(Bloomberg) -- The global airline industry stands to earn $36.6 billion in net income in 2025, driven by a record 5.2 billion passengers taking to the skies, the industry’s top lobby group said in its annual forecast.
The outlook represents a 16% gain on 2024 figures. Profit margins for the industry will be 3.6%, higher than the 3.3% margins in 2024, the International Air Transport Association said on Wednesday. Lower oil prices and higher demand will drive profitability, while potential tariffs and trade wars by the incoming Trump administration could hurt the industry’s prospects, the industry group said.
IATA also expects industry revenue to exceed $1 trillion for the first time in 2025.
“Costs are being heavily impacted by the delays in getting new aircraft, keeping older aircraft in service,” IATA’s Director General Willie Walsh said in an interview on Bloomberg TV. “Although next year will be better financially, I think it would have been a lot better had we not faced all of these supply chain problems.”
While the aviation industry has seen demand rebound sharply post pandemic, profit margins remain wafer thin. Airlines are struggling with supply chain disruptions that are delaying deliveries of newer, more fuel-efficient aircraft and keeping existing planes grounded for maintenance for longer.
North America remained the largest profit contributor to the global industry in 2024, though margins were at lower levels than pre-pandemic due to slower aircraft deliveries and higher costs particularly for low-cost carriers, IATA said. The Middle East recorded the strongest financial performance and was the only region where passenger yields jumped, thanks to strong demand for premium long-haul travel.
European airlines, in comparison, were hit with fleet groundings, rising wages, higher airport charges and taxes which took a toll on competitiveness in 2024, according to IATA. The lobby group sees profitability improving in 2025 as low-cost carriers resume flying grounded aircraft.
IATA said its outlook is subject to change should the Ukraine and Middle East wars worsen or oil prices fail to drop.
“There’s no safety or security risk with transiting through Russian airspace,” Walsh said. “We’re hopeful we’ll see peace return to the region and that will ultimately lead to the reopening of parts of the airspace.”
--With assistance from Guy Johnson.
(Updates with quote from IATA head in fourth paragraph.)
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