IATA, the International Air Transport Association, has released its financial forecast for 2025. The outlook predicts a slight increase in global airline profits despite continuing challenges. Net profits will reach USD 36.6 billion by 2025, up from USD 31.55 billion in 2024. The margin of net profit is expected to be 3.6 percent.
This is a significant improvement over the projected margin of 3.3 percent for 2024. The average net profit per passenger will rise to USD 7,00, up from USD 6,40 in 2024. Operating profits will increase to USD 67.5 Billion, with a net margin of 6.7%. The total industry revenue is projected to surpass USD 1 trillion for first time. This will be driven by a 6.7% increase in passenger numbers, and a 5.8% growth in cargo volume.
“We expect airlines will deliver a worldwide profit of USD 36.6 Billion in 2025.”
All these efforts will help mitigate several drags on airline profitability that are out of their control, including persistent supply chain challenges and infrastructure deficiencies.
The outlook highlights increasing connectivity as a major benefit of the industry. Air travel supports economic growth and job generation across sectors. Despite the positive outlook, there are still challenges, notably with regard to capacity discipline, due to supply-chain issues, and managing costs effectively. Fuel costs will decline by 4.8 percent, but airline costs will rise by 4.0 percent, as non-fuel expenses such as maintenance and labour are on the rise.
In 2024, passenger revenues are expected at USD 717 billion, an increase of 12 per cent over USD 642 billion from 2023. Revenue passenger kilometers growth is expected to increase by 9.8 per cent annually. IATA reported that 4.7 billion people will travel in 2024. This is a record high, surpassing the 4.5 billion pre-pandemic levels in 2019.
IATA’s Outlook also identifies important risks, such as geopolitical conflicts, especially in Europe and Middle East, and uncertainty in the economy. Lower oil prices and fuel costs will be a major factor for improved airline prospects in 2025.
“If they don’t materialise and the industry has thin margins, then the outlook could change drastically,” Walsh added.
North America, in terms of regional breakdown, is expected to generate the most absolute profits. However, profitability will be lower than before the pandemic due to supply chain vulnerability. Europe is expected, despite challenges like rising wages, the impact of the ongoing conflict in Ukraine and other factors, to see a slight increase in profitability. This will be especially true for low-cost airlines.
While the Middle East’s performance is expected to remain strong despite geopolitical conflicts, profitability in Asia-Pacific will improve slightly. Africa’s airlines will see marginal improvements in profits despite high operating costs.
Passenger satisfaction remains high. 96% of travellers are satisfied with their travel experiences, and 90% agree that air connections are vital to the economy. As airlines commit to reaching net-zero carbon emissions by 2050 81 per cent believe that the industry has taken significant steps towards sustainability.
IATA’s outlook shows a cautiously optimistic financial climate, with revenue and profit growth moderated by cost pressures and geopolitical risks.
