Airlines forecast profit growth in 2025, headwinds persist
The International Air Transport Association (Iata) has released its updated outlook for 2025, forecasting stronger profitability for airlines over 2024, despite continued global economic and geopolitical challenges.
Source: Archive
The industry is expected to post a net profit of $36.0bn in 2025, an increase from the $32.4bn projected for 2024, though slightly below the $36.6bn estimate made in December 2024.
The net profit margin will improve from 3.4% to 3.7%, while operating profits are forecast to rise to $66.0 bn from $61.9bnn the previous year.
Total revenues are set to reach a record $979bn, up 1.3% year-on-year, driven by strong demand, with passenger numbers climbing to an all-time high of 4.99 billion, representing a 4.0% increase on 2024. Cargo volumes will also edge up by 0.6% to 69 million tonnes.
"The first half of 2025 has brought significant uncertainties to global markets. Nonetheless, by many measures, including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections.
"The biggest positive driver is the price of jet fuel, which has fallen 13% compared with 2024 and 1% below previous estimates," says Willie Walsh, Iata's director general.
Passenger demand and revenues climb
Passenger load factors are set to reach a record 84.0%, reflecting capacity constraints from persistent supply chain bottlenecks affecting fleet deliveries and maintenance. Total passenger revenues will hit a record $693 billion, a 1.6% increase, including a notable 6.7% rise in ancillary revenues to $144 billion.
Passenger traffic, measured in Revenue Passenger Kilometres (RPKs), is expected to expand by 5.8%, with average airfares easing as passenger yields decline by 4.0% in response to falling oil prices and competitive pricing pressures. The average return airfare, adjusted for inflation, will drop to $374, about 40% lower than 2014 levels in real terms.
In a recent April 2025 IATA passenger poll, 40% of respondents indicated they planned to travel more in the year ahead, while 53% said they would travel the same as before. Encouragingly, 47% expressed an intention to spend more on travel, underscoring continued consumer appetite for air journeys despite economic headwinds.
Cargo revenue dips amid slower growth
On the cargo side, revenues are projected to fall by 4.7% to $142bn due to a softening global economy and growing protectionism.
Cargo growth will slow to 0.7%, following an 11.3% expansion in 2024, as yields are anticipated to decline by 5.2%. However, cargo demand remained resilient into April 2025, up 5.8% year-on-year.
Airlines' total expenses will climb to $913bn, a 1.0% increase, though this will be offset by a lower fuel bill of $236bn, with average jet fuel prices expected at $86 per barrel, down from $99 the previous year.
Sustainable Aviation Fuel (SAF) production is set to double to 2 million tonnes, accounting for 0.7% of total fuel use, though high SAF prices — more than 4.2 times the cost of conventional jet fuel — remain a challenge, compounded by European compliance fees.
'The behaviour of fuel suppliers in fulfilling the SAF mandates is an outrage. The cost of achieving net-zero carbon emissions by 2050 is estimated to be an enormous $4.7t. Fuel suppliers must stop profiteering on the limited SAF supplies available and ramp up production to meet the legitimate needs of their customers,' Walsh commented.
The cost of Corsia carbon credits is expected to rise to $1bn in 2025, though currently only Guyana has issued the high-quality credits required by the scheme.
Delivery delays and engine issues persist
Aircraft manufacturers continue to grapple with backlogs exceeding 17,000 aircraft, pushing waiting times for new orders to as long as 14 years. Deliveries are forecast to reach 1,692 aircraft in 2025 — the highest since 2018 — yet this remains 26% below earlier estimates. Engine supply chain problems have grounded over 1,100 aircraft under 10 years old, equivalent to 3.8% of the global fleet, primarily due to PW1000G engine issues.
"Manufacturers continue to let their airline customers down. Every airline is frustrated that these problems have persisted so long. And indications that it could take until the end of the decade to fix them are off-the-chart unacceptable!" Walsh stresses.
Regional outlook
North America leads, Africa lags
Regionally, North America will maintain the highest absolute profit, though airlines face economic slowdown and operational constraints. In Europe, robust demand, especially from low-cost carriers, and a stronger Euro are bolstering performance.
