2025 was a turbulent year for the region’s aviation sector, driven by tension between strategic ambition and a broken global supply chain. The year began with hopes for a rebound in Boeing and Airbus deliveries, but as those targets slipped, regional players refused to idle. Instead, they shifted their purchasing power to boost local manufacturing and maintenance capabilities to mitigate the delays.

Where we stand on a global scale

Regional carriers are forecasted to deliver the highestnet incomemargin globally at 9.3% — well above the world average of 3.9%. The airlines’ NPs are projected to reach USD 6.9 bn in 2026, driven by strategic investments and policy frameworks.

Beyond the GCC, however, the picture was mixed. Geopolitical instability, blocked funds, and uneven infrastructure held us down in 2025. The Middle East and Africa (MEA) region currently accounts for 93% of the world’s blocked airline funds, with Algeria topping the list.

Unlike its robust passenger outlook, the Middle East’s air cargo traffic is expected to contract by 1.5% in 2025. This decline is primarily driven by geopolitical tensions and easing ocean freight disruptions in the Red Sea. For 2026, the region’s air cargo traffic growth is expected to stagnate.

Despite the volume dip, yields remain resilient. Air cargo rates — which escalated beyond natural patterns due to the shift away from commercial Red Sea shipping — are now normalizing to match global growth trends. Capacity constraints also played a role, with geopolitical hurdles and sporadic airport closures keeping supply tight.

The supply crunch drove market behavior

What changed? The retrofit market surged as airlines ramped up capacity amid industry-wide delivery delays, with the backlog of unfilled aircraft orders stalling at over 17k jets in 2025. Emirates alone enacted a USD 5 bn retrofitting plan earlier this year, aiming to extend the operational life of existing jets as it waits for delayed deliveries.

Freighters on the brain: Mammoth Freighters, a Boeing licensee launched in 2020, specializes in converting passenger 777s into cargo aircraft. Qatar Airways has signed on as the launch customer for Mammoth’s converted 777-200ER model, ordering five jets earlier this year.

Etihad is set to follow suit next year. The Abu Dhabi carrier plans on retrofitting its older Boeing 777 and 787 widebodies effective 2026.

It’s a different story for Riyadh Air: While the newly launched carrier took off in October, the operational narrative focused on how it managed to launch without its own metal — instead leasing a 787-9 for the inaugural London flight and training. The airline finalized an order for 120 engines from CFM International to power its upcoming A321neo fleet.

Delivery drought drove the rise of MRO

At USD 10 bn and rising, the region’s maintenance market has become a strategic hedge against global dysfunction. Operators have pivoted from buying shelf capacity to building local MRO ecosystems, essential for extending the life of older models. Regional MRO demand is now forecast to grow at 5.4% annually — the fastest rate on the planet.

Background: The global MRO market is expected to grow annually by a steady average of 2.7% to reach USD 156 bn in 2035.

Abu Dhabi’s Mubadala-owned Sanad and Dubai’s MBRAH led the charge. Sanad expanded its agreement with GE Aerospace and Safran to provide full MRO for LEAP-1A and 1B engines. It also tapped AerCap for a AED 400 mn order for 6k aircraft components. Dubai South inked a steady stream of agreements, including with Liebherr-Aerospace, IER MRO Industries, and Tim Aerospace. Sanad Group reported 39% y-o-y growth in its top line to reach AED 3.2 bn in 1H 2025 — as the firm’s orderbook swelled to a record AED 38 bn.

Jordan-based, Dubai Aerospace Enterprise (DAE)-backed MRO outfit Joramco also stood out — inking pacts with Iraq’s Global Aviation, World Star Aviation, and Air India, as well as building a USD 30 mn MRO center in Jordan.

The growth of low-cost carriers also hiked up demand on already very busy MRO facilities, prompting new players to explore their own. Budget carrier flydubai broke ground on its USD 190 mn aircraft MRO facility in Dubai South in July, which is scheduled for operations by 4Q 2026.

Up and coming? Saudia’s MRO arm Saudia Technic finalized major engine MRO lines at its Jeddah MRO Village.

Big orders despite supply lags

The widebody lock-in: We saw a massive commitment to capacity across regional airlines. Emirates secured a USD 3.4 bn Airbus order, and flydubai — which traditionally uses narrow-bodies — took its first major step into widebodies with Boeing 787 Dreamliner orders. Qatar Airways dominated the headlines by finalizing a USD 96 bn order with Boeing during US President Donald Trump’s visit.

“Vintage” planes gained popularity: UAE-based aircraft-leasing company DAE acquired 17 used aircraft for USD 1 bn in March. IndiGo, India’s largest air carrier, reportedly entered into wet-lease agreements for seven aircraft — two from Qatar Airways and five Airbus A320s from Turkey-based Freebird Airlines — to support domestic operations. Kuwaiti carrier Jazeera Airways purchased six A320ceo aircraft — which it currently operates under lease — for KDW 55.7 mn.

A privatization push

Egypt moved from theory to execution on airport management. While the immediate news is the Hurghada International Airport tender, the real story is the policy precedent it sets. With the IFC advising on a program that covers 11 airports, the government is effectively building a new asset class for private operators. Local capital is already positioning itself for this shift; Naguib Sawiris is forming a consortium with Italian partners to bid for Hurghada, with an eye on future tenders in Luxor and Sohag.

Saudi Arabia was done experimenting. The General Authority of Civil Aviation (Gaca) ispushing forward with a national privatization program modeled after the success at Prince Mohammed bin Abdulaziz International Airport in Madinah. The Abha International Airport concession will be awarded within three months, Gaca’s President Abdulaziz Al Duailej confirmed on Tuesday, while several consortiums have expressed interest in the Taif International Airport project.

In capital markets, Flynas’ IPO made headlines by successfully pricing its IPO at SAR 80 per share, implying a market cap of SAR 13.7 bn.

What’s next?

Next year expects a move toward localized industrial consolidation — with the partnership between UAE’s Edge Group and Etihad Engineering to solidify their local manufacturing foothold marking the first of many.

Deliveries are expected to recover, with the GCC projected to see between 180-220 aircraft deliveries from Boeing and Airbus, Bauer Aviation Advisory founder Linus Bauer said. However, it’s all still up in the air, as this figure could drop by as much as 20%, he added. Regardless, this figure hangs high above the 43 aircraft delivered by Airbus and 38 jets by Boeing to the Gulf this year.

The delivery roster: Emirates, Qatar Airways, Saudia, Riyadh Air, flydubai, and Air Arabia are “likely to receive the bulk of the year’s deliveries” in 2026, Midas Aviation partner John Grant predicted. Airbus is expected to take the lead, with the A320 being the largest aircraft model entering service, he added. This is good news for low cost-carriers such as flyadeal, flydubai, and Air Arabia, who placed orders for the model this year.

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