Airline Profits To Strengthen In 2025 - Iata

IATAs financial outlook for the global airline industry in 2025 shows a slight strengthening of profitability amid ongoing cost and supply chain challenges.

According to IATAs forecast, net profits are expected to hit 36.6 billion in 2025 with a 3.6 net profit margin.

That is a slight improvement from the expected 31.5 billion net profit in 2024 3.3 net profit margin. Average net profit per passenger is expected to be 7.0 below the 7.9 high in 2023 but an improvement from 6.4 in 2024, IATA said.

Operating profit in 2025 is expected to be 67.5 billion for a net operating margin of 6.7, an improvement from the 6.4 expected in 2024.

IATA Director General, Willie Walsh, said airlines would have to balance multiple dynamics to achieving the forecast profit growth next year.

This will be hard-earned as airlines take advantage of lower oil prices while keeping load factors above 83, tightly controlling costs, investing in decarbonisation, and managing the return to more normal growth levels following the extraordinary pandemic recovery, Walsh said.

All these efforts will help to mitigate several drags on profitability which are outside of airlines control, namely persistent supply chain challenges, infrastructure deficiencies, onerous regulation, and a rising tax burden.

Walsh said total industry revenues were expected to reach 1.007 trillion, an increase of 4.4 from 2024 and making it the first time industry revenues topped the 1 trillion mark. Expenses are expected to grow 4 to 940 billion.

Its also important to put that into perspective. A trillion dollars is a lot, almost 1 of the global economy. That makes airlines a strategically important industry. But remember that airlines carry 940 billion in costs, not to mention interest and taxes.

They retain a net profit margin of just 3.6. Put another way, the buffer between profit and loss, even in the good year that we are expecting of 2025, is just 7 per passenger. With margins that thin, airlines must continue to watch every cost and insist on similar efficiency across the supply chain, especially from our monopoly infrastructure suppliers who all too often let us down on performance and efficiency.

The return on invested capital Roic for the global industry is expected to be 6.8 in 2025.

While this is an improvement from the 2024 Roic of 6.6, the returns for the industry at the global level remain below the weighted average cost of capital. Roic is the strongest for airlines in Europe, the Middle East, and Latin America, where it did exceed the cost of capital.

Passenger numbers are expected to reach 5.2 billion in 2025, a 6.7 rise compared with 2024 and the first time that the number of passengers has exceeded the five billion mark.

Cargo volumes are expected to reach 72.5 million tonnes, a 5.8 increase from 2024.

IATA also highlighted the broad benefits of growing connectivity. The most recent estimates show that airline employment is expected to grow to 3.3 million in 2025.

Airlines are the core of a global aviation value chain that employs 86.5 million people and generates 4.1 trillion in economic impact, accounting for 3.9 of global GDP 2023 figures.

Connectivity is an economic catalyst for growth in nearly all industries.

Looking at 2025, for the first time traveller numbers will exceed five billion and the number of flights will reach 40 million. This growth means that aviation connectivity will be creating and supporting jobs across the global economy, said Walsh.

The most obvious are the hospitality and retail sectors which will gear up to meet the needs of a growing number of customers. But almost every business benefits from the connectivity that air transport provides, making it easier to meet customers, receive supplies, or transport products.