Airline Profits Predicted to Rise Despite Economic Uncertainties

Airlines are finding ways to stay profitable in the face of global economic and political shifts. 

The International Air Transport Association (IATA) has announced updates to its 2025 airline industry financial outlook, showing improved profitability over 2024.

“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,” said Willie Walsh, IATA’s Director General.

Lower prices for jet fuel, higher cargo revenues and an improvement of net margins from 3.4% in 2024 to 3.7% in 2025 are improving the aviation industry’s profit picture.

“That’s still about half the average profitability across all industries. But considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify,” said Walsh.

Highlights from the expected 2025 financial performance include:

•    Net profits at US$36.0 billion, improved from the $32.4 billion earned in 2024, but slightly down on the previously projected $36.6 billion (December 2024). 

•    Net profit margin at 3.7%, improved from the 3.4% earned in 2024 and the previously projected 3.6%. 

•    Return on invested capital at 6.7%, improved from the 6.6% earned in 2024 and largely unchanged from previous projections.

•    Operating profits at $66.0 billion, improved from an estimated $61.9 billion in 2024, but down from the previously projected $67.5 billion.

•    Total revenues at a record high of $979 billion (+1.3% on 2024, but below the $1 trillion previously projected). 

•    Total expenses at $913 billion (+1.0% on 2024, but below the previously projected $940 billion).

•    Total traveller numbers reaching a record high 4.99 billion (+4% on 2024, but below the previously projected 5.22 billion).

Walsh said the industry is still vulnerable.

“Perspective is critical to put into context such large industry-wide aggregate figures. Earning a US$36 billion profit is significant. But that equates to just $7.20 per passenger per segment. It’s still a thin buffer and any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry’s resilience to the test. 
Passenger growth for 2025 (measured in Revenue Passenger Kilometers/RPK) is expected to be 5.8% — a significant normalization after the exceptional double-digit growth of the pandemic recovery. 

The industry faces an aircraft backlog exceeding 17,000 (sharply up from the 10,000-11,000 pre-pandemic), with an implied wait time of 14 years. IATA says that should states exit from a multilateral agreement exempting aircraft from tariffs, supply chain constraints and production limitations could be further aggravated.  

The organization says supply chain issues have had significant negative impacts on airlines: driving-up leasing costs, increasing the average fleet age to 15 years (from 13 in 2015), cutting the fleet replacement rate to half the 5-6% of 2020, and reducing the efficiency of fleet utilization (using larger aircraft than needed on some routes, for example). 

In 2025, 1,692 aircraft are expected to be delivered. Although this would mark the highest level since 2018, it is almost 26% lower than year-ago estimates. Further downward revisions are likely, given that supply chain issues are expected to persist in 2025 and possibly to the end of the decade.