higher interest payments will reduce the cash available for deleveraging, fleet renewal and decarbonisation. That matters for an industry already under strain. The average aircraft age now exceeds 15 years, according to IATA’s June outlook, and older aircraft burn more fuel and require more maintenance. Costlier finance could make replacing them harder still.

The pressure also compounds this year’s sharp rise in jet fuel prices. At its Annual General Meeting (AGM) in June, IATA halved its 2026 net profit forecast for the industry to US$23 billion, from US$41 billion six months earlier.

The analysis is based on a sample of 125 airlines, using data from Airfinance Global. IATA cautions that some airlines may use the three-to-five-year and after-five-years categories interchangeably, so the split between medium and longer-term debt is less precise than it appears.

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