Asia Pacific is benefitting from relaxed visa policies and improved capacity on China-US routes, while Latin America's prospects remain mixed amid local currency weakness and a proposed Brazilian VAT increase on air travel.
Middle Eastern carriers will achieve the highest profit per passenger carried, although growth is hampered by aircraft delivery delays, and Africa continues to face the toughest conditions due to high operational costs, fleet shortages, and access to foreign currency.
Public support and climate goals
Public sentiment toward air travel remains positive, with IATA's April poll showing 97% of travellers satisfied with their journeys, and 90% believing air connectivity is essential for modern life and economic development.
Confidence in the sector's climate ambitions also remains strong, with 81% of travellers trusting airlines' commitment to achieve net-zero CO2 by 2050, far outpacing confidence in government and oil company climate strategies.
All rights reserved. © 2022. Bizcommunity.com Provided by SyndiGate Media Inc. (Syndigate.info).
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
an hour ago
- The National
Explained: How Air India plane crash could impact Boeing
Boeing's stock price fell by more than 4 per cent on Thursday, after an Air India flight crashed in the Indian city of Ahmedabad. The plane, a Boeing 787 Dreamliner that had 242 people on board and was bound for London's Gatwick Airport, crashed shortly after take-off. According to air traffic control at the airport in Ahmedabad, the plane took off at 1.39pm (12.09pm UAE) from runway 23. It gave a 'mayday' call, signalling an emergency but there was no response after that. In a statement to The National on Thursday, Boeing said it was "working to gather more information".
Arabian Business
an hour ago
- Arabian Business
Middle East airports outperform as airlines face $5bn baggage challenge
Baggage mishandling costs the aviation industry an estimated $5bn a year, according to air transport sector IT provider SITA. The Middle East and Africa's air transport sector delivered one of the world's top baggage performances in 2024, according to the newly released SITA Baggage IT Insights 2025. Despite growing passenger volumes, the region maintained a low mishandling rate of 6.02 bags per 1,000 passengers, up slightly from 4.5 in 2023, yet still outperforming most global regions. Middle East airlines baggage handling This mirrors a global trend of improvement, with the worldwide baggage mishandling rate dropping to 6.3 per 1,000 passengers in 2024, compared to 6.9 in 2023—marking a 67 per cent reduction since 2007. This came amid an 8.2 per cent rise in global air traffic. Of the 33.4 million mishandled bags worldwide, over 66 per cent were resolved within 48 hours, showcasing significant advances in real-time tracking and automated resolution. Airlines and airports across the globe are increasingly turning to smart, data-driven baggage systems, with 42 per cent of passengers receiving real-time baggage updates in 2024, up from 38 per cent the year before. Nearly half of travellers said mobile tracking would boost confidence in checking bags, while 38 per cent favour digital ID tags. Key industry investments include: 66 per cent of airlines now offering automated bag drop 65 per cent of airports planning biometric self-service bag drop by 2027 New integration with Apple's Share Item Location for faster bag location and resolution The most common issue remains delays, accounting for 74 per cent of mishandled bags, down from 80 per cent in 2023. Damaged or pilfered luggage increased to 18 per cent, while lost or stolen bags held steady at 8 per cent. Contributing factors in mishandling include: Transfer mishandling (41 per cent) – improved from 46 per cent last year Tagging errors, security and misrouting (17 per cent) – up 3 percentage points Loading failures (16 per cent) – steady Operational issues like weather or customs (10 per cent) – up from 8 per cent The release of Modern Baggage Messaging (MBM) Version 2 in 2025 aims to reduce mishandling by an additional 5 per cent, enhancing real-time data quality across the sector. Airports like Red Sea International in Saudi Arabia are already leading with futuristic solutions including off-airport check-in and real-time tracking powered by SITA Bag Journey. Nicole Hogg, Director of Baggage at SITA, said: 'We're making progress, but baggage still causes stress. Passengers want reassurance. The future of baggage is rapidly evolving with automation, computer vision, and mobile tools, we're making the experience much more reliable.' David Lavorel, CEO of SITA, said: 'Passengers now expect their baggage experience to be as easy and transparent as using a rideshare or delivery app. It's no longer just about moving bags, it's about delivering a smooth, connected journey. 'Airlines are ready to tap into technology that improves the passenger experience while keeping costs down and being simple to roll out'.
The National
2 hours ago
- The National
Elon Musk's downfall could mark the end of a cultural era
A century ago, TS Eliot mused about the world having ended, not with a bang, but with a whimper. In his poem The Hollow Men, he described a generation unable to do anything with conviction, whether for good or ill, as societies, institutions and communities in Europe struggled with the new morality and the political upheaval following the devastation of the First World War. 'Between the idea And the reality Between the motion And the act Falls the Shadow' The parallels between 1925 and 2025 are legion, but perhaps none has been as striking as the culture wars that have shaped the current public discourse. Trust in government, experts and institutions is at a low ebb. Amid such a divisive political landscape, it is little surprise that individuals with maverick personalities have grown in influence. Arguably, no one illustrates this point as strongly as Elon Musk. His public image, cultivated through antics on X, meme culture and polarising rhetoric, has helped fuel a rise in his wealth and status as a business and technological prophet. Most pertinently, Mr Musk's vision of the future has also lacked empathy. His dreams of Mars colonisation, AI-human interfaces and radical innovation are as ambitious as they are detached from societal needs or human connection. There have also been actions that bring into question his ethics. For example, markets have been disrupted, if not manipulated, following his social media posts about Dogecoin and Tesla stock. Yet, until now, Mr Musk had insulated himself from the ire that enveloped other tech leaders. He had avoided the political theatre in the US Congress that Meta's Mark Zuckerberg, Google's Sundar Pichai and Amazon's Jeff Bezos were obligated to take part in. His purchase of X (when it was still called Twitter) and his subsequent alliance with the Republican Party seemed to keep regulators at bay while amplifying his influence. His track record means very little now, however, after his spectacular falling out with US President Donald Trump. On Wednesday, the shockwaves from the detonation of the most famous political alliance of our time seemed to finally fade with the words: 'I regret some of my posts about President Donald Trump last week. They went too far.' Could Mr Musk's post on X also be the waving of the white flag for his style of leadership? With never-seen-before gusto, Mr Musk had supported Mr Trump's presidential campaign and after the latter won the White House, he became a regular fixture in the Oval Office, even parading his four-year-old son in front of the cameras, such was the familiarity between the two men. It seemed a stunning triumph of his convictions. Eventually Mr Musk seemed to tire as his personal behaviour and his brainchild, the Department of Government Efficiency, became magnets for sustained controversy. So, he stepped back from the front lines. There had been a very clear cost, too, from such an unprecedented high-profile political affiliation. The Tesla share price is still down 14 per cent in 2025, but it had been even lower. After he was no longer on the inside of the administration, it took only days for him to turn against the President, attacking the 'One Big Beautiful Bill Act', a key part of Mr Trump's legislative agenda, and drawing return fire online and in the media from his one-time ally. Then, after Mr Musk made the explosive and since-retracted claim that Mr Trump appeared in the files related to the late financier and alleged sex trafficker Jeffrey Epstein, it became clear there could be no way back. Not only is Mr Musk's aura now diminished, but it could be the end of the techno-libertarian myth that has been at the root of so much divisiveness during the past decade. Figures like Mr Musk and Peter Thiel – also a supporter of Mr Trump – championed the idea that private innovators could outpace and outthink the state. The equivalent of shadow nations grew out of Silicon Valley and undermined the ability of governments to govern, further eroding trust and bringing extreme ideas to the mainstream, enabled by an unregulated flood of technological advances. The truth is, once any company achieves the scale of a country, it becomes nigh on untouchable. Mr Musk seemed to be trying to reach these heights while remaining bigger than his companies in the minds of the public. The social media age helped him to try to do this, and his approach has been very much a blueprint for the broader rise of content creators and influencers. Yet, back in the 1920s, TS Eliot warned of the perils of such hollowness. 'Between the desire And the spasm Between the potency And the existence Between the essence And the descent Falls the Shadow' Looking back 100 years from now, the Musk-Trump fallout will probably help mark the closing act of a cultural era defined by deficiencies in human connection and empathy for others.
